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.
11:28 am
BKX may have ended its Master Cycle at 188.76 yesterday and has fallen through its Cycle Top support/resistance line at 184.39. This has triggered an aggressive sell signal for banks. With interest rates higher in the past two months, teetering CRE and auto loans, loans to leveraged ETFs and unprofitable agricultural prices coupled with drought, there is nowhere to turn. This may be an early indication of insiders bailing at the top. Bad news may follow.
8:30 am
Good Morning!
SPX futures declined to 7419.20 thus far, as it may be testing support at 7399.59. It is early enough in the new Master Cycle to see SPX declining beneath the lower Triangle trendline at 7350.00 with a more likely target near 7200.00. There may be at least a week of decline with a possible extension to the week of July 20. While the decline in the SPX may be near 5%, the NDX decline may be closer to 10% with additional losses for those using leveraged long ETFs. The decline has been merciless for the AI sector with weakness spilling over to the broader market.
ZeroHedge reports, “Markets are on the backfoot this morning with equity futures and macro credit under pressure, bond yields spiking, the USD higher, and oil jumping after President Trump thrust geopolitical risks back into focus by declaring the ceasefire between the US and Iran to be over calling it “a waste of time” after the US launched strikes against Iran in response to attacks on ships transiting the Strait of Hormuz.”
The premarket VIX rose to 18.91 this morning before easing back beneath mid-Cycle support/resistance at 18.85. VIX has been compressed enough to allow a relief rally to the Cycle Top at 25.83 or the upper Triangle trendline. The market opinion is that the VIX may not represent true volatility seen in individual stocks, especially the AI sector. A part of the conundrum is the use of call options rather that direct investment into underlying stocks. The leverage expressed in the options adds a layer of volatility not seen in the indexes.
The US 10-year Bond Yield rose to 45.71 this morning, nearing Cycle top resistance at 45.84. This action may be nearing the end of the current Master Cycle. The new Master Cycle may last until early September. The reason that few analysts don’t recognize the pattern is that most analysis is short term. What we may be witnessing is the end of a massive Primary Cycle lasting approximately 34.4 months.
Crude oil jumped over 5% this morning, creating a buy signal above the 200-day Moving Average at 74.04. The Cycles Model calls for a possible 6-week rally that may exceed the previous high.
ZeroHedge comments, “Oil prices spiked overnight to three-week-highs after President Trump said that he thought the Iran cease-fire was “over” amid a volatile 24 hours in the Persian Gulf region.”
The USD is challenging the Cycle Top at 101.17. A clear rally above that level may bring about a further price increase to early August. Persistent dollar shorts may be hung out to dry as they may be forced to cover.
Bitcoin has declined beneath Intermediate support at 62479.00, confirming the resumption of the decline. The Cycles Mode suggests another 4 weeks of decline that has a high probability of descending beneath the Cycle Bottom at 54875.00. An extended Cycle may challenge the 2024 low at 49202.00.
Gold declined to a morning low at 4034.00. The Cycles Model suggests another week of decline with rising strength through the weekend. The Cycle Bottom at 3782.87 is the first line of defense against the decline but, with strength, may give way to the lower trading chanel trendline at 3600.00.
The Ag Index was repelled at the Cycle Top at 383.28, allowing the new Master Cycle to fall as far as the Cycle Bottom at 338.97 by early august. The rising volatility in agricultural products may eventually send GKX far beyond the Head & Shoulders target. In the meantime, however, the rising price of oil may have an immediate effect on agricultural prices.