9:43 am
BKX, our liquidity proxy, is losing its grip on the retracement after retesting Intermediate resistance at 102.83. The next support appears at the mid-Cycle line at 92.94. The current Master Cycle has another 3-4 weeks to go and is on a sell signal. It is quite possible that the target for this decline lies near the neckline of the Head & Shoulders formation at 72.55.
ZeroHedge remarks, ” If the economy is fine, why are so many signs of trouble erupting all around us? Those that keep insisting that the U.S. economy is heading in the right direction conveniently ignore the very troubling facts and figures that I regularly share with my readers. When you take an honest look at the cold, hard numbers that the economy keeps producing, there is only one logical conclusion. Our entire system is crumbling, and it appears that conditions will soon get significantly worse.
Just look at what is happening to our banks.”
8:00 am
Good Morning! Are you praying for our country?
NDX futures reached a morning low at 19481.60 before a bounce eased it away from the brink. This is the first day of the reversal. The rally has been so steep that there are few supports from which we may monitor its decline. The nearest support (Intermediate) is at 18479.58 where a sell signal may be made, nearly 6% from the ATH. Aggressive short positions may be taken at 19400.00 and at 19000.00. It would not be wise to remain long here. Strategists are neutral the Magnificent 7. There seems to be no fear, despite declining breadth..
Today’s options chain shows Maximum Investor Pain at 19490.00 Long gamma may begin at 19500.00. Short gamma may start at 19475.00.
SPX futures made their morning low at 5393.50 before a small recovery. An open beneath 5400.00 leaves an island reversal, a possible aggressive sell signal. Otherwise, another aggressive signal may be made at short-term support at 5320.00 while the trendline for this final rally lies at 5300, where confidence in the decline may rise substantially. It would not be wise to remain long at this point. The mainstay of the rally until yesterday was buybacks which provided liquidity for corporate insiders to make their exit. That has now stopped.
Today’s options chain shows Max Pain at 5420.00. Long gamma may begin at 5450.00 while short gamma resides beneath 5400.00.
ZeroHedge reports, “After stocks hit a 4th consecutive record and a 30th All Time High on Thursday on absolutely atrocious breadth (more than two thirds of the S&P closed red), futures traded lower as the rally finally fizzled. At 8:00am ET, S&P futures were down 0.5%, but off session lows, while Nasdaq futures outperformed, down 0.2% after closing at a fresh all time high despite more than 70% of names in the index trading lower on the session! The strong US performance – this morning notwithstanding – which delivered a 1.6% advance since last Friday, stands in contrast to a sharp decline in European stocks, which are headed for their worst week since January on growing concerns about political turmoil in France, and culminated with French public development bank SFIL SA pulling the sale of a green bond after a week that saw the country’s government debt tumble ahead of upcoming elections. Bond yields tumbled some 5bps lower, pushing the 10Y yield to 4.20%, amid an almost panicked flight to safety out of Europe, which also helped push the USD higher and EUR lower. Commodities are reversing recent losses with both oil and gold/silver are higher. Overnight, the biggest focus was BOJ’s decision, which again came in more dovish than expected: BOJ said the reduction in government bond purchases would begin after the bank’s next meeting, and sent the yen plunging initially before cross-asset flows pushed it back to unchanged. Today, the macro focus will be the Michigan sentiment and inflation expectation data at 10am. ”
VIX futures are on the rise again making a morning high at 13.45 testing the June 11 high at 13.47. While the VIX appears to be calm, the European V2X is in a panic, closing at the October 2023 high. Will the panic spill over to the US?
The June 18 op-ex shows Max Pain at 14.50 with short gamma below 14.00 to 11.50. Long gamma appears at 16.00 and may extend to 45.00.
TNX made a Trading Cycle low this morning at 41.88 and may have made a reversal. TNX ix still in an uptrend. The dip in yields may have been a reaction to outright panic in Europe. There is still some semblance of normalcy here.
USD futures continue to rise as the demand increases. The US still has the cleanest laundry on the clothesline.
ZeroHedge exclaims, “Sacre bleu!!
The implications of French President Macron’s shock announcement of snap legislative elections after sustaining a hammering from the far-right Rassemblement National in European elections are starting to show up in some much more worrying systemic signals for the EU overall.
The OATS Spread (the gap between the yields of 10-year bonds issued by France, known as OATS for obligations assimilables du Trésor, and German bunds) is back at the center of discussion …”
