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
2:47 pm
A simple visualization of the SPX indicates that the Head & Shoulders needed re-calibration. It so happens that the DJIA and NDX also have Head & Shoulders formations in similar locations. So there is now an agreement across the board, which makes this report easier to relay. Prepare for a possible decline with increasing strength over the next week.
8:00 am
Good Morning!
SPX futures are consolidating near the upper half of yesterday’s trading range with the possibility of another probe higher. This is an epic battle to regain control as the SPX slips beneath its support at the neckline of the Head & Shoulders formation. Poor liquidity is being exacerbated by increasingly bearish price movement. Individual investors are stepping away from the fray while hedge funds are increasingly bearish. Buybacks are slowing down, leaving no backstop against a further decline.
Today’s options chain shows Max Pain at 6825.00 with long gamma above 6850.00 and short gamma beneath 6800.00.
ZeroHedge reports, “It was shaping up as a catastrophic, margin-call driven Wednesday session after Japan’s Nikkei tumbled about 4% and Korea’s Kospi suffered its biggest drop ever, plunging by a record 12%. But after initially plunging overnight, S&P futures rose as much as 0.4% after the New York Times reported that operatives from Iran’s Ministry of Intelligence used backchannels to contact the Central Intelligence Agency a day after US-Israeli attacks began.”
The premarket VIX pulled back to a low of 22.18 this morning as tension eased in the Middle East. With corporate credit risk and Treasury yields rising, the path for the VIX may be higher for some time. The Cycles Model suggests volatility continuing to rise into the weekend. A possible target overthe next month may be the April 7 high at 60.00.
The March 11 options chain shows Max Pain at 19.00 with dwindling short gamma beneath it. Long gamma seriously begins at 20.00 with calls owners grouped between 20.00 and 25.00. There are outlying groups of calls up to 55.00.
TNX is consolidating within yesterday’s massive move. Although appearing calm, it may be ready to explode even higher today. The 52-day Moving Average at 41.53 may be a temporary stopper. Should it go higher, the 200-day resistance at 42.07 may prevail.
USD is consolidating near its Diagonal trendline after a massive two day rally breaking through all resistance. The Cycles Model suggests the rally isn’t over yet. The next resistance is the Cycle Top at 100.07, near the November high at 100.39. Wall Street is quiet about this move thus far. However, breaking above 100.00 may bring massive USD short covering. The possibility of a panic rally next week may grab a headline or two.
The Japanese Yen careened into its Master Cycle low yesterday, putting the Yen carry trade participants at ease. However, The Cycle has reversed overnight and with it the carry trade may be about to become less profitable. The “carry” involves borrowing funds from the Bank of Japan at its key rate currently at .75%, recently raised from .50% in December. The rate hike brought a delayed reaction in the Yen. What may not be recognized is that these hikes are about to bring a greater surge in the Yen. A breakout above the january high may bring an unwind of the carry trade.
Bitcoin has broken above its month-long consolidation, rising above Intermediate support/resistance at 69547.77. This action has given a buy signal. There may be a consolidation or a pullback for a few days. However, Bitcoin has a date to meet the 52-day Moving Average in another week. A longer pullback may follow. The current Master Cycle may last to the end of April, with a possible target near the mid-Cycle resistance at 95047.00.
Silver has fallen beneath its 52-day Moving Average at 83.47, confirming a sell signal. The correction may continue toward the mid-cycle support at 56.21, with a possible add-on decline toward 300.00.