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.
12:59 pm
Crude oil futures scored a direct hit on its Cycle Bottom and on its Master Cycle low on Tuesday. The Cycles Model suggests new upside strength may be found by the weekend as it has already challenged Intermediate resistance at 61.25. Once the 50-day is conquered, it may challenge the mid-Cycle resistance at 68.71. The ultimate near-term target may be the Cycle Top at 77.70.
ZeroHedge remarks, “Oil prices are dumping this morning, after overnight gains following API’s reported big crude draw as soft US economic data and concerns about rising supplies eroded the risk-on sentiment from a court ruling that blocked a swath of the Trump admin’s tariffs.
Crude had earlier rallied as much as 2% after a trade court blocked a vast range of President Donald Trump’s trade levies.
“The path to sustainably higher prices remains extremely narrow,” with the market likely to struggle to absorb additional barrels from OPEC+ over the coming months, said Daniel Ghali, a commodity strategist at TD Securities.”
12:25 pm
SPX made a nominal new high, then reversed to challenge the Ending Diagonal trendline. A loss of elevation beneath the trendline at 5875.00 may produce a sell signal. The upside pain may be over . SPX is a candidate for a key reversal which offers additional confidence of downside pain to come.
7:45 am
Good Morning!
SPX futures raced up to an overnight high of 5995.80 as the Fed releases more liquidity, acting as the buyer of last resort to keep the markets calm. The Fed may only succeed when investor confidence is regained. The Cycles Model suggests that the effort to boost equities to a new ATH may ultimately fail, as investors are still licking their wounds from the April debacle. The question is, “Who will buy at the top of a very steep rally?” Professional investors remain reluctant to participate in the rally while retail resistance may cave in the face of new highs. Whether the SPX makes a new high or not, it may have lost sustainability in the face of a huge sucking sound emanating from Japanese institutions attempting to stay ahead of investor liquidations in the face of rising rates.
Today’s options chain shows Max Pain at 5900.00. Long gamma may exist above 5940.00 while short gamma resides beneath 5850.00.
ZeroHedge reports, “US equity futures are higher, but well off session highs and rapidly losing altitude, after stronger NVDA earnings and a surprise legal block (for now) of Trump’s YTD tariffs, triggering a global risk-on rally. As of 8:00am, S&P futures are up 0.8% at 5,952, erasing half of the overnight post NVDA/tariff gains which briefly saw spoos rise above 6,000. Nasdaq 100 futures are up 1.4% boosted by NVDA which is +6% after delivering a solid sales forecast, and Jensen Huang saying the AI computing market is still poised for “exponential growth.” Mag7/Semis/Cyclicals are outperforming. Bond yields are higher pushing the 10Y yield to 4.52% but so far equities are mostly unbothered. USD is flat, also erasing all overnight gains, while commodities are higher led by energy. Today’s macro data focus is on the first revision to Q1 GDP, jobless claims, and pending home sales. The tariff rule, for now, has pushed the US back to global outperformance with EU the lagging.”
VIX futures are consolidating beneath mid-0Cycle support/resistance at 19.92 this morning, but may be gaining strength. A rise above the mid-Cycle resistance may offer a buy signal for the VIX, as it remains in an accumulation phase.
The June 3 options chain shows Max Pain at 19.00. Short gamma resided between 16.00 to 18.00. Long gamma comes in strong above 24.00 and remains strong to 50.00.
USD futures rose above Intermediate resistance at 99.85, triggering a buy signal. Official recognition of a rising dollar may be noted above the 50-day Moving Average at 101.06. Meanwhile, the heat is being turned up on the dollar short crowd, who may provide the fuel for a dramatic rally as they cover. The Cycles Model shows exceptional trending strength rising in the next week and lasting to mid-June.
TNX futures rose to 45.41 overnight, but eased back into its prior range as the market open looms. TNX is in the final days of its current Master Cycle and may finish a short correction to the 50-day Moving Average at 43.37. Trending strength may reappear toward mid-June with the neckline of the Head & Shoulders formation in view.
ZeroHedge comments, “What a difference a month makes.
A little over thirty days after one ugly coupon auction after another, when the market was panicking that the US had “lost its reserve status” and any Treasury auction could well be the last (it turns out that “privilege” belonged to Japan, where last week we almost saw the last ever 20Y auction), demand for US paper is once again off the charts… and we aren’t even talking about yesterday’s stellar 2Y auction. Moments ago Bessent’s Treasury sold $70BN in 5 Year paper which saw the highest foreign demand in history!”
Japanese Yen futures continue to press toward the 50-day Moving Average at 68.81 as it wraps up its Master Cycle over the weekend. That means the Yen may come roaring back next week as Japanese institutions panic sell everything (except their own illiquid bonds) to raise cash to meet liquidations. That, in turn, spikes the Yen and may force liquidation of US stocks and treasuries as the Yen carry trade implodes.