9:42 am
BKX is edging higher this morning as it completes its current Master Cycle. Today is day 252, leaving only 3 more market days of possible new highs. The financial system is showing signs of stress.
ZeroHedge remarks, “The banking industry has benefited from the Federal Reserve’s measures to control inflation.
Over the past two years, the U.S. central bank paid out more than $400 billion to banks and money market funds in interest payments and other transactions meant to curb lending to fight inflation, based on data published by the Fed as of July 1.
After a rate hike spree in 2022 and 2023, the central bank now pays 5.4 percent annual interest on “reserves” – any money a bank leaves parked at the Fed overnight.
The banks, on the other hand, haven’t necessarily passed on the windfall to its customers, as deposit rates remain very low compared to the rates banks receive from the Fed.”
8:30 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!
SPX futures reached an overnight high at 5514.40, signifying a high probability that the Current Master Cycle may end at a high. Resistance lies at 5543.00, which may provide a suitable target. Overnight money flows are fleeing from Europe and Japan while domestic retail investors provide daytime inflows. Dealers are net long, while hedge funds continue to sell. There is no exuberance. The sentiment is that there is no alternative. One must not be short while the market continues to rise. Today is day 250 in the Master Cycle. The Cycles Model suggests a reversal is due in the next week or so. Earnings reports start next week with high expectations.
Today’s options chain shows Max Pain at 5500.00. Long gamma may start at 5525.00 while short gamma may begin at 5495.00. Options are tightly wound and may react violently to any stimulus.
ZeroHedge reports, “US futures traded at new record highs amid rising optimism a Fed rate cut is coming, perhaps as soon as the end of the month, and ignored sticky high yields which traded near the highest level in a month. As of 8:00am ET, and ahead of a data barrage later in the day which includes ADP, Trade and claims data, as well as the latest PMI, ISM, Factory orders and Durable goods reports, S&P and Nasdaq futures were flat, erasing a modest gain earlier in the session, and ahead of a shortened-session that will end at 1 p.m. because of the July 4 holiday. On Tuesday, the S&P 500 closed above 5,500 for the first time notching its 32nd record this year. Tech and small-caps are outperforming as the market received a bullish boost from Powell but now the question is whether the macro data (and earnings) can deliver with ISM Services today and NFP on Friday. European markets took heart from Wall Street’s latest all-time highs and efforts to block a right-wing majority in French elections. Bond yields are flat to +1bps as the curve is flattening; USD is lower and commodities are higher led by metals where silver is the standout. Today’s macro data focus is on ISM Services, ADP/Jobless Claims, Factory Orders, and Fed Minutes (released after the Equity close).”
VIX futures are consolidating near yesterday’s low. Today is day 252 (of an average 258 days) in the current Master Cycle. A major reversal may be imminent. The market is increasingly vulnerable to higher volatility.
The July 10 options chain shows a very small contingent of puts at 12.50. Long gamma may begin at 17.00. Next week’s op-ex appears to be a nothing burger.
TNX has pulled back beneath its 50-day Moving Average at 44.40 after its breakout to a Master Cycle high on Monday. The mid-Cycle support lies directly beneath it at 43.40. Investors are speculating on an imminent rate cut in July, assuming a low jobs number on Friday.