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.
3:13 pm
SPX did not complete a final thrust higher today. While there may be a belated attempt at pushing it higher in the next day or so, it has crossed beneath the Cycle Bottom at 5280.50 creating a sell signal. Take appropriate action.
ZeroHedge notes, “Update (1330ET): Key highlights from Powell’s prepared remarks:
Powell said: “tariffs are highly likely to generate at least a temporary rise in inflation.”
“The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored.
Powell again stressed the central bank’s focus on preventing potential tariff-driven price hikes from triggering a more persistent rise in inflation.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.”
8:10 am
Good Morning!
SPX futures declined to 5307.10 this morning, as it prepares for a final thrust to the trendline just above 5500.00. The 50% retracement value is 5491.00. Should there be a surge in the next few days. it may reach as high as the mid-cycle resistance at 5768.00. This market may be full of surprises in the next few days.
Today’s options chain shows Max Pain at 5400.00. Long gamma may strengthen above 5425.00 while short gamma appears beneath 5350.00. Today appears to be a quiet day in the options market.
ZeroHedge reports, “US equity futures are lower after NVDA unveiled the US government restricted export of its H2) chips to China, sending the stock -6% lower pre-market and dragging the broader market lower; Europe chip giant ASML Holding NV reported disappointing results further denting the semi space. As of 8:00am, S&P futures are down 0.7%, and Nasdaq futures slide 1.5%, with the balance of Mag7 and Semis, all weaker (AMD -6.2%, AVGO -3.3%). Futures had been even lower overnight but bounced shortly after 4am ET after China said to be open to trade talks with some preconditions, including (i) consistency of message and respectful approach; (ii) one person to negotiate that is not Trump but has his authority; with the goal of having a signable agreement before the leaders meet in person. Bond yields are mixed as the curve twists steeper while USD weakness continues, sending the Bloomberg dollar index to a 6 month low. Commodities are rallying today with all 3 complexes higher; WTI crude oil futures are up about 1%, gold futures more than 2%, extending their recent advance. Precious is standing out to the upside, with gold hitting a new record high above $3300. Today’s macro data focus is on Retail Sales.”
VIX futures probed to 33.63 in the overnight session, rested above the Cycle Top support/resistance at 30.63. That action may be a buy signal for the VIX.
Today’s options expiration shows Max Pain at 21.00. Short gamma lies between 15.00 and 20.00. Long gamma may begin at 22.00 and strengthens above e350..0.
TNX slipped beneath the trendline and the 50-day Moving Average at 43.36, but appears to be strengthening on day 254 of the Master Cycle. This may be a bit too soon for a reversal, as there may be a strong likelihood of completing the decline to the mid-Cycle support at 42.19. Figures from the basis trade blow-up last week are beginning to emerge. Total assets in the multi-strategy trades are near $1.5 trillion. A lot is at stake her in attempting to mitigate losses in the Treasury market.
Bitcoin is slipping beneath the 50-day Moving Average at 84182.00. This may produce a sell signal with legs, as today may bring strength to the new trend. The Cycles Model suggests the decline may last until mid-June with the August low as a possible target.
Gold futures edged up against the April 11 high, but did not exceed it. Investor enthusiasm is at a fever pitch, so what could go wrong? Commentators are gleefully predicting an imminent collapse in the USD and continued rally in gold.
USD is hovering just above the April 11 low on day 254 of the Master Cycle. The decline may extend over the weekend, as mentioned last week, the probable target may be in the range of 96.00-98.00. Momentum traders are shorting the USD, putting on more downside pressure.
The Japanese Yen continues its climb this morning to a new high at 70.39. This action is wreaking havoc with the Yen carry trade as the year-to-date appreciation exceeds 11%. Those that borrowed in Yen at .10% now have to contend with capital losses far exceeding any possible savings from the lower interest rate. This action is draining liquidity further from the markets. The Cycles Model suggests a final surge to the neckline at 71.55 may be in order over the next few days. The Cycles Model signals a wild double reversal in the next 2-3 weeks that may propel the Yen above the Head & Shoulders neckline.