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
8:00 am
Good Morning!
SPX futures have declined to a morning low at 7363.20. Yesterday SPX has crossed beneath the lower trendline of its 6-week Ending Diagonal, giving it an aggressive sell signal. Confirmation comes in a decline beneath the Cycle Top at 7263.05 and again at the 52-day Moving Average at 6928.63. The decline may be termed a correction, not a bear market. It may last up to 2 weeks. The minimum possible decline may be to the mid-Cycle support currently at 6817.65. A further decline to the Cycle Bottom at 6371.31 is also possible. A shallower decline may result in a “runaway market” in June.
Today’s options chain shows Max pain at 7400.00 Long gamma rises above 7425.00 while short gamma is ensconced beneath 7375.00.
ZeroHedge reports, “US equity futures are lower, set for a 3rd drop in a row, as traders waited for futile signs of progress toward a peace deal in the Middle East. and as tech and small cap stocks reacted adversely to higher bond yields around the globe, but nowhere more so than in Japan, where many tenors are trading at record lows, as the wheels have fully come off the clown bus, aka the Bank of Japan.”
The premarket VIX is consolidating beneath the mid-Cycle resistance at 18.55. While there may be a further push-down, the new Cycle is higher for at least the next wo weeks or so. The Cycles Model allows the VIX to end its Master Cycle at a high instead of the low shown at 16.18, should it prove timely.
The May 27 options chain shows virtually no short gamma. Long gamma begins at 18.00 and extends in strength to 35.00. The May 20 options chain is currently unavailable.
The US 10-year Bond Yield is consolidating beneath yesterday’s hgih and may be due for a pullback. The intended level may be no lower than the neckline at 44.84 by the end of the week. The surge that follows may complete the Head & Shoulders intended target, subjecting the UST to further losses. Meanwhile, higher yields are being viewed as problematic for stocks, especially those that are interest sensitive.
USD is consolidating above the 52-day Moving Average at 98.99 this morning and may be preparing for its next probe higher. The Cycle Top at the Head & Shoulders neckline are obvious targets, but the Cycles Model implies a surge of strength by early June that may propel it above the neckline. A panic rally short squeeze may ensue.
Bitcoin may have landed at its Master Cycle low at 76005.00 on Monday. The Cycles Model now implies rally to the Cycle Top currently at 98656.00 terminating in mid-June. Bitcoin may be about to be the go-to safe haven during the upcoming turmoil.
Gold may be due for a bounce off the mid-Cycle support at 4415.00 in the next couple of days. However, the decline is not finished. Should it decline beneath the mid-Cycle, a panic sell-off may ensue. The Cycles Model infers a possible decline to the Cycle Bottom currently at 3446.00 in early June.
Crude oil is consolidating beneath its Cycle Top at 105.28 sfter a deep dive on Monday. There has been a statistical revision showing the Master Cycle high on Friday at 106.00. The outlook has not changed. The Cycles model implies that crude may decline to mid-June with the lower Triangle trendline near 85.00 a probable target. It may go lower.
BKX is testing the 52-day Moving Average at 160.60 this morning, where it may set up for a bounce. However, today may be a day of trending strength, pushing it beneath that means of support. In that case, BKX may extend its decline for the next 2-3 weeks. We are awaiting the outcome of today’s action.
Please note: I will be unavailable for commentary for up to a week.