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
7:45 am
Good Morning!
SPX futures declined to 7072.50 in the overnight session, then rebounded to test the Cycle Top support/resistance at 7115.02. This back-and-forth motion erodes the strength of support until it cannot remain above it, thereby becoming resistance. This support gives way to the next support, which is the 52-day Moving Average at 6787.89, and may happen as early as tomorrow. While liquidity is thin, confidence is still high that equities may go higher. A drop in confidence may expose the fragility of the market as it loses momentum right at the peak. Money flows are decreasing.
Today’s options chain shows Max Pain at 7100.00. Long gamma is in place above 7100.00 while short gamma owns the space beneath 7095.00.
ZeroHedge reports, “US equity futures are lower, but rapidly rising and now at premarket highs after a CCTV report that talks between Iran and the US in Pakistan may see a breakthrough “tonight or tomorrow”; still the optimism of recent days is being tested, with peace talks in limbo, software concerns reemerging and the bond market flashing warning signals.”
The premarket VIX rose to 20.00 in the overnight session, but may swing back to test the mid-Cycle support at 18.38 before moving higher. This may create a “slingshot” effect on the VIX as it goes into May.
The April 29 options chain shows short gamma t 17.00. Long gamma begins at 18.00 with institutional buyers taking positions every 5 points starting at 20.00 and rising to 55.00.
The USD has tested the 52-day Moving Average and may pull back as far as 98.00 in a corrective move. Volatility is rising, especially over the weekend and may accelerate the pullback. The Cycles Model takes a neutral stance, suggesting consolidation (sideways action) through the end of the month. A breakout appears possible in early May.
The US 10-year Bond Yield rose to test what may be a trendline for a declining Wedge formation. If so, TNX may decline to the bottom of the Wedge formation near 42.00 in the next week. Volatility appears over the weekend, which may hasten the decline into next week.
ZeroHedge reports, “The week’s lone coupon auction priced at 1pm when the Treasury sold $13 BN in 20Y paper, in a solid if not stellar auction.
The auction stopped at a high yield of 4.883%, up from 4.817% in March and the highest since last July. It also stopped through the 4.892% When Issued by 0.9bps, the highest since January.”
Bitcoin may have been repelled by the old Head & Shoulders neckline at 80600.00 yesterday. If so, that may be the end of the old Master Cycle and a new one begins. The new master Cycle may be due to decline to the end of June, so it may be time to liquidate longs here.
Crude oil jumped to 97.19 overnight, above the Cycle Top resistance. Trending strength is returning and has the potential to make new highs by the end of the month.
ZeroHedge reports, “After several weeks of the main oil artery into Europe being halted – perhaps as Ukraine awaited the outcome of the Hungary election and the greenlighting of Europe’s €90 billion loan to Kiev – Zelenskyy stated the Druzhba oil pipeline will be ready to ship Russian oil again. There is just one problem: Russia said it would halt halt Kazakh crude-oil shipments to Germany through the major Druzhba pipeline next month after reporting “technical issues.” ”
Gold is being repelled by Intermediate resistance at 4772.50 as it continues to decline. The Cycles Model suggests a potentially very large sale of gold over the weekend. The new Cycle may be very short, ending near or below 4000.00.