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.
7:30 am
Good Morning!
SPX futures are testing the upper trendline near 5847.50 this morning as it begins to roll over. The trendline may offer an opportunity for aggressive shorts to weigh in. The lower trendline, the 100-day MA and mid-Cycle support lie at 5784.64, giving confirmation of the sell signal beneath. The steep rally doesn’t offer as clear a re-entry as one would wish and many shorts who were squeezed out may be reluctant to short again as confidence may have been broken. This is the first real bear market rally and there will be more. Instead of SPX reaching 6000.00 or 7000.00 this year, we may see SPX attain 3500.00 instead.
Today’s options chain shows Max Pain at 5875.00. Long gamma may begin above 5900.00 while short gamma resided beneath 5845.00.
ZeroHedge reports, “US equity futures are lower as investors take profits on Thursday and tech stocks fell as investors worried about an economic slowdown after Steve Cohen warned the chance of a recession is 45% and today’s retail sales numbers are expected to be a miss. As of 8:00am ET, S&P futures are down 0.4%, rebounding from session lows after Walmart reported solid earnings; Nasdaq futures dropped 0.5% with Nvidia, Palantir and Tesla falling about 2% in early trading. On Wednesday, the S&P failed at 5,900 for the second consecutive day. The silver lining according to JPM is that yesterday, NVDA turned positive on the year, joining META and MSFT; if the remaining members follow suit, there is another ~10% upside to the index assuming positive members are flat. YTD, AMZN is -4.2%, GOOG -12.6%, TSLA -13.9%, and AAPL -15.2%. In trade news, China removed curbs on rare earth exports to the US. Trump says India is willing to drop is tariffs on US goods. Brent sank below $64, down more than 3% after President Donald Trump said the US is getting closer to a deal on Iran’s nuclear program, fueling concern that additional oil supply may pressure the market. Bond yields and the USD are lower. Today’s macro data focus is on Retail Sales which are expected to remain unchanged in April (versus 1.5% prior); PPI, Jobless Claims, Philly Fed and Empire Manufacturing numbers are due at 8:30 am in New York, while Industrial Production prints at 9:15am. Also, traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell.”
VIX futures rose to a morning high at 19.23 thus far. A buy signal appears above the mid-Cycle support/resistance at 19.66. The Cycles Model anticipated a high velocity rally for the next four weeks.
The May 21 options chain shows Max Pain at 22.00. Short gamma resides between 16.00 and 20.00. Long gamma prevails above 25.00 and 75.00.
USD may have found its retracement low at 100.44 in the overnight session. Since then it has risen above Intermediate support at 100.69. Should the rally resume, USD may simply bypass the 50-day Moving Average and target the mid-Cycle resistance at 104.43 in short order. The Cycles Model offers another month of rally in which the target may be the Cycle Top at 110.53.
The Japanese Yen has risen to 68.71 thus far this morning, surpassing the 50-day Moving Average at 68.30 and offering a buy signal. The Cycles Model anticipates a rally to early June, but the effects may last longer than expected. Taking out a loan in Yen is, in effect, shorting the Yen. While the interest rate may be very low, the currency loss may be enormous.
TNX futures rallied to 45.42 before the open, setting the stage for another rise in the cash market. Trending strength is growing and may last over the next three weeks as the Cycle Top may be challenged. A breakout above the neckline of the Head & Shoulders formationmay set the tone for a further rally this summer.
Gold futures reached a morning low at 3124.51, beneath the 50-day Moving Average. This offers gold investors a triple confirmed sell signal. The next layer of support lies at 3000.00. However, a true impulsive decline may take gold beneath its Cycle Bottom at 2318.34.We may expect the decline to last as far as mid-July.
Crude oil futures retraced the rally down to the Cycle Bottom, making a low at 60.47 before a bounce. This has been a difficult place to go long, yet the longer-term Cycles Model strongly supports it. The possible target for the next 3 weeks may be the Cycle Top resistance at 78.09.
Bitcoin is easing lower as it consolidates beneath the Master Cycle high. Round number support at 100000 provides a floor thus far and beneath it one may infer an aggressive sell signal. Confirmation of the sell lies beneath mid-Cycle support at 93646.84 today.