9:35 am
BKX, our liquidity proxy, clearly dropped beneath its trendline on Friday and is continuing its decline this morning. It is on a confirmed sell signal. The Cycles Model suggests a continuous decline to the week of July 8.
On Friday, ZeroHedge reported, “Money-market inflows continued for the seventh straight week getting close to $6.1 trillion…
Source: Bloomberg
As total seasonally-adjusted US bank deposits fell $41.5 BN…”
Zerohedge notes, “When the Federal Reserve started raising rates, it precipitated a financial crisis. The central bank managed to paper over the problem with a bailout program, but the crisis continues to bubble and percolate under the surface.
According to the latest data from the FDIC, the U.S. banking system is sitting on $517 billion in unrealized losses due to deteriorating bond portfolios.
Unrealized losses triggered the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023.”
8:00 am
Good Morning! Have you been praying for our country yet?
SPX futures declined to 5328.80 this morning before a muted bounce. The Friday high may be the Cycle Top, as well. It is exactly 4.3 years from the February 2020 high that led to the decline in March 2020. An aggressive sell signal lies beneath 5300.00, while the Ending Diagonal trendline lies at 5250.00, where the sell signal may be confirmed.
Today’s options chain shows Maximum Investor Pain at 5340.00. Long gamma may begin at 5350.00. Short gamma may start at 5325.00.
ZeroHedge reports, “US equities were poised for modest losses to start the week after underlying indexes hit a new all time high on Friday, as focus shifted to Wednesday’s CPI data and Thursday’s Fed meeting. As of 8:10am, both S&P 500 and Nasdaq futures slid about 0.1%, rebounding from session lows hit shortly after Europe opened following a weekend trouncing of establishment parties in the European Parliament elections. The VIX Index rose, but remained well below its average over the past 12 months. The yield curve is twisting steeper, and the USD starts the week stronger. Cmdtys are mixed with strength in metals, weakness in Ags, and Energy flattish. AAPL and AMZN kick off today, with AAPL’s focused on AI. Today’s macro data focus is on NY Fed’s 1-year inflation expectations print; prior level was 3.26%.”
VIX futures rose to a morning high at 13.28, then eased a bit, remaining above 13.00 There seems to be little awareness that VIX may have ended its probe to new lows.
Wednesday’s options expiration shows no short gamma, while long gamma appears strong at 16.00. This may help to “pull” VIX above the mid-Cycle resistance at 14.60.
TNX futures rose to 44.73 this morning, while the cash market registers a high at 44.67. The 50-day Moving Average lies at 44.81. The Cycles Model shows more trending strength may be at hand. TNX is on a buy signal since Friday. Rising above the 50-day Moving Aveage enhances/confirms the buy signal. The Treasury Auction schedule shows $140 billion of 13-week and 26-week bills being auctioned today, along with $58 billion of 3-year notes. Keep an eye on the notes as yields are trending higher.
Gold futures dropped to a weekend low of 2304.55. It fell beneath the 50-day Moving Average at 2346.44 on Friday confirming its sell signal. The Cycles Model indicates the decline may last up to a month, so buying the dip may be counterproductive.
Crude oil futures reached a weekend high at 76.04. This may not be the time to buy the dip since the Master Cycle is coming to a close this week. Should the Master Cycle end at a high in the next few days, the downtrend may resume.