10:42 am
The Ag Index is testing its prior trend channel before launching another 2-3 week rally. The pullback is offering buyers another opportunity to accumulate agricultural shares and ETFs.
10:29 am
BKX broke through the Diagonal trendline yesterday, only to ignore it today. However, it is testing the 50-day Moving Average at 102.75. Moving Averages and trendlines often occupy the same space, so they may act interchangeably during a testing period. The Cycles Models argues that a burst of downside strength may arrive over the weekend. That may argue the possibility of one or more bank failures being announced ove the weekend.
ZeroHedge notes, “US regional banks’ deposits recently made new highs, exceeding the level prior to SVB’s collapse. But that’s far from an all clear. Exposure to commercial real estate continues to rise and delinquencies on the underlying loans is mounting. Hold-to-maturity bank portfolios are losing more money as yields increase, while small banks’ shares are weakening, significantly underperforming those of larger banks. Those conditions also preceded SVB’s bankruptcy last March.”
8:00 am (note: My keyboard failed around 8:30 am and I had to leave to purchase a new one.)
Good Morning! Have you prayed yet today?
US Tech 100 futures have declined to 18600.00 this morning, still above Thursday’s Key Reversal low at 18554.89. Investors are still ignoring the break of the Ending Diagonal trendline at 18800.00. They are waiting for a break of a horizontal trendline across Thursday’s low. Others are waiting for a break of the 50-day Moving Average at 18067.00. So, the average investor is still buying the dip while smart money (hedge funds) are selling.
Today’s options chain shows Maximum Investor Pain at 18775.00-18790.00. Long gamma has a marginal lead starting at 18800.00. Short gamma begins at 18770.00 and dominates the options beneath that level.
ZeroHedge comments, “Groupthink
Hedgies are all in on the semis long logic.
Source: GS
and the daily NVDA…
The one and only
Peter Callahan on NVDA: “2024 YTD return: +130%, 2023 +239%, 2022 -50%, 2021: +125%, 2020: +122% … along this path, NVDA has added nearly $2trn in market cap over the last 1 year … for context, it took names like AAPL or MSFT decades to achieve that feat.””
SPX futures have declined to a morning low of 5235.60, beneath the Thursday low and confirming the trendline sell signal. This action may induce some investors to sell, as it is more noticeable. The 50-day Moving Average lies at 5178.00, which may get a larger reaction from investors. At the moment, there is some short-term support at 5250.00 which may give encouragement to the buy-the-dippers. If so, there is also resistance at 5290.00 that may put a stop to buyers.
Today’s options chain shows Max Pain at 5270.00. Long gamma may begin at 5270.00-5275.00. Lon gamma may begin at 5290.00 while short gamma may start at 5265.00.
ZeroHedge reports, “US equity futures are weaker despite lower bond yields, breaking away from this week’s narrative of Equity/Yields negative correlation, after Salesforce plunged 15% due to disappointing guidance. Small-caps are poised to outperform but have failed to hold gains this week. As of 7:45am, S&P futures are down 0.4%, pointing to a second day of declines but off the session’s worst levels as Nasdaq futures drop 0.3% while Europe’s Stoxx 600 benchmark was led higher by telecom and banking stocks. Premarket, the Mag7 names are mostly lower, ex-AAPL, while NVDA is -0.8%, weighing on Semis, dragged lower by the read through from Salesforce. 10Y yields are down 2 basis points after jumping about 15 bps in the past two days. The US dollar is seeing its weakest start to the day for this week; commodities and bitcoin are weaker, too. Today’s macro data focus will be on Jobless Claims, Retail Inventories, Pending Home Sales, and revisions to the 24Q1 GDP print including the GDP Price Index and Core PCE Price Index. Tomorrow we receive the monthly PCE data which should be more market moving.”
VIX futures reached a morning high at 14.88 before declining back beneath the 50-day Moving Average. The Buy signal has been confirmed with the pullback offering better pricing for buyers. VIX watchers are still in denial, expecting a further low.
The June 5, 2024 options chain show virtually no short gamma. Long gamma is ensconced between 16.00 and 21.00. Still not a lot of conviction above that level. Short-term speculators still dominate the VIX options.
TNX pulled back to test Intermediate support at 45.38 after yesterday’s spike high. This is merely a consolidation with higher values to come. The Cycles Model calls for another 5-6 weeks of higher yields before the market takes a rest. Today the Treasury is auctioning $140 billion of 4-week and 8-week bills. Are bills still safe?