9:48 am
BKX has declined beneath its Ending Diagonal trendline, thereby elevating the sell signal from aggressive to confirmed. Today the downside strength begins and may continue for the next two weeks. The next target may be the mid-Cycle support at 91.57, but may not stop there. There is a massive Head & Shoulders formation that may be completed over the next 6-9 months. Be prepared to see banks merge or close as their portfolios blow up due to rising rates. What can possibly go wrong with zero percent down mortgages?
8:00 am
Good Morning! Have your prayed this morning?
NDX futures have slipped beneath the Ending Diagonal trendline near 18830.00, making a morning low at 18731.80. The NDX has been challenging its trendline since last Thursday’s reversal, but has been closing above the trendline, causing the casual observer to believe that the uptrend has been intact. Today we see a clear break in that perception. Today a $44 billion offering of the 7–year notes will go on auction. What could possibly go wrong?
Today’s options chain shows Maximum Investor Pain at 18850.00. Long gamma makes an appearance above 18900.00 while short gamma becomes relevant beneath 18800.00.
ZeroHedge remarks, “Little did we know
We wrote this weekend that it was a sure bet that Jensen Huang would surpass the $100bn mark in net worth. Little did we know that it would take only one trading day (plus the after-market) for him to reach in. Someone needs to buy the Hollywood rights for the NVDA story – this is for the movies and the history books. Let’s look at the latest insane data-points.
One stock to rule them all
Since May 22nd: NVDA +20%, SPX down.”
SPX futures have declined to 5271.40, not yet reaching Thursday’s reversal day low. As reported earlier, today is a day of trending strength and the new trend is “down” since the Ending Diagonal trendline was broken. Once the immediate support is broken, further supports may be found at the 50-day Moving Average at 5160.00, then the 100-day Moving Average at 5070.00. The 1987 trendline lies at 5000.00, which may be challenged by the current decline over the next week.
Today’s op-ex shows Max Pain at 5300.00. Long gamma gains ascendancy above 5310.00 while short gamma becomes strong at 5275.00.
ZeroHedge reports, “US futures are weaker with tech and small caps underperforming after the NDX made a new ATH yesterday on the back of the relentless Nvidia meltup. The weakness has been driven by surge in yields, a result of the latest batch of hawkish Fed remarks, two very weak bond auctions and stronger macro data (Consumer Sentiment; Housing Prices). Will we see more of the same today with the 7Y auction on deck? At 7:45am S&P futures are 0.6% lower while Nasdaq futures dipped 0.7% as Mag7 and Semi stocks (incl. NVDA) are all lower pre-mkt; Asian stocks fell, led by losses in Hong Kong, while Europe’s Stoxx 600 index also slipped 0.6%. Yields continued their rise, and after jumping 9 basis points on Tuesday, 10Y yields rose further to 4.57%, the highest level since May 3 when the huge payrolls miss sent yields sliding. The USD caught a bid, but commodities were a bright spot with both energy and base metals moving higher as another attack in the Red Sea added to heightened geopolitical tensions in the Middle East . It’s a light calendar: the only US eco data is the May Richmond Fed index (10am) and Dallas Fed services activity (10:30am); we also get speeches from the Fed’s Williams (1:45pm) and Bostic (7pm). Fed releases Beige book at 2pm”
VIX futures have risen to 14.17 this morning, fast approaching the 50-day Moving Average at 14.41. It is finally moving out of its somnolent stage into a higher level of activity. Rising above the 50-day moving Average may finally gain some attention from hedgers, who have ignored the opportunity until today.
Today’s options chain shows Max Pain at 12.50. There is a solitary crowd of shorts at 12.00 while long gamma begins at 15.00 and is well populated to 20.00.
TNX has jumped above Intermediate resistance at 45.36 and may have clear sailing to its intended target at the Cycle Top at 48.93. The Cycles Model allows up to 5 weeks for the current Master Cycle, so yields may climb higher.
ZeroHedge remarks, “Are the central bankers at the Federal Reserve just winging it?
It sure seems that way if you step back and take a long view of their decision-making.
Fed officials project this aura of authority. You might imagine them as hyper-intelligent experts in the field of economics and finance making carefully calculated monetary policy decisions based on a thorough understanding of all the dynamics in the economy. After all, they must have risen to these important positions at the Fed based on their economic acumen, right?
Or maybe they are just politicians making stuff up as they go along.”
USD futures have risen to 104.76 thus far. They have surpassed the 50-day Moving Average, thereby confirming a buy signal. The Cycles Model suggests that USD may continue its rise through mid-June, leaving it free to challenge the Cycle Top at 107.00.
Gold futures have declined to 2335.20 this morning, consolidating in a corrective manner. Once the correction is over, it may test the 50-day Moving Average at 2316.24 while moving much lower. Once the 50-day is vanquished, there is unobstructed movement to the mid-Cycle support at 2093.19. The Cycles Model suggests this may occur sometime before mid-July. In the meantime, gold bugs continue to push gold as the ultimate investment.