8:40 am
Good Morning! Have you prayed this morning?
SPX futures dove to 5215.40, then bounced. The most likely stopper is short term resistance at 5276.00 (not shown on the daily chart). Should the decline be impulsive, it should then resume toward the 50-day Moving Average at 5178.00. The structure of the decline does not appear complete.
Today’s options chain shows Maximum Investor Pain around 5250.00. Long gamma may begin at 5275 while short gamma begins at 5225.00.
While waiting for PCE results, ZeroHedge reports, “Futs are slightly lower as bond yields rise after European inflation prints came in stronger than expected and PCE looms. As of 7:30am S&P futures are down -0.2%, off the worst levels of the session; Nasdaq futures slumped 0.5% as last night’s latest round of tech earnings disappointed: DELL plunged -14% as it failed to meet the high expectations on AI demand; MDB cratered 24% and is now down 55% below YTD highs. Indeed, most AI names (ex-NVDA) are mostly lower: AMD -1.0%, MU -78bp. Bond yields are 1-2bp higher in sympathy with the move wider in Bunds where the latest data showed European consumer prices rose more than expected; the Bloomberg dollar index dipped and commodities, energy and ags are mostly lower. Today’s macro data focus will be March PCE release; the street expects a headline and core PCE print of +0.3% MoM; on YoY basis, Core PCE is expected to rise 2.8%. Over the weekend, NVDA will host the CEO live keynote ahead of the Computex 2024 event on Sunday June 2 at 7am ET.”
VIX futures declined to a morning low at 13.32 before a bounce. This allows an oportunity to accumulate VIX shares/ETFs/ options for hedging or speculation. Many commentators suggest the VIX may go lower, with a rebound closer to the election. Unfortunately, they are not observant of international risks that may propel VIX higher.
The June 5 options chain shows little short gamma. Long gamma may begin at 14.50.
TNX may be taking a breather that may not last. Today happens to be a Trading (minor) Cycle low. The Master Cycle has another 5 weeks to go. The 5-week target may be the Cycle Top at 48.98. Trending strength appears to be returning next week. We may be experiencing stagnation, not deflation.
ZeroHedge observes, “After a somewhat weaker than expected CPI print two weeks ago, and with inflation data generally surprising modestly…
… the doves’ last chance for “sooner than later” rate-cuts is today’s Core PCE Deflator – often described as The Fed’s favorite inflation signal. And indeed, after last month saw a stronger than expected print in both the headline and core prints, moments ago the Biden Bureau of Economic Analysis confirmed that – just as we previewed – the core PCE dropped from 0.3% to 0.2%, the lowest monthly increase of 2024…
ZeroHedge further states,”After unexpectedly slumping last month to 37.9, the Chicago PMI index cratered even more unexpectedly in May, when it defied hopes of a rebound to 41.5, and instead tumbled even more, sliding to a cycle low of 35.4 which was not only below the lowest estimate, but was staggeringly low. To get a sense of just how low, the last two times it printed here was during the peak of the covid and global financial crises…
… which seems to suggest that at least according to Chicago-based purchasing managers, the economy is in a depression.”