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 reached a new all-time high at 6371.00 this morning. While on its final probe, it may reach the Cycle Top resistance currently at 6401.47. There is potential fractal resistance at 6416.00. Today is day 279 in a very stretched Master Cycle, 21 days beyond the standard length of a Master Cycle. The Cycles Model remains quiescent, allowing the stretch to continue…until it becomes completely exhausted. Retail investors are all-in, with increasing leverage, owning 70% of the options in calls, with a heavy emphasis on 0DTE. There seems to be no urge to take profits. Suddenly they will find there are no buyers. Hedge funds are increasingly short.
Today’s options chain shows Max Pain at 6340.00. Long gamma may prevail above 6360.00 while short gamma lies beneath 6325.00.
ZeroHedge reports, “Global stocks extended their rally to fresh record highs on the prospect of more trade deals with the US, easing fears of a drawn-out tariff war while US equity futures are also higher led by Tech with small caps lower after yesterday’s outperformance, as sentiment was boosted by Alphabet signaling strong demand for its AI products, while Tesla posted the biggest revenue decline in at least a decade. As of 8:00am, S&P futures are 0.1% higher and Nasdaq futs gain 0.3% with the AI theme driving Tech following GOOG earnings with $10 billlion capex boost helping lift other AI infrastructure stocks in premarket trading, including NVDA and AVGO. Tesla slumped 6% after Elon Musk warned of difficult times ahead after losing electric vehicle incentives in the US. Cyclicals are stronger pre-market led by Industrials. Bond yields are 1bp from 2s to 30s with USD seeing its first bid in 5 sessions. Commodities are also higher led by Ags/Energy with weakness in both Base and Precious metals. Today’s macro data focus is on Flash PMIs, Jobless Claims, Home Sales, and regional Fed activity indicators.”
VIX futures have declined to a morning low of 15.18, extending the Master Cycle low to day 266. The Cycles Model is suddenly becoming active, starting tomorrow, with trending strength powering up over the weekend. A breakout above the wedge formation at 19.00 may be anticipated by the end of the weekend. Once launched, the new trend may continue to the end of August.
Todays’ options chain shows Max Pain at 17.00. Short gamma has a weak showing at 16.00 while long gamma is bursting at the seams at 22.00. Hedging drops off above 26.00.
TNX rallied above its 50-day Moving Average at 44.11 this morning , creating a buy signal. While a few analysts recognize the importance of the 50-day, most investors may not react until TNX breaks out above its recent highs at 44.93. The Cycles Model may reinforce the buy signal over the weekend with a singular burst of energy, followed up with another a showing of trending strength by mid-week. The prevailing belief that the Fed may allow 100 bp cuts by the end of the year may be chalked up as wishful thinking.