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.
11:09 am
BKX has begun its descent from its Wave (2) Master Cycle high high. The Cycles Model suggests the decline may be short (about 2 weeks), but deadly, as it is likely to descend sharply beneath the Head & Shoulders neckline. Note that the 10-year bond yield may be rising as well as the Yen, trapping banks in al illiquid squeeze. A sell signal has been made.
7:45 am
Good Morning!
SPX futures tested the 1987 trendline near 5530.00 this morning. Yesterday’s high at 5571.95 occurred on day 267 of the extended Master Cycle. The extension is simply to get the best month-end result for the SPX on light volume. A decline beneath 5530.00 may give a sell signal with confirmation beneath the Intermediate support at 5482.00. The retracement may be considered complete, or nearly so. Once underway, the ensuing decline may last until mid-June in an intermediate Wave (3), which may be more powerful than Wave (1). Individual investors may be withdrawing from equities as they seek to reduce the record amount of leverage in the face of growing uncertainty.
Today’s options chain shows puts and calls evenly balanced between 5500.00 and 5550.00. Long gamma begins above 5570.00, while short gamma rules beneath 5475.00.
ZeroHedge reports, “US equity futures slipped ahead of key GDP and PCE data. As of 8:00am, S&P 500 futures are down 0.3% while Nasdaq 100 contracts lose 0.5%, with Mag 7 names mostly lower (NVDA -1.4%, TSLA -1.1% and META -0.6%) as weak earnings weighed on risk sentiment after Super Micro plunged 16% ahead of Microsoft and Meta numbers later on Wednesday. Bond yields are lower by 1bps to 4.15% while the USD is higher. Overnight, China’s factory PMI slipped into the worst contraction since December 2023 (49 vs 49.7 cons) due to the negative impact of higher US tariffs, while Trump at a rally in Michigan renewed his criticism of Powell, noting he is “not really doing a good job” and that he knows more about interest rates. This morning, Euro Area flash CPI has been mixed, while Q1 GDP data was slightly firmer than expected at 1.2% YoY (vs 1.1% cons). Commodities are mixed: oil is 1.8% lower; previous metals are lower, while base metals are mostly higher. After yesterday’s close, earnings were modestly negative. Particularly, SBUX fell 6.7% on missed earnings amid margin pressure and top-line growth. BKNG commented that there is a moderation in inbound travel into the US, but so far the global leisure travel demand has been stable. Looking ahead today, we have ADP employment, Q1 GDP, PCE and employment cost index. There are no Fed speakers scheduled given blackout ahead of May’s FOMC meeting.”
VIX futures are consolidating beneath the 50-day Moving Average at 25.38. The low occurred on day 253 of the current Master Cycle. Should a reversal occur today, the VIX may advance higher to mid-June., Wave (3) may be a multiple of Wave (1). A realistic target may be the March 2020 high at 85.47. Trending strength may be lurking until the end of the week.
The may 7 options chain shows Max Pain at 26.00. Short gamma prevails with low conviction between 20.00 and 24.00. Long gamma rules with even less conviction between 26.00 and 30.00. Investors are not ready for a trip to the moon.
USD futures may be preparing for a blast higher as the new Master Cycle gains trending strength this week. The USD shorts may be due for a drubbing as the USD regains its upward trend. The Cycles Model suggests higher values to mid-June.
The 10-year US Treasury note futures made a low of 4.135 in the overnight market. This morning it opened at 4.139 and appears to be going higher on day 268 of the Master Cycle. The decline appears to be over, or nearly so. Confirmation may be evidenced by a rise above the mid-Cycle support/resistance at 42.26. Should that occur, the new trend may continue to early June in a very sharp rally above the Cycle Top. This flies in the face of the argument for reducing rates in a slowing economy.
ZeroHedge reports, “While jobless claims refuse to show even a glimmer of hope to the doomsaying ‘recession is imminent and it’s all because of Trump’ narrative, this morning’s ADP gives us a potential glimpse at what Friday’s ‘most important payrolls print ever’ will offer.
…and the picture is not pretty at all…
According to ADP, the US economy added just 62k jobs in April – the lowest since July 2024’s dip”
Japanese Yen futures are pulling back in a retest of support. However, another Cycle turn may be imminent. That being so, the Yen may resume its rally by next week. Stay tuned for a blow-off above the neckline in the month of May. The Head & Shoulders formation may be a guide for the next phase of the rally. In the meantime, those who borrowed from the Yen carry trade may face the dilemma of how much of a loss can they stand?
Bitcoin continues to make its sideways consolidation since the April 23 high. The trend isn’t clarified yet, but the Cycles Model suggests a strong reaction may be imminent. Shold the decline be underway, it may also last to mid-June. A sell signal may be made in a decline beneath mid-Cycle support at 91503.00.
Crude Oil futures may have made their retracement low this morning at 59.20 in a probable Trading Cycle low. Should that be so, the Cycles Model indicates a resumption of the uptrend through the end of May.