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.
9:50 am
BKX has just a few more days left in the Master Cycle to make a new high. The normal retracement would allow BKX to rise to the mid-Cycle resistance at 123.25. The 50-day Moving Average lies at 125.83. However, time is running out. Should TNX run lower, it may propel BKX to its targets. A lot his riding on the bond market at this time.
8:15 am
Good Morning!
NDX futures are consolidating near the 38.2% Fibonacci level. The bounce stil has further to go. The minimum retracement would be near the 50% retracement value or to the Intermediate resistance at 19505.99. The Cycles Model points toward the multiple resistance including the 30-month trendline, mid-Cycle resistance, the 50-day Moving average and the 61.8% retracement level at 20000.00-20362.23. Analysts are asking, “Does the price action continue to turn away from US assets?”
SPX futures are also consolidating during this shortened week. The minimum target for this retracement may be at 5500.00, where the 50% Fib retracement may be met. Intermediate resistance is declining at a rate of 18 to 20 points per day and currently at 5601.00. The 50-day Moving Average and mid-Cycle resistance are at 5769.36, right on top of the 61.8% Fibonacci level. However, that may entail running above the 1987 trendline near 5575.00. Having reviewed the price levels, the time element may not run out until early next week.
Today’s options chain shows Max Pain at 5380.00. Long gamma may begin at 5400.00 whil short gamma resided beneath 5300.00. Options may not be playing a big role in price action today.
ZeroHedge reports, “US stock futures swung between gains and losses after a two-day advance as traders focused on signs that the Trump administration may add more tariff exemptions to ease the economic turmoil of the trade war. As of 8:00am S&P 500 were down -0.3% and Nasdaq futures dipped -0.2%, although both indexes were in the green just minutes earlier with moves now happening so fast and jittery, it has become meaningless to keep tabs. Boeing sank 4% in premarket trading after China ordered airlines not to take any further deliveries of the company’s jets; elsewhere, Mag7 and Semis are leading TMT higher with Fins higher into earnings. Other Cyclicals like Energy/Industrials are mixed with Materials higher led by gold miners. In Europe, stocks pushed higher after Trump floated a pause in auto tariffs. Bond yields are +/- 1bp as the curve twists flatter; USD is flat as it looks to ease 5 consecutive days of losses. The commodity complex is weaker with crude and base weaker, gold up, and Ags mixed. The macro data focus is on import/export prices and Empire Mfg plus earnings from GSIB Banks, transports, and a HC (and Defensives factor) bellwether, JNJ.”
The Shanghai Composite is consolidating near its high of the week above the Lip of the Cup with Handle formation. The next probable turn date may be on Friday, while our markets are closed. Thus far the PBOC has been buying stocks to maintain the optics of stability, but that may give way to economic and technical reality as it declines back beneath the lip. Any advantage that Chinese stocks may reveal may disappear as the index declines to or beneath the Cycle Bottom.
ZeroHedge comments, “Last week we explained how the escalating trade war between the US and China has gradually transformed into a theatrical war of who has the upper hand on any given day. And since it takes a long time for trade obstructions to hit the underlying economy, investors are keenly eyeing the stock, and especially FX, markets for any and every (early) indications of who has the upper hand (even if they are, as we show below, completely false).”
VIX futures have made a marginal new low at 29.59 which may mark the end of the retracement, or nearly so. The 61.8% retracement level is near 33.50. The 75% retracement lies near 27.75.
Tomorrow’s options chain shows Max Pain at 20.50. Sjprt ga,,a resided betweem 15.00 and 20.00. Long gamma begins at 21.00 and runs as high as 75.00.
ZeroHedge remarks, “Post peak fear
Volatility has cooled from its April highs, but the market’s nerves are still frayed. While the VIX term structure flattens and SPX range compresses, deeper cracks—like MOVE’s stubborn grip and skew distortions—remind us that healing takes time.
We have seen volatility
April VIX future (UX1 Index) is now at 29 vs being 39 last Tuesday… Aside from February 2018 (‘volmageddon’) … highest 10d realized volatility in last 10+ years … yes, above COVID (GS derivatives).”
TNX bounced off the trendline and 50-day Moving Average at 43.42 this morning. However, this decline only made a 38.2% retracement thus far. Today is day 253 of the Master Cycle, either suggesting the retracement may be over, or a very sharp move may be made in the next week that could bring the 10-year yield lower. While the basis trade appears contained and foreign selling does not appear in the fore, there may be pressure to keep yields down. The fact that bot stocks and bonds took a hit last week has shaken investor confidence.
USD bounced off Friday’s low, signaling a potential early end to the Master Cycle. However, there may be room to decline another 3 points by early next week. Should that occur, we may see a powerful rally out of the low.
Bitcoin is consolidating beneath Friday’s high. Time may be running out for another probe higher. By next week the opportunity to raise price levels may have run out. In fact, the Cycles Model suggests a very strong downdraft may be revealed by mid-week.
Gold futures may be consolidating above its upper trendline near 3220.00. An aggressive sell signal may be obtained upon the decline beneath 3200.00. While gold may only have a 3-4 week window for a decline, it may have the potential to turn into a collapse.