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 rose to 7157.50 this morning, presaging possible new highs. Yesterday’s potential key reversal was negated in the final two hours with a save to Max Pain near 7100.00, although closing beneath the Cycle Top resistance at 7119.37. This market is clearly driven by options. The thinly traded futures market may simply run out of buyers at the open or it may “throw over” in a late-stage attempt to keep the chase going. The green volume bars are turning red as the SPX nears exhaustion. Institutional month-end rebalancing is estimated to be $23 billion, a downside potential of the market performance at the end of April. The Cycles Model shows the Master Cycle may be complete or nearly so.
Today’s options chain shows both puts and calls running neck-to-neck between 7050.00 and 7105.00. Long gamma edges higher above 7110.00 while short gamma dominates beneath 7045.00.
ZeroHedge reports, “US equity futures jumped to a new all time high, reversing modest overnight losses, and oil tumbled to session lows on reports that Iran is sending a delegation to Pakistan today for talks, boosting hopes of ceasefire extension or more. Iranian Foreign Minister Araqchi is expected to arrive in Islamabad at 22:00 local time…”
The premarket VIX has declined to 18.46, just points away from mid-Cycle support at 18.40. The Cycles Model remains neutral this week, but shows growing strength next week.
The April 29 options chain shows very little short gamma. Long gamma begins at 18.00 and builds from there to 35.00. However, long conviction is only moderate.
The US 10-year Bond Yield has stalled without a breakout. The Cycles Model suggests a probable retest of the lows .ear the trendline at 42.00 in the next week. What comes to mind is the $23 billion of equities being sold at month-end. A good portion of that rebalancing may find its way to bonds.
Crude oil futures are consolidating near the Cycle Top support/resistance at 95.76. The Cycles Model points out a possible surge in bullish strength starting this weekend which may propel oil to a new high by the end of the month.
Reuters comments, “Oil turned negative on Friday after a Pakistani government source said Iranian Foreign Minister Abbas Araqchi was expected to arrive in Islamabad on Friday night with a small team and peace talks with the U.S. were likely to take place.”
Zerohedge comments, “Three weeks ago, when Bloomberg pointed out that Andurand was the best performing hedge fund in March thanks to its notorious levered long oil positioning (and really nothing else), we said they may want to refresh his exposure after the April 7 oil crash.”
Gold rose to 4733.00 this morning in an attempt to test Intermediate resistance at 4758.53. In this case, resistance is compressing the price of gold as the moving averages decline. Precious metals are in a Cyclical decline in a stair-step formation that may have a month to go.