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
10:16 am
BKX bounced from its lower trendline at 156.00and may retrace its decline back to the 52-day Moving Average at 167.73, a 50% retracement. The consolidation may take up to 2 weeks. However, when the retracement is over, the Cycles Model suggests the decline may be strengthened. “First, the stairway. Then the elevator.”
7:45 am
Good Morning!
SPX futures declined to 6760.00, beneath the Head & Shoulders neckline near 6770.00 on the news of the military campaign against Iran. The futures bounced to 6822.00, but have subsided near 6800.00. The break of neckline support may allow the decline to continue to the proposed target near 6200.00. However, prior to that, the bounce may resolve higher, possibly to retest the 52-day Moving Average at 6897.00. The predominant emotion seems to be concern and not fear. The Cycles Model suggests that panic may set in toward the end of the week and extend to mid-month.
Today’s options chain shows Max Pain at 6890.00. Long gamma begins at 6900.00 while short gamma lies beneath 6800.00.
ZeroHedge reports, “US equity futures and global stocks tumbled, the dollar and gold rallied and oil soared as military strikes intensified across the Middle East, sending oil to its biggest surge in four years and stoking concern that faster inflation could weigh on the global economy.”
Premarket VIX rose to 25.24 over the weekend, breaking above its February 5 high at 23.10. Panic rules the VIX this morning and may be reinforced as the week progresses. The Longer view suggests the VIX may rise to the April 7 high near 60.00. The new Master Cycle may last to mid-April.
The March 3 options chain shows short gamma between 14.50 and 18.00 dwindling. Long gamma ovetakes short gamma at 19.00 and shows increased activity to 50.00.
ZeroHedge remarks, “Over the past 48 hours, geopolitical tension between the United States, Israel and Iran has escalated into direct military action. Air and missile strikes have been reported. Retaliatory measures have followed. Political leaders are issuing statements, and international observers are attempting to assess the scale and trajectory of events.”
The US 10-year Bond yield rose to 40.19 this morning, leaving a Master Cycle low on Friday. The new Master Cycle may show growing strength over the next few weeks. A buy signal on yields may be found above the trendline at 40.30. The Cycles Model infers a possible 3-month rally out of this low, as it may be the retracement of a 3-year correction. The peak in October 2023 was 49.97.
USD futures rose above their 52-day Moving Average at 97.92 and surpassed the mid-Cycle and 200-day resistance at98.31 this morning. The Ending Diagonal trendline awaits the USD at 98.75. It is on a buy signal that may take the USD higher for the next two weeks. Trending strength may become more active during that time, challenging the Cycle Top at 100.06.
Bitcoin dipped to 63030.00 on Saturday as news of the military action in Iran came out. However, it recovered and remains above the Cycle Bottom at 63198.00 as I write. This indicates that the trend is higher in bitcoin. The Cycles Model suggests a possible 2-month rally. The next resistance to the rally may be the 52-day Moving Average at 77730.00 with a further possibility at the mid-Cycle resistance at 95446.00.
The rally in gold surged to 5433.75 over the weekend but pulled back near 5300.00. The Cycles Model suggests that this probe may be a mere correction with more possible downside to come. A decline beneath the trendline near 5250.00 or the Cycle Top at 5170.95 may confirm that viewpoint.
Silver declined from its cycle Top resistance at 93.94 on Friday to a morning low at 88.70. A decline beneath Intermediate support at 88.53 may offer an aggressive sell signal with a further drop beneath the 52-day Moving Average at 82.59 may confirm the sell. The Cycles Model maintains that silver may still have some corrective action to do.
Crude oil (WTI) rose to 74.99 over the weekend, in reaction to the military operations in Iran and the bombing of oil refinery facilities in the Middle East. This morning it is trading near 71.00. Crude oil has been due for a reversal and may have made its Master Cycle Top over the weekend. Should that be the case, crude may decline through mid-April in the new Master Cycle.
ZeroHedge observes, “A drone strike forced Saudi Aramco to suspend operations at its Ras Tanura complex while damage assessments are underway on Monday, reviving a 2024 warning we issued that any successful Iranian or Iran-backed militia strike on critical Saudi refining infrastructure could trigger a global oil shock and, in a more severe scenario, set the stage for a broader financial crisis (reminder credit markets are already cracking).”