June 5, 2024

After Hours

Some fractal analysis of the market structure reveals an interesting set of possibilities:

  • First, there are two Triangle formations occurring in the same Wave, which is highly unusual and not allowed in an impulsive formation.  The solution is a Broadening Ending Diagonal, which is entirely made up of corrective A-B-C Waves that commonly show Triangles..
  • Second, where Wave (3) is the largest Wave (330 points), Waves (1) and (5) tend toward equality.  Wave (1) is 170 points.  Wave (5) reaches 170 points at 5362.00.  It is at near equality at the close and does not need to equal or exceed its fractal match.
  • Which leads us to the  next observation.  that is, Waves (1) and (5) are self-similar (not identical), suggesting completion, or near-completion may have been achieved.
  • Finally, The Current Master Cycle has been stretched to 278 days, which appears to be the maximum length of time for this Cycle.

 

8:15 am

Good Morning!  Are you praying for our country?

SPX futures have risen to a morning high at 5309.90.  The correction may be called an expanded flat since the SPX reaches resistance above 5300.00.  Maximum resistance is near 5315.00.  Most investors “feel” the SPX going higher, but critical support to the upside is broken.  What we may be seeing is a combination of a positive Memorial Day seasonality and a “buy the dip” mentality among retail investors.  At the same time, hedge funds have been ramping up their selling as the underlying trend is weakening, with the giant tech stocks propping the market.

Today’s options chain shows Maximum Investor Pain at 5275.00.  Long gamma may start at 5300.00-5310.00.  Short gamma may begin beneath 5270.00.

ZeroHedge reports, “US equity futures edged higher and were again on pace to reclaim all time highs (which again is less than 1% away away) on expectations that a slew of labor-market readings this week may support the Federal Reserve’s policy easing. As of 7:40am ET, S&P futures rose 0.25% and were at session highs with tech outperforming and small-caps keeping pace; Nasdaq futs were up 0.4% as all the Mag7 names were higher with Semis outperforming. AMD, INTC, MU, and NVDA all up at least 1% premarket. The S&P had seen three straight days of sliding in overnight trading, to then drift higher post EU close and close unchanged or green; today we start in the green so it will be interesting if in a mirror image we close red. Treasury yields were steady after their largest two-day drop for 2024, erasing an earlier yield gain of 2bps, and potentially aiding USD strength. Commodities are finally rebounding with strength in Energy, Ags, and precious metals. Oil was little changed and Bitcoin topped $70,000. In corporate news, Intel agreed to sell a stake in a venture that controls a plant in Ireland to Apollo Global for $11 billion, while activist investor Elliott is pushing SoftBank to launch a $15 billion buyback. Today’s macro data focus is ISM-Services and ADP.”

 

 

VIX futures made a low of 12.85 this morning, a  Fibonacci 61.3% retracement of its reversal off the Master Cycle low.  VIX action does not support the rise in the SPX.  The common expectation is that the VIX will go to 10.00 while the SPX makes new all-time highs.  The Cycles Model disagrees.

 

TNX futures made a new “swing” low at 43.03 while the cash market bottomed at 43.12.  At day 278, I am reluctant to call it a Master Cycle low, but it fits a double Trading (lesser) Cycle low.  However, the long-term trend is “higher” despite the sudden downturn.  As the US labor market deteriorates, there may be pressure on the Fed to lower rates.  However, the drums of war, which are always inflationary, may take precedence.

 

WTIC futures appear to be consolidating after a week-long rout.  The Cycles Model suggests the decline may redouble over the next week before finding a low.  The probable target may be the Head & Shoulders neckline near 68.00.  A further decline beneath the neckline may trigger the bearish formation.

 

 

 

 

 

 

 

This entry was posted in Published. Bookmark the permalink.