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 rose to a new high at 6316.60 this morning. It has since pulled back near the high. Since the April 7 low, the SPX has rallied 1480 points, a 30.61% return in that 102 days. This may be called a Teflon rally, since it defied all expectations. Many are calling for the rally to continue. The Cycles Model has no anticipation of big moves for the balance of July. However, the rally has all the earmarks of exhaustion. In addition, NATO is beating the drums of war and we will not be exempt.
Today’s options chain shows Max Pain at 6295.00. Long gamma may begin above 6300.00 and stretches to 6400.00. Short gamma begins beneath 6260 and has a long tail, as well.
ZeroHedge reports, “US equity futures are higher and approaching a new record high. Over the weekend, headlines were relatively muted in the US, while globally, Japan’s ruling party lost its majority in the upper house, but PM Ishiba still pledged to stay in office in a creeping setup for the latest Japanese political crisis. While the yen has rallied overnight after Japan’s ruling coalition loses its majority in the upper house election, this appears to be a kneejerk reaction with Japanese markets closed today; expect much more weakness for the JPY as Japan now opens the fiscal stimulus floodgates forcing the BOJ to monetize much more Japanese debt. As of 8:00am ET, S&P and Nasdaq futures are both up 0.2% and Europe’s Stoxx 600 Index posted small moves. In premarket trading Mag 7 shares are higher: TSLA (+1.6%) leading gains, followed by GOOGL (+0.9%) and META (+0.6%); the only exception is Microsoft which was down 0.2% after a cyberattack. Utilities and Consumer Discretionary are outperforming. The yen strengthened 0.7% while the dollar slipped. After last week’s selloff, Treasuries yields are lower: 2-, 5-, 10-, 30yr yields are 2bp, 3bp, 4bp lower. Commodities are mixed with base and precious metals higher and oil lower.
VIX futures have risen to 16.99 over the weekend. This is a good time to accumulate hedges, as VIX is quite inexpensive compared to the elevated values in the SPX.
USD futures have declined to 97.71 this morning and may continue to the trendline at 97.00. USD shorts may be heaving a sigh of relief, as the USD was turned back at the 50-day Moving Average. However, USD may hit a patch of volatility by the weekend, positioning it to rally higher afterwards.
TNX has declined to test the 200-day Moving Average at 43.61 this morning. It may languish there for the balance of the week, but there is a disturbance in the force that may reveal itself this weekend.