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 probed down to 7104.00 in the overnight session, but bounced back above its close. The cross-currents are growing more intense as pensions are rebalancing, commercial traders and hedge funds are selling, buy-backs are increasing and retail is trading the froth. The NYSE Hi-Lo Index only shows 38 new 52-week highs after closing at 100.00 on Monday, where the SPX barely eked out a new high. The Cycles Model says the Master Cycle may be complete, with a possible reversal in the next two days, should it attempt a new high. A sell signal may appear beneath the froth level at 7100.00.
Today’s options chain shows Max Pain at a much contested 7100.00. Long gamma may begin above 7150.00 while short gamma may be influential beneath 7080.00.
ZeroHedge reports, “Futures erase an overnight slide, and have resumed their ascent trading near all time highs, despite a hawkish Fed statement but stronger Mag7 earnings.”
The premarket VIX is chopping around near the mid-Cycle support/resistance at 18.41. The compressed volatility is at odds with the position of the SPX. The Cycles Model suggests the rally may resume imminently, with rising strength to mid-May. Quite possibly the neckline of the head & shoulders formation may be tested by then.
The May 6 options chain shows a solitary slug of puts at 17.00, while long gamma abruptly rises at 19.00 and dominates to 40.00.
USD is testing the bottom of its consolidation today. The trend is being tested. Should it hold, the USD may rise to a potential Head & Shoulders formation at 100.64. However, there may be a tendency to decline to its Cycle Bottom at 96.72 before moving higher. The Cycles Model is unclear until mid-May, when strength returns.
The US 10-year Bond Yield pulled back this morning after giving the market a scare as it appeared to be heading for a breakout. The Cycles Model suggests that TNX may drift lower over the next week or so as the war in the Middle East appears to be winding down. Should that occur, the reversal may be swift and steep.
Zerohedge comments, “The U.S. Government sells debt on a revolving door basis, yet most people aren’t aware of the mechanism by which this is done. Luckily, ZeroHedge covers the debt auction results, which allows us to articulate one of the structural problems in the Federal Reserve system.”
Bitcoin bounced off round number support at 75000.00 today. The bounce may be brief as the decline may gain momentum over the weekend. The Cycles Model indicates the probability of a decline to mid-May.
Crude oil pulled back from a high at 110.93 this morning, as it takes a break from its intense rally. The correction may take a week and the likely target may be the 52-day Moving Average currently at 89.34.
Gold has reversed out of its Master Cycle low at 4510.32 yesterday and is moving higher. Intermediate resistance at 4696.00 may offer a buy signal while confirmation may be had above the 52-day Moving Average at 4846.00. The Cycles Model indicates a likely month-long run to a new high. A parabolic run to 8000.00 through the summer is possible.
Those of you who read this blog to the bottom will be alerted to a potential change in trend in the Yen. The Bank of Japan decided to support the falling yen yesterday in an emergency session. The sudden reversal has had widespread effects, especially on the price of oil. However, this may signal the beginning of the end of the Yen carry trade. The Cycles Model indicates the new trend may rise to the end of June, causing the Yen to rise as far as the April 2025 high at 71.32. A potential Head & Shoulders neckline is there. I will discuss the target as the Yen approaches the neckline.
ZeroHedge observes, “With Brent surging to a new post war high overnight, rising as high as $125 on fear of an imminent resumption of hostilities in Iran, which dragged yields higher, and also pushed the USDJPY above 160 for the first time since late March, overnight Japan made clear – again – it wouldn’t take it any more, with the usual round of jawboning.”