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.
7:50 am
Good Morning!
SPX futures rose to a 35.5% retracement overnight at 5226.80, then eased back down beneath 5200.00. It is likely that the decline may extend further before a significant bounce appears. Beyond the round number supports the next level to defend is the April 7 low at 4835.00. There is little buyer conviction, which may allow the options market to rule the day.
Today’s options chain shows Max Pain at 5150.00. Long gamma may begin modestly above 5200.00. Short gamma is strong beneath 5100.00.
ZeroHedge reports, “US equity futures are higher, attempting to pare back some of the sharp losses from Monday’s prior session and extending yesterday’s late day buying where the S&P found support at the 5,100 level; according to JPM, there is some optimism around a trade deal with either Japan or India and a deal is a likely milestone for stocks to finally bottom. As of 8:00am ET, S&P and Nasdaq futures are are up 0.8%, off session highs of 1.3%, with Mag 7 and Semis all higher with TSLA earnings after the close. This week 25% of the S&P reports with implied vols among the highest since peak-COVID. Chinese tech names are reportedly considering US listings despite “market ructions”, via Bloomberg citing sources; Walnut Coding, CloudSky, Zaihui & Zhonghe said to be considering IPOs in the US. The yield curve is twisting flatter and USD seeing a bid following 4 days of losses. The commodity space is mostly higher led by Energy but gold remains the top story as it set a new ATH rising above $3500 before easing back. The macro data focus is on regional Fed activity indicators (Philly non-mfg and Richmond Fed at 8:30am/10:00am ET), but the more impactful data is tomorrow’s Flash PMI prints. We also get a slew of Fed speakers (see below) alongside numerous heavyweight earnings including Tesla.”
Taking the long (weekly) view, SPX may have completed a 60-month [A]-[B]-[C] fractal in March. Confirmation of that (Ending Diagonal) fractal may be contingent upon declining beneath the April 7 low at 4835.04. Should that event occur, the next level of support lies at the October 10, 2022 low at 3491.58.
VIX futures pared its gains down to 32.07 this morning. Vols are not coming down, remaining above the Cycle Top support at 31.51 and on a buy signal. This is a sign that there may be another probe higher, exceeding the August 5 high. The Cycles Model gives the probability of another two weeks of rally in the VIX.
Tomorrow’s options chain shows Max Pain at 31.00. Short gamma lies beneath 30.00. Long gamma strengthens at 35.00 and runs to 60.00.
TNX is maintaining its gain from yesterday’s probe to 44.07 thus far. It may be due in the next few days to a Trading Cycle low near the mid-Cycle support at 42.20. The next period of strength ma come in early May, while the current Master Cycle may continue its advance through the end of May. Powell is being set up as the potential fall guy should interest ratees rise further. The sad fact is that the Fed has always followed the lead of the markets with rare exception. While tariffs are being blamed for rising rates, the real issue of a looming war is being swept under the table.
Bitcoin continues to rise as it approaches mid-Cycle resistance at 90323.00 on day 267 of the Master Cycle. The Cycles Model shows a high volatility reversal potential on Wednesday. Further resistance of the 100-day Moving Average at 90850.00 is directly above.
Gold futures may have met their target high at 3509.06 this morning. Care must be taken here as the apparent Cycle high is about two weeks early. Should there be a reversal, look for gold to decline beneath the Cycle Top support at 3149.48 to verify a possible change in trend.