June 27, 2024

10:09 am

The Ag Index suddenly took a dive beneath its prior low and may have triggered a Head & Shoulders formation.  Normally H&S structures occur above or beneath a Wave (1).  This pattern is beneath a Wave (3), which is a bit unusual.  However, the pattern is valid.  The normal Wave structure allows for a decline to 225.00, so the H&S may allow for an extension.  Something may be going on that is quite unexpected.

Food wars?  ZeroHedge observes, “Sunny Verghese, CEO of Olam Agri, a Singapore-based agricultural trading firm, spoke at the Redburn Atlantic and Rothschild consumer conference last week, warned the audience that the world is heading towards a period of “food wars” as geopolitical wildfires spread across the globe.

“We have fought many wars over oil. We will fight bigger wars over food and water,” Verghese said, quoted by the Financial Times, adding that food protectionism has forced some governments to boost domestic food supplies, exacerbating food inflation.

Meanwhile, consumers hesitate at the grocery stores.  ZeroHedge remarks, “General Mills shares plunged nearly 8% at the start of the US cash session, marking its steepest intra-day drop since May 2022. The decline followed the packaged-food company’s report of fourth-quarter sales that missed average analyst estimates, coupled with a full-year sales forecast that also fell short. This disappointing outlook signals more evidence of a consumer pullback amid elevated food prices and builds on our weak consumer theme. ”


7:50 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures declined this morning to 19618.30.  NDX is on an aggressive sell beneath its Cycle Top and may be due for a further decline today.  Short-term support is at 19572.00.  Intermediate support and the 2-month trendline is at 19949.30, where a confirmed sell signal may be made.  The 50-day Moving Average is  at 18493.58.  NDX has the “feel” of going higher, but insiders and hedge funds are distributing a record amount of shares shares to retail investors.

Today’s options chain shows Maximum Investor Pain at 19760.00.  Long gamma may begin at 19770.00 while short gamma may start at 19750.00.  The lines are being clearly drawn.


SPX futures declined to 5451.60 this morning, testing short gamma at 5450.00.  A decline beneath that level is an encouragement for an aggressive sell.  Short-term support lies at 5420.64 while Intermediate support and the trendline lie at 5343.67, where a confirmed sell signal may be made.

Today’s opotions chain shows Max pain at 5475.00.  Long gamma may start at 5500.00, while short gamma may begin at 5455.00.

ZeroHedge reports, “US index futures are down but well off session lows as Treasury yields stay at a two week high high this morning ahead of a flurry of economic data over the next two days which will help set the path for Fed policy. At 8:00am ET, S&P futures were down 0.1% as ugly earnings from Walgreens confirmed the consumer weakness is spreading, while Nasdaq futures dropped 0.2% after Micron’s disappointing sales forecast weighed on tech giants. Semis are mostly lower post MU’s earning as hedge funds continue to dump TMT/semi names to retail investors: NVDA -1.1%, AMD -47bp, QCOM -40bp. MU is down -5.4% pre-market, partially recovered from the initial 7% loss. Bond yields are flat while the USD is modestly lower. Commodities are mostly higher led by oil complex, ags and precious metals. Today, the key macro catalysts are Jobless Claims, Durable/Cap Goods Orders and the first presidential debate tonight, while tomorrow we get the closely watched core PCE figures. The figures come after Fed Governor Michelle Bowman yesterday tempered market expectations for interest rate cuts. We also receive WBA and NKE earnings.”



VIX futures consolidate as the market winds up for  a release of volatility next week.  A Minsky Moment may be coming, as call chasing equities by investors may do a turnabout.  The Cycles Model suggests a very intense 2-3 week reversal just ahead.

The July 3 op-ex shows a very calm volatilities scenario.  There is no short gamma, but long gamma is also scarce.  The July 17 monthly options expiration comes alive at levels not seen in a while.


TNX futures raced up to 43.47, testing the mid-Cycle resistance at 43.53., then backed away.  The Cycles Model suggests a further decline to the trendline over the next week before moving higher.  The volatility in bonds is striking, mirroring the European chaos as money flees to the US.

ZeroHedge reports, “After yesterday’s solid 2Y auction stopped through with the best Bid to Cover in one year, moments ago the Treasury sold $70BN in 5Y paper in another very strong auction.

The high yield of 4.331% stopped through the When Issued 4.335% by 0.4bps, the third consecutive stop through in a row, and also the lowest high yield since the 4.235% in march.

The bid to cover rose to 2.35 from last month’s 2.30, but it was still well below the six-auction average of 2.39 and was the second lowest this year.”


USD futures may have put in a Master Cycle high yesterday and shows signa of reversing lower, down to 105.40 today.  The Cycles Model suggests a decline toward 103.00 before resuming its uptrend.



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