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 7541.20, but did not exceed the prior futures high at 7555.00. From there it swung down to 7489.70, consolidating near 7500.00. The upside is now grinding gears in an effort to maintain momentum. The sideways move in the past two days suggests the crowd has already made its move. this is not a good sign. The uncertainty being shown here can easily turn into a rout. The Cycles Model suggests the SPX may go higher but possibly with a change in leadership as a correction may be due. The uptrend may not be over, but the easy profits may be behind us.
Today’s options chain shows Max Pain at 7520.00. Long gamma resides above 7530.00 while short gamma dwells beneath 7500.00.
ZeroHedge reports, “US futures are but well off session lows, as part of a weaker risk tape after the US and Iran exchanged strikes, fueling doubts whether an end to the war is imminent and crushing hopes for a Hormuz deal (gasp). Overnight, US forces carried out airstrikes on an Iranian military site which Centcom described as “purely defensive” and designed to maintain the ceasefire; it also imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz.”
The premarket VIX may be consolidating inside yesterday’s trading range. The Master Cycle may have been spent as of yesterday. The VIX may no longer be “mopping the floor” as a panic Cycle may be brewing next week. Hedge now while you still can do so cheaply.
The June 2 options chain shows virtually no short gamma. Long gamma rests from 17.00 to 30.00, with an outlier at 55.00.
The USD made a nominal breakout this morning, but retreated back inside its trading range. It may pull back to its 52-day Moving Average at 98.95 before moving higher. The Cycles Model suggests a possible panic rally into next week that may exceed the Head & Shoulders neckline.
The US 10-year Bond Yield has gapped above 45.00, making a high in the futures at 45.31. The Cycles Model may be primed for a panic rally lasting the next week or so that may bring new heights to the TNX. Markets may no longer tolerate higher yields, as the earnings Cycle may be capped by the same higher rates.
ZeroHedge sums it up, “Refinancing activity in the U.S. housing market plummeted last week as mortgage rates hit their highest level in nine months, new industry data released on May 27 show.”
Bitcoin slipped beneath the 52-day Moving Average at 76959.00 to extend its Master Cycle as liquidity drains. Investors may be draining their savings to meet higher costs.
ZeroHedge observes, “After accelerating significantly in March, The Fed’s favorite inflation indicator – Core PCE (a measure of price changes in consumer goods and services that excludes volatile food and energy costs) – rose 0.2% MoM in April (less than expected +0.3% MoM), but pulled up the YoY measure to +3.3% (as expected) – its highest since Nov 2023.”
Crude oil may be consolidating today after its impulsive decline beneath 100.00. The Cycles Model suggests that crude may resume its decline over the weekend in strength. Wave E may last another two weeks with possible targets near 80.00 or, deeper still, near the mid-Cycle support at 72.51.
Gold remained beneath its mid-Cycle support at 4449.60 this morning. Time may be running out in this Master Cycle, but trending strength has not. This suggests a very steep decline may be in play, which may discourage many investors.