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.
11:54 am
SPX has been unable to make an appreciable bounce at 5600.00, leaving the possibility of continuing the decline toward the 1987 trendline this afternoon. SPX is in deep short gamma, forcing the dealers to go short as well to cover the expiring puts at the end of the day. This morning I mentioned a “wall” of puts at 5675.00. That is not the end of them. Here are the major layers:
5675.00 – 13681 put contracts
5650.00 – 17134 put contracts
5600.00 – 11503 put contracts
5500.00 – 9911 put contracts
There are multiple layers of 5000+ contracts between these layers. Once the market “let’s go” there is little to stop the carnage. No catalyst is needed.
ZeroHedge remarks, “Are Democrats trying to spark a recession by cr”ashing the stock market with their insanely partisan and outlier-ish survey responses?
10:37 am
The Ag Index has reached its target at 370.85 today, on day 252 of its Master Cycle. It is possible a week early with some additional downside to go. However, this is an ideal place tto accumulate shares of agricultural commodities, or buy a basket of commodities through an ETF. Now that the lustre has worn off equities, food producing commodities offer a tangible alternative.
10:10 am
BKX has crossed beneath mid-Cycle support at 123.07 and is testing the 200-day Moving Average at 121.52, creating a potential sell signal. The Cycles Model suggests a decline may be in order until mid-April. Should the BKX decline beneath the 200-day, the target may be the Cycle Bottom at 101.61 in a rather sharp decline. The Cycles Model infers multiple bouts of trending strength over the next two weeks.
9:55 am
The EuroStoxx 50 is going lower. The ETF has crossed beneath Intermediate support at 55.29, creating a sell signal. Those investing in EuroStoxx seeking maximum gains may see losses, instead.
ZeroHedge remarks, “A few harsh realities to consider:
1) The hard-left has infiltrated all Western institutions and actively seeks to undermine and subvert all Western nations – regardless of which particular puppet politician is in power.
2) Most countries within Western Europe will see their native young become a minority well before 2050. …”
8:00 am
SPX futures declined to 5665.00 before a bounce which hasn’t regained lost ground thus far, having crossed beneath the 200-day Moving Average at 5757.00. This action generated a new sell signal. The Cycles Model indicates growing trending strength starting next week that may allow the SPX to pierce the 1987 trendline. Should that be so, the fractal pathway appears to lead the decline to 5100.00, approaching bear market territory. Volume has been thin thus far, as investors take a wait-and-see approach. However, volume may accelerate as SPX begins to make new lows, crossing the trendline.
Today’s options chain shows Max pain at 5725.00. Long gamma may begin above 5750.00 while short gamma rules beneath 5700.00, with a massive put wall at 5675.00. Dealers and hedge funds are already asking the Fed to bail them out in the next crash.
ZeroHedge reports, “US equity and global stock markets slumped while gold topped a fresh all time high as investors braced for today’s core PCE report, the Fed’s preferred inflation metric, and continued to worry about the lasting economic damage of the trade war amid daily tariff news and a halt in progress on the geopolitical front, as the market now awaits the April 2 tariff announcements. As of 8:00am ET S&P futures are down 0.2% but off session highs, with the Nasdaq lagging -0.4% and small caps modestly higher; Mag 7 names are mostly lower premarket: AAPL -0.7%, AMZN -0.5%, while TSLA +1.6%. European and Asian stocks are also lower: Bond yields are lower and the USD trades near session highs. Commodities are mixed with base metals all lower this morning, but gold is making a new record high rising above $3,080 per ounce. Brent trades near session highs above $74/bbl. Looking ahead today, we will get PCE data for February at 8:30am (consensus expects headline and core PCE up 0.3% MoM, and 2.7%/2.5% YoY headline/core) followed by UMich survey data at 10am. Following the data, we will hear from Fed voter Barr and non-voter Bostic.”
VIX futures rose to 19.58 in the overnight session. In doing so, it has risen above the 50-day Moving Average at 18.61, creating a buy signal. The next move may be substantial, as the length of third waves are often multiples of Wave 1. VIX may meet or exceed the height of the August 5 rally.
The April 2 options chain shows Max Pain at 18.00. Short gamma occupies 15.00-17.00. Long gamma may begin at 20.00, but only extends to 24.00. The options market may be about to wake up.
TNX is pulling back impulsively with a potential target at the mid-Cycle support at 42.17. Pullbacks such as this are typical after a breakout. Investors are interpreting this as a resumption of the sideways trend However, once TNX meets its target the Cycle will flip upward in a dramatic way by early next week.
ZeroHedge reports, “Moments ago, the Treasury sold the week’s final coupon auction and after a stellar stopping through 2Y sale, a mediocre, tailing 5Y, today’s 7Y was the ugliest of the lot.
Stopping at a high yield of 4.233%, the auction yielded 0.4bps more than February and also tailed then When Issued 4.227% by 0.06bps; this was the first tail for the 7Y tenor since August 2024.”
Bitcoin has pulled away from the mid-Cycle resistance at 87698.70 and has fallen beneath Intermediate support at 85904.08, creating a sell signal. The Cycles Model suggests a decline until mid-April that may hit or exceed the Cycle Bottom support at 60775.03. Should that be so, the alternate target may be the August 5 low at 49202.91. Bitcoin has been favored by investors to expatriate their wealth away from countries such as China and some European countries. That impulse has already seen its peak and the onset of capital controls may now have the opposite effect.
USD futures are consolidating beneath the mid-Cycle resistance at 104.89. The Master Cycle bottom was made on March 18 and the USD may be about to launch a 6-7 week breakout rally soon. Note that both USD and the Yen are set to rally simultaneously.
The Japanese Yen has marked a Master Cycle bottom yesterday, signaling a potential resumption of the uptrend. As the Yen appreciates, those who have been using the Yen carry trade for financing may get squeezed. Note the potential target should the neckline be breached.
Gold is fast approaching its Cycle high as futures top out at 3124.40 while the CME trades about $50.00 lower. The initial target of 3100.00 has been met (futures) and there are only a few days left in the Master Cycle. Futures are trading higher due to foreign demand, while domestic demand is lagging. Gold prices may decline through the month of April. The initial target may be 2300.00. A decline beneath the Cycle Top at 3010.00 may invoke an aggressive sell signal (reduce exposure). A confirmed sell signal may lie beneath Intermediate support at 2945.00.