3:04pm
SPX is poised to take out the 50-day Moving Average in the next 24 hours. This is the last chance to sell/short. Good luck and good trading!
7:30 am
Good Morning! Ae you praying for our country?
NDX futures rose to a weekend high of 18640.00 before pulling back. That constitutes at 62% retracement of the decline beginning May 23, a Fibonacci level. Despite stock buybacks and large pension contributions, hedge funds were net sellers while CTAs (commodity trading advisors) have fallen into their sell zone. The Cycles Model calls for as many as six more weeks of selling.
Today’s options chain shows Maximum Investor Pain at 18570.00.. Long gamma starts at 18600.00 while short gamma begins at 18550.00.
ZeroHedge remarks, “The Nasdaq 100 dropped about 300 points on the week or about 1.5%. Not horrible, but late into the day on Tuesday and late into the day on Friday (which also happened to be month-end), the Nasdaq 100 gained about 470 points (about 2.5%). Now, maybe the “hockey stick” save into the close on Tuesday is explicable, but we saw those gains fade as the week progressed. However, Friday’s action seemed bizarre at best. Presumably, it was due to some sort of month-end rebalancing, but it was hardly something that a continued rally seems likely to be based on.”
SPX futures rose to 5299.10 before easing back down. The retracement took back 72% of the decline since May 23. The move was expected, closing near its resistance at 5276.00. However, the futures ventured further, suggesting the retracement may linger yet this morning. The Cycles MOdel suggests today may be a day of strength, but also primed for a reversal.
Today’s options chain shows Max Pain at 5260.00. Long gamma may begin at 5275.00 while sot gamma becomes strong beneath 5255.00.
ZeroHedge reports, “After closing the month of May on the front-foot when a last minute rebalancing spike in the S&P reversed two days of losses, US stock futures are ticking higher to start the month of June following the lead of broad gains across European equity markets and a jump in Asia. As Bloomberg notes, “a degree of extra optimism about the prospect for interest-rate cuts by the Fed following last week’s PCE data, along with better manufacturing figures from China, filtered through markets.”
As of 7:50am, S&P futures traded 0.2% higher with both Tech and Small-Caps outperforming as bond yields start the day lower amid bull flattening, while Nasdaq futures gained 0.4% signaling a recovery after last week’s 1.4% selloff which was driven by investors pulling out of expensive tech leaders, as NVDA jumped 3% after CEO Jensen Huang announced at the Computex conference that the group plans to update its AI accelerators every year, underlining its bullish outlook on the demand for chips and announced a Blackwell Ultra chip for 2025, along with a next-generation platform in development called Rubin for 2026. 10Y Treasury yields dropped 4bps to 4.46% after closing at 4.50% on Friday; the Bloomberg dollar index jumped while oil was volatile after the OPEC+ group announced an extension of output cuts while setting out a plan to gradually restore some production as early as October. Commodities ex-energy are weaker with natgas the standout +5%. Today’s macro data focus is on ISM-Mfg, vehicle sales, and construction spending. This is an important macro data week with the narrative gradually moving to lower growth; NFP may help frame the Fed’s reaction function.
VIX futures are consolidating above Friday’s low at 12.84. Friday’s action has sparked discussion that the VIX may hit 10.00. One can hardly blame them after a year of bottom-hugging in the VIX. However, the Master Cycle low is in and the Cycles Model suggests another possible 6 weeks of (nearly) continuous rally.
The June 5 options chain shows very little short gamma, while long gamma is crowded around the expirations 16.00 and 21.00.
TNX may be challenging its 50-day Moving Average at 44.72. Should it go lower, the next support is the mid-Cycle support at 43.65. However, the prevailing trend is “higher”, so the rally may be expected to resume shortly.
ZeroHedge comments, “The U.S. national debt is at 34.7 trillion dollars. If you laid that many dollar bills end-to-end, it would wrap around the Earth 134,599 times. That’s enough to travel to the sun and back 17 times. Suffice it to say, we’re in a pickle.
America is slowly approaching the precipice of debt default. This is no minor dilemma. A default could cause approximately 8 million jobs to be lost. In other words, the bill would come due.”