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.
1:03 pm
SPX is on a sell signal, having declined beneath 5875.00 and the short-term trendline.
ZeroHedge comments, “Update (1230ET): So much for the TACO trade…
Trump came out swinging early (as we detailed below) and has now followed up with an upper cut as Bloomberg reports, the Trump administration plans to broaden restrictions on China’s tech sector with new regulations to capture subsidiaries of companies under US curbs.
Officials are drafting a rule that would impose US government licensing requirements on transactions with companies that are majority-owned by already-sanctioned firms, according to people familiar with the matter.
7:30 am
Good Morning!
SPX futures remain flat after testing the 5875.00 support level overnight. While there may be a surge in retail buying, the efficacy of the short covering to the rally may have disappeared. The actions thus far have not produced any anxiety, but the saying goes, “The bull market rises on an escalator, but descends in the elevator.” The Cycle Model offers approximately two weeks of decline, which doesn’t seem to phase people after six weeks of rally. However, Ending Diagonals are often completely retraced in the decline that follows.
Today’s options chain shows Max Pain at 5950.00. Long gamma may begin above 5975.00 while short gamma resides beneath 5925.00. There is a large put wall at 5900.00 that may accelerate the decline.
ZeroHedge reports, “US equity futures are in the red but well off session lows, with tech leading and small caps lagging. As of 8:00am S&P futures are down -0.1% at 5,917 having earlier dropped as much as 0.5%; according to Goldman, US equities are “not reacting well” to i) “Plan B” article from the WSJ (which recaps what we said here) that “the administration is considering a stopgap effort to impose tariffs on swaths of the global economy under a never-before-used provision of the Trade Act of 1974, which includes language allowing for tariffs of up to 15% for 150 days to address trade imbalances with other countries”, and 2) a Reuters article quoting Bessent that US-China tariff talks are “a bit stalled.” Pre-market Mag 7 are mostly lower with TSLA -1.4%, NVDA -0.6% and META -0.4%. Bond yields are largely unchanged with the 10Y trading at 4.42%; the USD is modestly higher against G7 peers. Commodities are mixed with oil higher and metals lower. Today, macro focus will be on the April PCE and the final Michigan survey; tomorrow, OPEC+ will meet to decide on July output.”
VIX futures rose to 20.33 this morning, signaling a potential buy signal above mid-Cycle resistance at 19.94. The 50-day Moving Average lies at 25.14, where most analysts may declare a buy signal. VIX has been hovering near its trendline for nearly a month and is due for a lift-off. The Cycles Model suggests trending strength may appear over the next two weeks.
Bitcoin is on a sell signal which may be further confirmed as it declines beneath Intermediate support at 102592.27. Bitcoin may also be on a mandate to completely retrace its rally from April 7. When one examines the track rtecord of Bitcoin and other cryptocurrencies, one may conclude that Crypto will not take the place of a sovereign currency because it has the behavioral properties of a simple trading platform with no intrinsic value. China is against bitcoin because it offers a way to move assets out of the mainland and is used for money laundering.
ZeroHedge observes, ” Vice President JD Vance said that China’s aversion to decentralized cryptocurrencies like Bitcoin was one more reason that the United States should embrace the technology.
“The People’s Republic of China doesn’t like Bitcoin. Well, we should be asking ourselves, why is that? Why is our biggest adversary such an opponent of Bitcoin, and if the communist Republic of China is leaning away from Bitcoin, then maybe the United States ought to be leaning into Bitcoin, and that’s one of the things we’re going to be doing,” he said.”
USD futures have been trading rather flat in the overnight session after attempting to make a double bottom. It may still attempt to decline to the Cycle Bottom at 98.03 to end its Master Cycle, which has another week to go. Conversely, we may see an early bottom as strength is due to make a comeback next week, according to the Master Cycle.
TNX made a marginal new low this morning at 44.16 on day 255 of its Master Cycle. While it may extend further to either Intermediate support at 43.85 or to the 50-day Moving Average at 43.38 over the next few days, the decline fractal may be complete. The fact is that the USD and the Yen are due for major reversals this weekend which may hasten the reversal in the TNX as well.
The Shanghai Composite Index declined to 3341.65 this morning on day 254 of the Master Cycle. There is a probability of a higher ending to the current Cycle early next week. However, the underlying fundamentals are eroding, despite intervention by the PBOC. US stocks tumbled on the breakdown of talks between Trump and China. The China breakdown may soon follow.
The Japanese Yen rose to 69.69 this morning before a small pullback. It is testing support at the Intermediate lie at 69.46. The Cycles Model allows a final probe lower, possibly to the 50-day Moving Average at 68.70 before resuming its climb. The Cycles Model suggests the rlaly may continue to mid-June.