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.
9:59 am
The Agriculture Index is now rising out of its Master Cycle low made on Friday. The rally begins after almost 4 months of sideways correction. The reversal has yet to be recognized by the mainstream, making it an attractive buy. The Cycles Model anticipates trending strength returning next week. In the meantime, inputs into the food chain, such as fuel, are rising dramatically.
8:00 am
Good Morning!
SPX futures have declined to a morning low of 5988.30 as the decline resumes. Both trendlines have been broken, leaving the SPX on a sell signal. Ending Diagonals (rising wedges) have a bad habit of completely retracing themselves. Furthermore, the Cycles Model anticipates the decline to last until mid-July, leaving plenty of time to make deeper lows. Based on past experience, a minimal target may be the 2023 low at 4103.79. Major trading desks are turning tactically bearish.
Today’s options chain shows Max Pain at 6020.00. Long gamma may begin above 6050.00 while short gamma is prevalent beneath 6000.00.
ZeroHedge reports, “US stock futures and global markets are broadly lower on escalation/contagion worries in the Middle East after Trump called for the evacuation of Tehran and cut short his G-7 visit, and yet, as BBG notes, traders don’t seem too perturbed, with futures remaining solidly above last week’s lows, when the conflict between Israel and Iran started. As of 8:00am, S&P 500 futures fell 0.6% at 5:25 am in New York, with Nasdaq 100 contracts -0.6% as all Mag7/Semis are weaker. In main overnight news, Trump left the G-7 in Canada early and later told reporters on Air Force One that he is “not too much in the mood to negotiate” with Iran, and wants a deal that is better than a ceasefire. A draft of the Senate’s version of the budget/tax bill drawing complaints from fiscal hawks and Section 899 features sees its first ex-US backlash with one money manager freezing all long-term investments in the US, per BBG. Elsewhere, the USD is stronger, Treasury yields are lower and commodity prices are higher. WTI crude rose, partially erasing Monday’s loss, while gold stayed near a record high. The Energy complex continues its gains and both Base and Precious have a bid. Retail Sales is the key macro data print today where consensus sees the the ex auto print up 0.3%, an increase from the previous month but the latest BofA card data suggests a miss is on deck.”
VIX futures rose to 20.99 this morning, beneath Friday’s high and the 50-day Moving Average at 24.52. Most analysts may not recognize the buy signal in the VIX until it exceeds either the 50-day Moving Average or 25.00. A likely target for the VIX may be near 100.00. Should a panic set in, it may go higher. The end of this Master Cycle may come in mid-July. Options dynamics may change the VIX as more investors seek to hedge their portfolios.
The June 18 options chain shows Max Pain at 19.50. While short gamma resides between 16.00 and 19.00, long gamma begins above 20.00 and ramps higher to 100.00.
TNX opened above th50-day Moving Average at 43.76 snd be showing signs of a reversal higher. A rally above the Intermediate resistance at 44.22 may confirm the rally. The Cycles Model suggests it may continue to the week of July 7. The Cycles Model suggests the short-term target may be above the neckline of the Head & Shoulders formation. The Head Shoulders target, should the neckline be overcome, may arrive late in September.
ZeroHedge reports, “With Thursday a holiday, and the Fed statement on Wednesday, it’s an especially abbreviated week for bond issuance which is why at 1pm today the Treasury sold $13BN in a 19 Year, 11 Month reopening, which was met with solid demand and passed smoothly. ”
Bitcoin is climbing the rising 50-day Moving Average for support, but failed to make a new high. The Cycles Model suggests Bitcoin may spend the rest of the week in decline. Furthermore, the decline may continue to the end of July. A sell signal resides beneath the 50-day Moving Average at 104116.65.
USD is climbing above Friday’s Master Cycle low. The Cycles Model calls for a rally to early August. The double bottom in the USD has pulled a lot of speculators on the short side. Trending strength may return by the weekend, causing short sellers to cover. This would be essential fuel for a panic rally lasting the next two months. Options traders have paused their downside bets.
The Japanese Yen is challenging its 50-day M<oving Average at 69.30 this morning. Whiel threatening Wednesday’s low, it is due today for an abrupt reversal. The Cycles Model shows rising strength into the weekend with strength maintained through the following week. The lip of the Cup with Handle formation is at risk of being overcome, offering a strong buy signal. Each subsequent rally in the Yen puts more carry trade users in a bind, as the payback on those low interest loans come back to bite them. What is unusual is that the Yen is being looked upon as a haven in a declining market by investors..
Crude oil futures rose to 72.11 in the overnight session as it resumes its rally through the end of the month. Trending strength may revisit crude in early July as it wraps up its decline by mid-July.