The Lord’s Prayer
Our Father, who art in heaven, hallowed be thy name. Thy Kingdom come, Thy Will be done, on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. Amen.
8:00 an
Good Morning!
SPX futures have hit a high of 5778.90 thus far and may go higher in the next day or so. The reason is that SPX is on day 252 of the Master Cycle, nearing completion within the reversal window. A further observation is that the previous Master Cycle was 5 days late, on day 263, allowing the turn to occur early in this Cycle and remain close to the average Cycle length. My earlier analysis before my trip was that the SPX would make a Master Cycle bottom this week. What a difference two weeks make! The main reason for this change is the NATO is preparing for war. European citizens are sending their money overseas where it is safer and not subject to possible capital controls that may be forthcoming in a wartime economy. A clampdown on money fleeing Europe may be imminent. European chat forums are being shut down. In the meantime, US assets are benefiting from capital flight. It is possible that this bounce may target Intermediate resistance at 5874.39.
Today’s options chain shows Max Pain at 5750.00. Long gamma dominates above 5770.00. Short gamma strengthens beneath 5700.00.
ZeroHedge reports, “US equity futs are little changed, erasing a modest loss earlier in the session when investors took some profits from yesterday’s torrid rally which pushed the S&P 1.8% higher. As of 8:00am ET, S&P and Nasdaq futures are both up 0.2%, with Mag 7 stocks all higher pre-market, led by TSLA (+1.4%). European stocks gained as the Estoxx 50 rises 1.1% led by energy and financials, although Asian stocks dropped for a third straight day of losses, driven by Chinese tech shares trading in Hong Kong slid 2.6%, weighed down by a drop in Xiaomi after its $5.5 billion share sale. Investors were also rattled by Trump’s new threat of “secondary tariffs” on countries that buy oil from Venezuela. Bond yields are 1-3bp higher. Commodities are mostly higher led by precious metals (silver) and oil. WTI crude oil futures add about 0.5% to Monday’s 1.2% gain. Today, we will receive consumer confidence at 10am ET (est 94.0 survey vs. 98.3 prior).”
VIX futures are coming down, reflecting money flows that dampen volatility. VIX is approaching its turn window the may not be realized until a reversal in equities. A decline to 16.00 may occur in the next week.
Tomorrow’s options chain shows Max Pain at 20.00. Short gamma is dominant between 15.00 and 19.00. Long gamma begins at 21 and remains strong to 35.00.
TNX is on the rise again, testing Intermediate resistance and the trendline at 43.57. A breakout may give a buy signal. There is approximately a week left in the current Master Cycle. A breakout may cause yields to challenge the January high. Analysts believe that the bond market is exhibiting mean reversion behavior experienced over the last six months. The Cycles Model suggest this may change…
globest.com reports, ““In my talks with [the president], he and I are focused on the 10-year Treasury [yield],” Treasury Secretary Scott Bessent said in February.
That’s been an understatement according to a recent Bloomberg tally, which characterizes him as being unable to stop talking about the Treasury Note yield. He mentioned it five times in an appearance at The Economic Club of New York. He talked about it on CNBC’s Squawk Box early in March.”
EuroStoxx may be in their final probe to a new high this week. The Cycles Model suggests the final high in Stoxx may be Friday, suggesting the events leading to a European conflict may come to a head as early as this weekend. European investors have little choice in where to put their money as the bond market is in tatters there. Banks are not too far behind, so investing in stocks is not being made for the return, but for some capital preservation. While the European market looks enticing, capital controls may trap investors’ money when the tide turns.
The USD made its Master Cycle low on March 18. It is currently consolidating above the low, but has mid-Cycle resistance above it at 104.89. A buy signal may be made above that level.
Gold futures may be on their way to a final high near 3100.00 or higher in the next week. A possible probe to the upper trendline near 3200.00 appears likely. Gold is also benefiting from capital flight from Europe, but may cease soon as capital controls are initiated by European governments..