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 plummeted to 5924.50 in the overnight session, then bounced back near 5985.00 thus far. Yesterday the SPX violated the Diagonal trendline (rising wedge) to offer a sell signal. Those heeding the technical pattern were rewarded overnight. The Master Cycle terminated on Wednesday at 6059.40, on time at the 258th day after a complex (zig-zag) retracement.
Today’s options chain shows Max Pain at 6025.00. Long gamma may rule above 6050.00 while short gamma dominates beneath 6000.00.
Zerohedge reports, “Futures are all lower but already about 100bps higher than overnight lows with all eyes on geopolitical tension in the Middle East after Israel effectively started war with Iran, sending the VIX up to a 20-handle and Gold re-testing ATHs. As of 8:00am, SPX futures are down -90 bps, and trading just under 6,000; Nasdaq 100 futs are down 110 bps with all Mag 7 stocks trading lower (TSLA -2.8%, NVDA -2.0%, GOOG/L -2.0% lagging) and small caps -140 bps Global indices lower, though not dramatically so, with Asia market down ~75 bps overnight and Europe down 100-150 bps at the moment. Dubai/Abu Dhabi markets were down 3/4%. Overnight, the major headlines were Israel’s wide-ranging attack on Iran’s nuclear program and military leadership. Oil up sharply to ~$75 but also well off session highs as so far the initial Israeli attack has avoided energy targets, but Israel could extend over several days, with Iran vowing to retaliate. Also it is unclear if Iran will be allowed to continue smuggling oil to China after this escalation. Crude is up 7.8% from yesterday’s close having surged as high as 13% earlier – its biggest jump in 3 years – and with all CTAs still 100% short this may just be the start of the squeeze. Gold added +0.9%. Yields are mostly unchanged; USD is higher. US economic data slate includes June preliminary University of Michigan sentiment at 10am; Fed officials are in external communications blackout period ahead of June 18 rate decision.”
VIX futures rose to 22.00 in the overnight session, then pulled back, remaining above the mid-Cycle support at 19.70. It is on a buy signal. The Cycles Model anticipates the rally may continue to mid-July in Minor Wave A of (3). The target may be a multiple of its predecessor Wave (1).
The June 18 options chain shows Max Pain at 19.50, with short gamma ruling beneath 19.00. Long gamma begins at 20.00 and runs strong to 100.00.
USD futures are consolidating near yesterday’s high as it rises from its Master Cycle low made yesterday, on day 258 of the (former) Cycle. Overhead resistance at 99.66 of the 50-day Moving Average at 99.93 may signal the change in trend to the dollar short sellers.
TNX tested the mid-Cycle support at 43.30 this morning and is rising toward the 50-day Moving Average at 43.65 where the buy signal is re-activated. Many analysts consider TNX to be in a sideways pattern. However, a closer examination shows higher lows and higher highs. The Cycles Model suggests up to 4 weeks of rally may be ahead, challenging the Cycle Top and neckline of the Head & Shoulders formation.
Bitcoin slipped beneath Intermediate support at 106159.00 and is now challenging the 50-day Moving Average at 130188.37. It has made a sell signal. The Cycles Model anticipates a steep decline into mid-July.
Gold futures have exceeded its target of 3444.00 this morning as they rose to 3466.00. Futures are easing back down and may offer a sell signal beneath the Cycle Top at 3429.62.
Crude oil futures vaulted to an overnight high of 77.58, testing the Cycle Top at 77.69. The Cycles Model anticipates the price of oil to climb until mid-July, where a pullback may be anticipated. Should the Cycle Top be exceeded, the first possible target may be the 2023 high at 92.48. Goldman Sachs warns that, “in a worst-case scenario, oil prices could surge to $130.00 per barrel.” That may match the 2022 high at 126.42 per barrel.