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
8:10 am
Good Morning!
SPX futures remained above the Cycle To support at 7132.50 this morning, prolonging the rally. The sideways movement of the past two weeks has been more of a consolidation than a sign of weakness. Today 40% of the SPX will have reported earnings, giving a clearer picture of the potential market outlook. I may be able to give a more comprehensive analysis at the end of today. It appears that Wave A may not yet be complete. Granted, there may be a correction in May, but in all likelihood, it may be a shallow Wave B, if the fractal pattern holds. If so, the market may peak in June. Note that the final formation may have a complex A-B-C pattern.
Today’s options chain shows Max Pain at 7135.00. Long gamma has a clear majority above 7175.00 while short gamma has an advantage beneath 7100.00.
The DJIA futures are consolidating near yesterday’s low. It has not made a new all-time high. However, it appears to be incomplete. Note that the “failed” Head & Shoulders downside move offers evidence that a new all-time high may follow. The fractals are clearer in the DJIA than the SPX, giving a clearer outlook. A high above 50513.00 may complete the rally. Fractal analysis suggests a possible new high near 51150.00 – 51400.00.
ZeroHedge reports, “S&P futures are flat with Nasdaq outperforming ahead of a huge day for tech. Alphabet, Amazon, Meta and Microsoft, representing nearly 20% of S&P market cap, report after the close, with traders focused on capex.”
The premarket VIX has been consolidating near the lows from yesterday, beneath the mid-Cycle resistance at 18.41. The Cycles Model indicates a probable rally to mid-May, but there are no outstanding features in the VIX Model suggesting a breakout.
The May 6 options chain shows a solitary holdout of puts at 17.00 while long gamma begins at 20.00 and reaches 40.oo without a lot of conviction.
The US 10-year bond yield rose to 43.74 this morning, as it continues its bounce from the 52-day Moving Average. The Cycle Top at 43.83 which may offer resistance to the rally, but there is no potential reversal in the Model until it reaches the neckline of the Head & Shoulders formation. While the impact of the war in the Middle East may impact inflation, the Fed response is expected to stay muted.
Yesterday ZeroHedge reported, “The week’s final coupon auction per the truncated pre-FOMC schedule has come and gone, and like yesterday’s 2Y and 5Y, was also mediocre at best.”
USD is consolidating between the mid-Cycle support at 98.56 and the 52-day Moving Average at 98.91. The Cycles Model portrays a calm outlook until mid-May when a potential breakout may occur.
Bitcoin may be consolidating near its low as it gears up for its next move. There may still be a potential to test the trendline above in the next couple of days. If so, the mid-Cycle resistance at 82287.00 may join at the trendline to meet the test. In any event, the next reversal may take place in mid-May.
Crude moved to 105.25 this morning before pulling back. The Cycles Model calls for increasing strength in this rally to mid-May. Quite possibly crude may make a new high in the process. Should it do so, the longer term outlook may be for WTI to reach 185.00 – 200.00 later this year.
ZeroHedge reports, “President Trump recently met this week with oil and gas executives at the White House to address the energy fallout from the Iran war, per fresh Axios reporting, as supply disruptions push prices higher and create both opportunity and risk for the industry. Among those attending were Mike Wirth of Chevron, along with senior officials including Susie Wiles, Scott Bessent, Steve Witkoff, and Jared Kushner.”