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.
1:22 pm
Indications are that, possibly by the end of the day, the SPX may reach its potential target. Three different indicators all agree that the target range may be 5491.00 – 5500.00. The 50% retracement is at 5491.00. The fractal expansion is at 5491.00 and the Intermediate resistance, currently at 5500.00, may reach 5491.00 by the end of the day. An alternate possibility may allow the target to be reached by tomorrow morning.
8:30 am
Good Morning!
SPX futures have risen to 5424.80 as it completes a heretofore correction to the 1987 trendline and Intermediate resistance at 5513.26. This rally may be the last of its kind, should it not exceed the 1987 trendline. The market loves to prove the majority wrong as the rally flies in the face of bearish sentiment. The Cycles Model allows this final probe today on day 261 of the Master Cycle. The potential target limit may be 5530.00-5550.00. The final probe must exceed the prior high at 5481.34, its minimum target.
Today’s options chain shows Max Pain at 5275.00. Long gamma may begin above 5300.00 while short gamma may start beneath 5250.00.
ZeroHedge reports, “US futures jumped and the dollar stabilized after president Trump said he has no intention of firing Powell, easing some fears on the Fed’s independence, while he also plans to be “very nice” to China in trade talks and sees China tariff coming down substantially which hinted a potential pivot in trade policy. As of 8:00am ET, S&P futures are up 2.3%, with Nasdaq futures surging 2.7%. Pre-market, Mag 7 names are all higher led by TSLA (+6.4%, after Musk said that his time on DOGE will significantly drop next month), NVDA (+4.9%), AMZN (+4.1%) and META (+3.7%). Intel rose 3% on reports it will cut more than 20% of its staff, a move aimed at eliminating bureaucracy. 10y TSY yields are down 10bps to 4.30% as longer-dated Treasuries rally, recovering from selling on concerns about the Fed’s continued independence; the USD reversed earlier gains. Commodities are mostly higher led by oil (+1.6%) and base metals; gold is 1.3% lower.
VIX futures have declined to 27.81 this morning. It may be completing the next Master Cycle in the next week as low at the mid-Cycle support at 19.44.
Today’s option expiration is no longer available. The April 30 options chain shows short gamma beneath 25.00 while long gamma strengthens above 35.00. Options are clearly bearish on the VIX.
TNX futures have sunk to 42.80, beneath the 50-day Moving Average at 43.25. The potential downside target may be the mid-Cycle support at 42.21. Today is day 261 of the Master Cycle, allowing a deeper low than the April 16 low.
ZeroHedge comments, “For much of April, and certainly following the vomit-inducing surge in 10Y yields two weeks ago, the biggest question in the market has been whether China is dumping their roughly $1 trillion in treasuries. And while we won’t know until June when the April TIC data hits (and even then the data is at best mixed), moments ago we found something just as important: the Chinese are certainly no longer rushing to buy US paper, something we learned following today’s 2Y auction which saw a dramatic plunge in Indirect (i.e. foreign) demand.”
I have several appointments later this morning. I may return to comment in the afternoon. Tomorrow’s reoport may also be shortened, as I am planning a trip beginning tomorrow.