July 2, 2024

10:04 am

The Ag Index (raw goods) has broken beneath the neckline of a Head & Shoulders formation spanning 5 years.  GKX has already declined beneath the 61.8% Fibonacci level aa t387.76.  But the H&S formation is being challenged, suggesting a larger decline to come.  This is the worst of both worlds, since prices at the farm are declining while rising at the checkout counter (stagflation?).  This may be due to bottlenecks in transportation and processing that have an inflationary effect on prices and may cause shortages.  Home gardening is catching on, but many don’t have the wherewithal to make a dent in their grocery bills.

ZeroHedge observes, “If you are really struggling with the high cost of living, I want you to know that you aren’t alone.  In recent months, I have been hearing from so many people that feel like they are drowning financially.  Have you experienced a palpable sense of panic when you compare your rising bills to the level of income that you are currently bringing in?  So many people out there are stressed out of their minds because it has become such a struggle to pay the bills each month.  As I discussed a few days ago, a typical U.S. household must now spend $1,069 more a month just to buy the exact same goods and services that it did three years ago.  Over the course of an entire year, that is almost an extra $13,000 dollars.  Month after month, prices just keep going higher, but those that are running things continue to insist that everything is just fine.”


9:32 am

BKX may be reversing from a Master Cycle high made yesterday after testing the lower trendline of the Ending Diagonal formation.  Yesterday was day 250 in the Master Cycle.  While time still allows a little “play,” the price may be right.  Earnings may start next week with very low expectations for regional banks.


8:00 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 have declined to 19672.40, remaining above yesterday’s intra-day low at 19577.54.  Should the NDX decline beneath that level, it introduces the probability of a further decline to short-term support at 19358.00.  Otherwise, the options dealers may be able to maintain a tight grip on equities, although bullish sentiment is waning.  Earnings estimates for the past three quarters were set low, but earnings came in lower.  Now the talk is of an earnings recovery, which may lead to a severe disappointment.  This far this market is marked by extremes, leading us to the conclusion that a reversion to the mean is looming.

Today’s options chain shows Maximum Investor Pain at 19800.00.  Long gamma may start above 19900.00.  Short gamma is creeping up to 19750.00.


SPX futures have declined to a morning low of 5444.60, then bounced from short-term support at 5447.20.  This action may allow SPX to go lower, possibly to Intermediate  and trendline support at 5362.00 .   That action may be countered by the options dealers who are long the SPX and would be inclined to keep it higher for the holiday.  Earnings reports don’t begin until July 8 and the majority of reports may be due after July 15.  The NYSE Hi-Lo Index closed beneath its 50-day Moving Average at 14.55 yesterday and is spending more time in the single digit range..

Today’s options chain shows Max Pain at 5475.00.  Long gamma may start at 5500.00 while short gamma may begin at 5450.00.

ZeroHedge reports, “US equity futures are sliding, reversing all of Monday’s gains and then some, with tech and small-caps stocks underperforming even though bond yields are lower by 2bps ahead of the latest JOLTS data that will give clues on the outlook for US interest rates while French stocks give up all of the post-vote gains as the relief rally reversed. As of 8:00am ET, S&P futures are down 0.5% and Nasdaq futures lose 0.6%. Treasury yields held most of Monday’s rise, which was fueled by speculation that a Donald Trump presidency would lead to greater US fiscal deficits and higher inflation. The US Dollar is stronger for a second day and commodities continue to find a bid, led by oil and energy. Today’s macro focus will be on JOLTS and Powell (9.30a) as the world adjusts to the new political outlook, one where Trump replaces Biden in November, and which appears to be the near-term driver of bond yields and commodity prices; the hurricane in the Atlantic is also supporting energy prices. These moves may be exacerbated by the low volume associated with the holiday week. ”



VIX futures bounced to a morning high at 12.88.  A buy signal may be achieved above the 50-day Moving Average at 13.38.  There is a growing likelihood of the VIX  putting in a Master Cycle low this week or early next.  It may take the earnings season to break the VIX out of its slumber.  Implied correlations in equities are near an all-time low.  What that means is that stocks are performing out of sync with one another, giving the impression of calm on the surface.  Should correlations begin to align, a spike in volatility may result.  Substantially lower earnings may be the catalyst.

Tomorrow’s options chain shows Max Pain at 13.50.  There is a large nest of puts at 13.00.  Long gamma may begin at 20.00 in the event of a surprise.


TNX has pulled back beneath the 50-day Moving Average at 44.46 this morning.  Today is day 253 in the Master Cycle, leaving an approximate week to complete the Cycle.  There is an overhead trendline at 45.50 which may define the upper limits of this move.

ZeroHedge remarks, “Higher for longer

US 10 year bounced perfectly on the big trend line, and is now reaching the short term negative trend line. This last move higher has taken most by surprise. Note we are above all major moving averages as of today…”



USD futures are pulling back beneath this morning’s Master Cycle high.  The Cycles Model suggests a decline in USD to mid-August.  The target may be the Cycle Bottom at 101.60.




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