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
8:00 am
Good Morning!
SPX futures rose to 7384.90 this morning, overshooting the estimated target for the completion of the Master Cycle. While all the elements for the Cycle have been completed, the Cycles are behavioral, not mathematical. While mathematics provide an understanding of the Cycles, they provide guidelines, not rules. For example, this morning’s behavior is termed a “throw-over” where trendlines and targets are exceeded. The next push-back level may be round number resistance at 7400.00. This is meant to pull in the last potential dollar from investors, draining all the available cash. The use of options rather than share ownership indicates exuberance that may not be warranted. This is a dangerous level, since sellers may soon find no more buyers.
Today’s options chain shows Max Pain at 7350.00. Long gamma resides above 7375 while short gamma is strongest beneath 7300.00. Record-setting call options warn of “irrationality“.
ZeroHedge reports, “The global market meltup is rolling on. US stock futures inch higher, but are off session highs, with oil falling for a third straight day as traders waited for updates on a potential US-Iran peace deal that would reopen oil flows through the Strait of Hormuz.”
The premarket VIX rose to 17.60 this morning before settling back near yesterday’s close. A buy signal may be had above the mid-Cycle support/resistance level at 18.44. The Cycles Model suggests a possible 1-2 week rally to the neckline of the Head & Shoulders formation.
The May 13 options chain shows no short gamma, while long gamma begins above 17.00 and extends to 35.00. Upward pressure is building.
The US 10-year Bond Yield dropped beneath Intermediate support at 43.37 to a morning low of 43.14 in the futures, suggesting a further drop in the cash market, as well. The next support is the 52–day Moving Average at 42.69, should TNX go lower. However, the Cycles warn that TNX may be about to regain its bullish footing, as trending strength may come back in panic form over the weekend.
The US dollar may be finishing its correction prior to an imminent reversal higher. The Cycle bottom at 96.72 may provide a final floor for the current low. However, the correction may be complete, or nearly so. Look for a renewal of bullish strength nest week as the secular uptrend resumes.
Bitcoin is challenging the mid-Cycle support at 80946.00 this morning as it reverses out of its Master Cycle high. The Cycles Model suggests a short, but sharp, decline that may last about two weeks. No particular target is given, but we should watch for support at 65000.00.