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
11:37 am
SPX went higher this morning, but is giving up its gains. Crossing beneath the neckline at 6710.00 offers a reiteration of the existing sell signal. In this very choppy market, a sell signal should be taken seriously. It may mean “reduce long exposure” or “go short”, depending on the risk tolerance of the investor. So far, the SPX has taken the stairway lower. The next iteration may be to take the elevator.
8:00 am
Good Morning!
SPX futures descended to test mid-Cycle support at 6664.30 in the overnight session, indicating a downward bias. It has since bounced back to 6700.00 and remains there at this time. The short-term Cycles suggest that Monday’s bounce may be over, or nearly so, having met the trendline at 6710.00 and been repelled at the 38.2% Fibonacci at 6714.00 by closing beneath them. Should a short-term bounce continue this morning, resistance may be found at 6740.00 and again at 6765.00. The decline may resume today with a potential panic day tomorrow. A bounce may occur on Friday due to options expiration, then a final decline into the end of the month.
Today’s options chain shows Max Pain (least payout by the dealers) at 6710.00. Long gamma begins above 6750.00 with a call wall at 6780.00. Short gamma lurks beneath 6680.00 with a put wall at 6600.00. Friday’s options chain shows $70 billion of protective options (puts). Of those, $20 billion fall off, creating a possible vacuum in the options market on Monday.
ZeroHedge reports, “Stock futures have reversed overnight losses and traded at session high, just above the flatline, despite diesel topping $5 a gallon – the highest since 2022 – with Iran expanding attacks on energy infrastructure around the Middle East and Israel targeting military / security leadership, reportedly killing Iran security chief Ali Larijani and the commander of Iran’s paramilitary Basij unit.”
The premarket VIX has declined to 22.88 thus far. I had indicate yesterday that perhaps it may decline to 22.20. That move may be possible this morning. However, a rise above the Cycle Top at 23.51 reiterates the buy signal. While the SPX Cycles Model infers a significant low at the end of March, the VIX Cycle may persist to mid-April. The question is, will the mid-April terminus be a high or a low?
Tomorrow’s monthly options chain shows Max Pain at 22.00 Short gamma dominated the range from 15.00 to 21..50 while long gamma begins at 23.00 and has significant ownership to 100.00.
The US 10-year Bond Yield may be approaching the 200-day Moving Average at 21.94 this morning. That should limit the retracement and allow TNX to resume its surge higher. The Cycles Model suggests a burst of trending strength tomorrow may elevate TNX to the Cycle Top resistance at 44.07.
USD may be relieving its overbought condition by declining to the 200-day Moving Average at 98.36 before resuming its probe higher. The retracement process may take a week or more. However, the next surge higher may take USD to 101.50-102.00.
The Japanese Yen may have made an early Master Cycle low on Friday. While it may take the rest of this week to gain certainty of the reversal, the end of the month shows a particularly strong finish for the Yen. This may add yet another headwind to the banking and insurance sector.
Bitcoin hit 76000.00 today before a pullback that may go as far as the 52-day Moving Average at 71510.00. Bit coin is in a dynamic rally that may last to the end of April and place Bitcoin near the mid-Cycle resistance at 92107.00. The next overhead resistance may occur near 80000.00. Bitcoin may act as a currency proxy for people to move assets across borders, at least until their governments install currency controls which would ban bitcoin from use.
Crude oil may have reversed from its secondary high at 102.44. The Cycles Model suggests a decline that may go to the Intermediate support at 71.41 with an outer limit at the 52-day Moving Average at 67.16. While the Model suggests the decline may extend to mid-April, it may end sooner. Domestically, diesel rose above $5 per gallon and gasoline is up nearly 25%.
ZeroHedge observes, “Crude oil futures rose in overnight trading, with Brent nearly reaching $105 per barrel and WTI climbing as high as $98.42 per barrel, as Iran intensified drone strikes on energy infrastructure across the Gulf.
“Further ominous developments today. For the first time, Iran successfully targeted oil and gas production facilities, rather than refining, terminals, and storage,” Bloomberg Opinion and commodities columnist Javier Blas wrote on X.”
Silver surged to 82.76 overnight before resuming its decline. The Cycles Model calls for three more weeks of decline. The next model support area may be the mid-cycle at 57.52. Other supports that may be considered are round numbers (50.00, 40.00) and a possible 4-year trendline near 35.00.