7:45 am 2 Chronicles 7:14
“If my people, which are called by my name, shall humble themselves, and pray, and seek 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 have risen above the former all-time high at 5871.41. The next level of fractal resistance lies at 5924.00 with additional short-term Cyclical resistance at 5902.00-5920.00. There are multiple reasons for this inversion, some of which may include:
- Money fleeing from Chinese and European markets.
- Trump’s ascendancy in the polls
- Interest rates temporarily easing
- The Yen temporarily easing.
- Technical support (Cycle Top) at 5843.00.
- Buybacks coming back.
However, there are unknowns that may reverse the SPX on a dime which I will not enumerate. The Cycle Inversion is an outlier that may fall apart at any time.
Today’s options chain shows Max Pain at 5245.00 Long gamma may begin above 5870.00 while short gamma strengthens beneath 5800.00.
ZeroHedge reports, “Futures are higher and on the verge of another all time high with Tech leading: NVDA is up +2.5% pre-market as TSMC reported strong upside on margin, along with comments on “extremely robust AI related demand”. As of 8:00am, S&P futures rose 0.4% to 5,910, just shy of the 5,918 all time high; Nasdaq 100 futures climbed 0.9%, led by an advance in chip stocks after TSMC posted a better-than-projected 54% rise in quarterly earnings. That helped reverse the impact of ASML Holding NV’s lowered 2025 guidance, which halted a rally that had pushed US-traded shares to a three-month high. Europe’s Stoxx 600 index gained 0.7% ahead of the ECB’s second consecutive rate cut. China stocks extended their post-euphoria slump and erased gains on disappointment over the outcome of a joint ministry press briefing about the property market which again lacked critical details on the stimulus package. Iron ore tumbled to a three-week low ahead of data on Friday which is expected to show the economy grew at its weakest pace in six quarters. Bond yields are higher and USD is lower; 10-year yields are 2bp higher to 4.03%. Commodities are mixed: Oil and base metals are higher, while precious metals are lower.”
The Shanghai Composite Index consolidated beneath the Cycle Top, on a confirmed sell signal. Should the Shanghai not be able to regain support at the Cycle Top, it may decline to the Cycle Bottom in short order. The Chinese equities market may be one of the “unknowns” that may spill over into the US market, since the government may install capital controls to stop the bleeding. One little-known item is that the surge in bitcoin may have been influenced by money finding its way out of China.
VIX futures have declined to a new low at 18.88. The 50-day Moving Average is at 18.32. Should the Cycle Inversion linger, the VIX may have its Master Cycle low in the next week. The 50% retracement level is at 19.08 while the 61.8% Fibonacci retracement level is at 18.14.
Next week’s options chain shows Max Pain at 19.00. There is no discernible short gamma. Long gamma begins at 20.00 and may go as far as 28.00.
TNX rose to 40.79 this morning, challenging the upper trendline of the (former) trend channel and mid-Cycle resistance at 41.83. Yesterday’s low at 39.95 was on day 258 of the Master Cycle. Should the resistance hold, TNX may probe lower to complete the Cycle. in the next few days.
USD futures are consolidating beneath the mid-Cycle resistance at 103.58 after challenging it. USD may take a short-term rest after outperforming for the past two weeks.
Japanese Yen futures may have completed their minor retracement this morning at 66.91. It may go higher until the end of the month.
Gold futures extended their rally to 2014.17 this morning, on their way to a new all-time high. Today is day 267 of the current Master Cycle. It is extended, but within normal bounds. It is possible that gold may rally to the Cycle Top at 2733.93. However, that is not an absolute necessity. It is likely that the high may be made this week. Contrary to popular thinking, gold is not a hedge against inflation. Instead, it may more likely be an inverse indicator of political confidence, worldwide.