9:00 am
Yesterday BKX challenged the Ending Diagonal trendline and the 50-day Moving Average at 102.99, closing beneath the 50-day. There is a strong likelihood that the BKX may open beneath both levels this morning on a confirmed sell signal. Liquidity is on the wane, showing in the periphery. Soon it may be mainstream.
7:30 am Good Morning! Hove you been praying for our country?
NDX futures have declined to 18465.70 this morning, on their way to testing the 50-day Moving Average at 18103.53. The top 5 tech stocks now occupy 27% of the SPX valuation. Comparisons are being made to the 2000 dot.com bubble. Of ocurse, investors are used to seeing skyrocketing valuations and are not prepared for them to end. Shorts are a dying breed.
Today’s options chain shows Maximum Investor Pain at 18650.00. Long gamma ma start at 18670.00 while short gamma begins at 18620.00.
ZeroHedge remarks, “The evaporated short
The SPX notional short is at its most subdued point since 2014…
Source: UBS
“Pro” longs
Funding spreads jumped big over the past week and are now at the highest levels since January 2018. Goldman’s Marshall: “…we see this as an indicator that professional investors are comfortable with their exposure. For the most part, this indicator is a leading or coincident indicator for equities.”
SPX futures have declined to a morning low at 5248.90. The 50-day Moving Average is at 5183.81. Yesterday I mentioned that the SPX has the capability of taking out the 50-day today. While this decline is still in the minor Cycle phase, the declines may be much stronger than one would expect.
Today’s op-ex shows Max Investor Pain at 5250.00. Long gamma may begin at 5285.00 while short gamma may start at 5240.00.
VIX futures made an overnight high at 14.08, approaching the 50-day Moving Average at 1440. The Cyclical mean value of the VIX is at 14.63. Once above that level, the VIX becomes positive and has larger reactions to the upside. Most analysts still perceive the VIX as being positive above 25.00.
VIX futures become positive above 13.00 with long gamma beginning at 16.00. There is no short gamma.
USD futures broke down beneath the May 16 Master Cycle low in the overnight session with nearly 2 more weeks of decline left in its path. Given that parameter, we may see USD decline toward 102.75 as a likely target over the next couple of weeks. The alternate view may be that the Master Cycle has arrived early. Should USD rise above its 50-day Moving Average at 104.92, a new Master Cycle may emerge with this morning’s low.
TNX futures declined to a morning low at 43.58, challenging the mid-Cycle support and 200-day Moving Average at 43.65. TNX opened at 43.61 and is now back to 43.65, suggesting a Trading Cycle low may have been put in. Should that be the case, we may see TNX rise back above the 50-day Moving Average at 44.73 in due time. Be aware that the trend in TNX is “up.”
Crude oil futures have plunged to a morning low at 72.48. The Cycles Model suggests another week to 10 days of decline before a bottom may be found. The next target may be the neckline of the Head & Shoulders formation near 68.00. A dive beneath 68.00 may trigger the formation.
ZeroHedge remarks, “Wow oil
Oil at the most oversold levels since March 2023.
Source: Refinitiv
Never forget
There has been a short term connection between oil and the SPX. The gap is widening even further.
Gold futures have declined to 2345.40, threatening the 50-day Moving Average at 2331.88. Should the 50-day be broken, the way is clear for a decline to the mid-Cycle support near 2100.00. The Cycles Model suggests a possible decline through the second week of July. While confidence in a rally may grow slowly, panics can suck the wind out of the market very quickly.