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.
1:33 pm
The Agriculture Index has been in an accumulation phase for the past two months after a rally from the August lows. GKX may continue to decline to the mid-Cycle support at 375.18. However, the Cycles Model anticipates an imminent strong reversal out of this low. The ensuing rally may be a counterpoint to the likely decline in equities. In other words, a hedge to a declining market.
1:15 pm
BKX has risen above the d 200-day Moving Average at 122.67 and is testing the mid-Cycle resistance at 123.60. While it may have another week of time in the current Master Cycle, it has nearly achieved its price target, which is mid-Cycle resistance. It’s time to prepare for a decline to the Head & Shoulders neckline. Along with the decline in the BKX may come a decline in overall liquidity for the broader markets. Today’s rise in the TNX shows a growing reluctance to finance debt, starting with Treasury debt. Investors are waiting for the May FOMC announcement on the 7th at 2:00 pm. That may be the focal point for the BKX as well.
7:50 am
Good Morning!
SPX futures hit a weekend low at 5633.60 while on its way to test the50-day Moving Average at 5603.83. The Master Cycle may have been completed on Friday at 5700.70. A further decline beneath the 50-day Moving Average invites a sell signal to be confirmed beneath the 1987 trendline near 5550.00. The earnings season is almost over, with average earnings better than expected. However, companies are hesitant to provide forward guidance. 24% of reporting companied mentioned the word “recession” vs. 2% in the previous quarter. Investor belt-tightening may be putting a drag on forward expectations.
Today’s options chain shows Max Pain at 5650.00. Long gamma may begin above 5690.00 while short gamma prevails beneath 5635.00.
Zerohedge reports, “US equity futures are lower after the S&P gained 2.9% last week and erasing all post-Liberation Day losses. As of 8:00am, S&P futures were down 0.9%, putting the index on track to snap its longest streak of gains since 2004; Nasdaq futures dropped 1.0% with the Mag7 weaker, pulling markets lower, and cyclicals under pressure. Berkshire Hathaway stock is down 2% after Warren Buffett surprised Berkshire’s annual meeting on Saturday by announcing that he plans to step down at the end of the year. Overnight, Trump’s latest flurry of tariff comments gave little clarity on the path forward for markets: the president suggested some deals could come as soon as this week, but also that he had no current plans to speak with Chinese President Xi Jinping; he also said that a trade deal may come as soon as this week (India? Japan? S Korea?). Trading outside the US has been subdued to start the week, with several financial market including Japan, Hong Kong, China and the UK, closed today. The USD is weaker and bond futures are flat around 4.30%. Crude oil slumped after OPEC+ announced it is increasing supply (411k bpd), hurting oil prices but providing a disinflationary offset to tariff. Today’s macro data focus is on ISM-Services with the Fed on Weds.”
VIX futures rose to 245.63 this morning. It may be rising to challenge the 50-day Moving Average at 25.67 where a buy signal awaits. The Cycles Model anticipates a rising VIX to mid-June. The big picture shows a possible Cup-with-Handle formation. A possible target under this formula may be in excess of 100.00. A Cup-with-Handle is a continuation formation that may indicate acceleration of the trend.
The May 7 options chain shows Max Pain at 24.00. Short gamma prevails between 20.00 and 23.00. Long gamma begins at 25.00 and extends to 40.00.
TNX futures rose to 43.33 this morning while the cash market rose to 43.30 thus far. The Cycles Model shows a possible high trending strength day, reinforcing the reversal from Friday’s Master Cycle low. Indications are that rates may continue rising to the first week of June. That allows TNX plenty of time to challenge the Cycle Top at 48.02.
ZeroHedge observes, “Interest rates are linked to inflation, but they’re also linked to risk.
As a result of recency bias, where we assume the recent past is a permanent state of affairs, many believe near-zero interest rates are “normal.” They aren’t. As the chart of 10-year US Treasury yields–a proxy for interest rates throughout the economy–illustrates, rates in the 3% or lower were an anomaly that only occurred in the relatively brief period of 2011-2022.”
Bitcoin is consolidating after the weekend decline from Friday’s Master Cycle high. A decline beneath mid-Cycle support at 92108-9.00 offers a possible sell signal. The Cycles Model suggests a probable decline to mid-June.
USD is pulling back after a breakout higher. It is possible that the pullback may decline to 99.00 or slightly lower in the next couple of days. However, trending strength may reappear by the end of the week, suggesting much higher prices.
Gold futures have bounced to a weekend high of 3331.00 as it may have completed its corrective bounce from the Cycle Top. If so, gold may resume its decline with intensity increasing by mid-month. Gold may be anticipated to decline over the next two months.
Crude Oil futures made a weekend low of 55.39 as it declined further into its final probe of the current downtrend. A possible target may be near 50.00 over the next couple of weeks.