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.
1:30 pm
The Japanese Yen has appreciated by 4% since the beginning of the month and over 9% since the beginning of the year. Those highly leverages trading accounts borrowing against the Yen are suddenly finding themselves under water. This will force the unwinding of the Yen carry trade and the dissolution of huge swaths of Treasuries being used in these trades.
12:45 pm
NDX gapped beneath its trendline near 21050.00 this morning. It is now on a sell signal.
7:30 am
Good Morning!
SPX futures made a brief foray to a low at 5819.60 around 6:00 pm yesterday, but recovered. The Fractal path allows the SPX allows a further decline this morning, then a possible bounce to a target near 5900.00 this afternoon, setting up for the next downdraft. An alternate view allows the decline to resume today with no bounce.
The NYSE Hi0Lo index made a modest high on Tuesday, May 20 at 159.00. Yesterday it closed at -30.00, its lowest in a month. The internals have gone negative. Normally the Memorial Day week is the high point of the Spring positive seasonality. However, the Cycles Model suggests that record may be broken as the peak may have come a week early.
Today’s options chain shows short gamma at all levels beneath 5900.00.
ZeroHedge reports, “It was set to be a relatively quiet day, with stock futures unchanged, yields modestly lower, bitcoin just shy of record highs… and then Trump woke up.
First, in a post on his Truth Social just after 7:20am ET, the clearly angry president said that unless iPhone that are sold in the US are not also built in the US, then a “Tariff of at least 25% must be paid by Apple to the U.S.”
The comment immediately wiped out tens of billions in value from AAPL stock, which tumbled $10 to $193, or more than 4%…
… and while the news also dragged broader futures lower, Trump saved his second market punishment for 25 minutes later when at 7:45am ET, the president doubled down on his post-awakening stream of Truth Social consciousness and wrote that he is “recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States.” ”
VIX futures are maintaining their elevation, but have not moved higher this morning. The Cycles Model anticipates a rising VIX until mid-June. The early April rally may be matched or exceeded.
The May 28 Options chain shows short gamma beneath 19.00 and long gamma above 20.00. However, long gamma does not have the strength of conviction of a rally above 30.00-35.00, making it a bargain, should the SPX fail.
USD futures made a morning low at 99.03 while the cash market bottomed at 99.14. This action may complete the pullback and allow the USD to rally toward the Cycle Top. A rise above the Intermediate resistance at 100.10 may confirm the move by reiterating the buy signal. The rally may be fueled by short covering, as that is the dominant position held by traders and hedge funds.
The 10-year bond futures made a temporary low at 44.45 this morning as it approaches its Cycle Top at 48.16.