The Practical Investor

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 remained above the upper trendline over the weekend in a throw-over position.  Historically, throw-overs have lasted 2-3 weeks.  However, the Cycles Model suggests that, if the SPX remains near5 or above the trendline, it may last up to a month, with increasing volatility.  This action may defy normal analysis.  While retail investors may be drying up, the flow of overseas investors in increasing.  The clue is the consistent positive market opens due to Asian and European investors that are five hours ahead of the US and sending their money here.

Today’s options chain shows Max Pain at 7580.00.  Long gamma may begin above 7590.00 while short gamma strengthens beneath 7530.00.

ZeroHedge reports, “Futures are positive and at session highs even as the a lack of a US / Iran deal pushes oil prices, bond yields, and volatility higher.”

VIX futures rose to 15.99 this weekend, propelled by a positive burst of energy for the first time in months.  The Master Cycle may have found its low on Friday, finally freeing the VIX to move higher.  However, should the VIX not clear the 52-day Moving Average in the next few weeks, it may move into a throw-under position until the end of June.  There is no fear of the downside in the VIX.

The June 2 options chain shows Max Pain at 16.00.  There is a singular position of short gamma at 15.00.  Long gamma begins at 17.00 and runs to 30.00.

The US 10-year Bond Yield may have made its master cycle low on Friday, bouncing from the Intermediate support at 44.18.  The burst of strength that propelled TNX from its low may have also given a buy signal, as it has risen above the Cycle Top resistance at 44.91 this morning.  Investors may take notice of the 10-year yield when it rises above 45.00, which appears imminent.

USD may have risen out of its master Cycle low at 98.75 on Friday, with the 52-day Moving Average at 98.93 providing a launch pad.  The Cycles Model calls for increasing strength in the new rally, which may last another 4 weeks.  The Head & Shoulders formation may be in view.

Bitcoin May be making its Master Cycle low this morning.  The Cycles Model may allow the ensuing rally to proceed for the next three to four weeks.

ZeroHedge observes, “Bitcoin is extending its recent weakness overnight (hurt by US-Iran tensions escalating again), trading back below its 100DMA after Strategy (MSTR) sold 32 bitcoin between May 26 and May 31 at an average net price of $77,135 a coin, totaling $2.5 million (disclosed in an 8-K filing on Monday).”

Crude oil bounced in no-man’s land, taking advantage of a brief burst of strength.  However, it offers hope, but no substance to the bulls.  The Cycles Model anticipates another two weeks of decline, targeting an area beneath the lower Tringle trendline possibly the mid-Cycle support at 72.79.  Lower prices are coming at the expense of SPR draw-downs which may lead to shortages and possible rationing.

ZeroHedge remarks, ” The market is increasingly behaving as though the U.S.-Iran war is ending and the oil market is about to return to normal. I suspect that view is only half right. The war may indeed be moving toward its final chapters, but the physical energy system does not heal as quickly as financial markets.”

Gold is bouncing around its mid-Cycle support and may go lower.  The Cycles Model is due for a Master Cycle low this week, so patience may be the key in catching the low.  Unfortunately for many investors, it may be lower than anticipated.

The Agriculture Index may be making its Master Cycle low today as GKX nears its mid-Cycle support at 360.78.  Resolution may come in the next two days, as a burst of strength may appear mid-week.  This may be  an ideal place to accumulate shares of Ag-related companies and agricultural commodities.

ZeroHedge discloses, “America’s bees and beekeepers are losing a valuable ally just when they need its help most.

The U.S. Department of Agriculture plans to soon close the Beltsville Agricultural Research Center, a 6,500-acre agricultural research station in Maryland that is home to the nation’s premier bee research and disease diagnosis hub, the Beltsville Bee Research Lab.”

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 have marched higher, to 7580.30 thus far this morning.  It is now in throw-over mode, suggesting a final push above trendline resistance.  It has reached day 60, a Trading Cycle, from the March 30 low.  This is equivalent to the 61-day decline from the January 28 high to the March 30 low.  Trading Cycles have their own timing that often corresponds more to the calendar year than the larger Master Cycles.  However, when they match, they may provide more accurate guidance.  In this case, the Trading Cycle may have overridden the Master Cycle and may not match in June.  Investors are now in full panic mode, trying not to miss out on the rally.  Can anything go wrong?

Today’s options chain shows Max pain at 7545.00.  Long gamma dwells above 7550.00 while short gamma strengthens beneath 7500.00.  Investors are walking away from protective puts in favor of long calls.

ZeroHedge remarks, “Nearly two months of the national average gasoline price exceeding the politically sensitive $4-per-gallon level have left corporate America increasingly worried about consumer health this earnings season. Kraft Heinz’s CEO warned that some households are “literally running out of money,” while UBS analysts caution that even as the AI-linked chip and memory bubble inflates markets to new highs, there are growing “consumer cracks beneath the surface.””

ZeroHedge reports, “US equity futures are higher, continuing their slow motion-gamma squeeze into record territory, as traders waited to see whether America and Iran could finally get the peace deal they have already priced in every single day for the past month.”

The premarket VIX is holding its own as it consolidates above yesterday’s proposed Master Cycle low.  This final extension is running out of time.  Investors are selling protection where it may be needed the most.

The June 2 options chain shows virtually no short gamma.  Long gamma runs from 17.00 to 30.00, suggesting that speculators are not very afraid.

The 10-year Bond Yield may be on its final approach to a Cycle Bottom near the 52-day Moving Average at 43.83.  The breakout last week may have changed the outlook for TNX.  Before the breakout, the probable downside target would have been the mid-cycle support at 41.94.  While that is still possible, the more likely Master Cycle low may be higher, as the strength is more attuned to the upside.  A breakout of the new Head & Shoulders formation may occur by mid-June.

ZeroHedge observes, “In the week’s final coupon auction, the US Treasury sold $44 billion in 7 Year notes to stellar demand.

Extending on the strength yesterday’s solid (if tailing) 5 Year auction, today’s 7 Year sale printed at a high yield of 4.290%, up from 4.175% and the highest since Jan 2025. It also stopped through the When Issued 4.291% by 0.1bps, the first stop through since December 2025.”

USD may be easing back to find support at the mid-cycle level at 98.64 as lower bond rates take away some of the attraction to the USD.  However, the current Master Cycle has nearly run its course and may reverse higher from that low.  In fact, the Cycles Model implies a possible explosive move from a low that may be complete by mid-week.

Bitcoin may be consolidating above its Master Cycle low achieved yesterday.  The Cycles Model suggests a possible month-long rally that may reach the Cycle Top  near 97413.10.  The rally in bitcoin may have more to do with deteriorating economics overseas than any particular attraction domestically.

Crude oil continues its decline toward the Triangle trendline, where it may bounce violently.  However, that may not be the end of the decline.  The Cycles Model anticipates a final probe beneath the trendline by mid-June.

ZeroHedge maintains, “Just about two months ago, JPMorgan did the math on “How Long Before The World Hits Crude Oil Operational Minimum.” The punchline was that while the market can hold hundreds of millions of barrels, it would still become fragile once working stocks fell too low. Like blood pressure in the human body, the issue is circulation.”

Gold emerged from beneath mid-Cycle support at 4455.24, but the bounce may not last.  The Cycles Model suggests a panic surprise may await gold investors this weekend.  A low at the Cycle Bottom is possible as central banks unload their gold in favor of oil.  What looks like capitulation may be a false flag.

The Agricultural Index is fast approaching its master Cycle low.  It is less than2% from the mid-Cycle support which may mark the bottom of this decline in a matter of days.  While AI stocks are attracting the masses, a more critical investment is emerging as food prices may skyrocket with the knowledge of a poor harvest season.

ZeroHedge remarks, “Tyson Foods CEO Donnie King is stepping down after five years at the helm of the nation’s largest meatpacker, with the stock having languished under his tenure as the company battled some of the worst cattle-market conditions in a generation.

Jeff Schomburger, a long-time Tyson board member, will become president and CEO on October 4. King, a 43-year Tyson veteran, will remain on the board and help with the transition beginning in July.”

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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 rose to 7541.20, but did not exceed the prior futures high at 7555.00.  From there it swung down to 7489.70, consolidating near 7500.00.  The upside is now grinding gears in an effort to maintain momentum.  The sideways move in the past two days suggests the crowd has already made its move.  this is not a good sign.  The uncertainty being shown here can easily turn into a rout.  The Cycles Model suggests the SPX may go higher but possibly with a change in leadership as a correction may be due.  The uptrend may not be over, but the easy profits may be behind us.

Today’s options chain shows Max Pain at 7520.00.  Long gamma resides above 7530.00 while short gamma dwells beneath 7500.00.

ZeroHedge reports, “US futures are but well off session lows, as part of a weaker risk tape after the US and Iran exchanged strikes, fueling doubts whether an end to the war is imminent and crushing hopes for a Hormuz deal (gasp). Overnight, US forces carried out airstrikes on an Iranian military site which Centcom described as “purely defensive” and designed to maintain the ceasefire; it also imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz.”

The premarket VIX may be consolidating inside yesterday’s trading range.  The Master Cycle may have been spent as of yesterday.  The VIX may no longer be “mopping the floor” as a panic Cycle may be brewing next week.  Hedge now while you still can do so cheaply.

The June 2 options chain shows virtually no short gamma.  Long gamma rests from 17.00 to 30.00, with an outlier at 55.00.

The USD made a nominal breakout this morning, but retreated back inside its trading range.  It may pull back to its 52-day Moving Average at 98.95 before moving higher.   The Cycles Model suggests a possible panic rally into next week that may exceed the Head & Shoulders neckline.

The US 10-year Bond Yield has gapped above 45.00, making a high in the futures at 45.31.  The Cycles Model may be primed for a panic rally lasting the next week or so that may bring new heights to the TNX.  Markets may no longer tolerate higher yields, as the earnings Cycle may be capped by the same higher rates.

ZeroHedge sums it up, “Refinancing activity in the U.S. housing market plummeted last week as mortgage rates hit their highest level in nine months, new industry data released on May 27 show.”

Bitcoin slipped beneath the 52-day Moving Average at 76959.00 to extend its Master Cycle as liquidity drains.  Investors may be draining their savings to meet higher costs.

ZeroHedge observes, “After accelerating significantly in March, The Fed’s favorite inflation indicator – Core PCE (a measure of price changes in consumer goods and services that excludes volatile food and energy costs) – rose 0.2% MoM in April (less than expected +0.3% MoM), but pulled up the YoY measure to +3.3% (as expected) – its highest since Nov 2023.”

Crude oil may be consolidating today after its impulsive decline beneath 100.00.  The Cycles Model suggests that crude may resume its decline over the weekend in strength.  Wave E may last another two weeks with possible targets near 80.00 or, deeper still, near the mid-Cycle support at 72.51.

Gold remained beneath its mid-Cycle support at 4449.60 this morning.  Time may be running out in this Master Cycle, but trending strength has not.  This suggests a very steep decline may be in play, which may discourage many investors.

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

10:15 am

The BKX is pulling asway from its Master Cycle high at 170.61 and has found support at the Intermediate level at 167.22 thus far.  A decline beneath that level gives a potential sell signal which may be further confirmed beneath the 52-day Moving Average at 162.19.  The decline may last up to two months and may get panicky by next mid-week.

8:00 am

Good Morning!

SPX futures rose to 7551.20 this morning, but was repelled by the upper trendline.  It is currently hoovering between yesterday’s closing price and the trendline.  A reversal may be due today.  The fractal appears to be a zig-zag move which implies a short but strong decline, minimally to the 52-day Moving Average at 6992.11.

Today’s options chain shows Max Pain at 7500.00.  Long gmma resides above 7530.00 while short gamma dwells beneath 6475.00.

ZeroHedge reports, “US futures are trading at new all-time highs following Tuesday’s record-setting rally (when the S&P hit a new  record high on negative breadth as is now the norm) , bolstered by a growing chorus of Wall Street bulls…”

The premarket VIX dropped to 16.78 this morning, but did not make a new low.  While the VIX may go lower, the prevailing option is to challenge the neckline of the head & Shoulders formation at 35.30.

The June 2 options chain shows Max Pain at 18.00.  There are few short contracts in the VIX.  Long gamma may begin at 20.00 and is strong to 30.00.  The appearance is  calm.

The 10-year US Bond Yield has declined beneath neckline support and the Cycle Top, allowing bondholders to exhale in relief.  However, it may not last.  The current buy signal may be reinstated once TNX rises back above 45.00.

USD is consolidating in mid-range, using the 52-day Moving Average at 98.95 as a potential launching pad.  It is due to go higher to complete the current fractal and Master Cycle.   Completion may come in early june with a challenge of the neckline of the Head & Shoulders formation.

Bitcoin may be consolidating beneath the 52-day Moving Average at 76890.00.  A probe above that level may give a buy signal, if not already taken.  The Cycles Model infers a potential month-long rally that may propel bitcoin to its Cycle Top resistance currently at 97627.00.  It may be considered a temporary “safe Haven” for various constituencies.

Crude oil continues its decline to complete the Triangle formation.   The Cycles Model suggests a possible decline to the mid-Cycle support currently at 72.38.  The time frame is by mid-June.  The Triangle formation is a corrective fractal that delays the final surge to an all-time high.   Should crude rise above the current high at 119.48, it may seek a target near 184.00.

Gold has declined beneath its mid-Cycle support at 4445.00 this morning.  The Cycles Model suggests the decline may soon be over.  However, should it linger, it may do so in strength, which may determine whether a new correction low may be made next week.  Should it do so, it may discourage many investors precisely when a reversal may be forming.

The Ag Index may be in its final stretch to a corrective low.  A possible target may be the mid-Cycle support at 360.66.  This pullback may be an ideal place for acquisition of agricultural shares and commodities.   The Cycles Model suggests that prices may blast out of their decline in another week or so.

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

10:12 am

BKX may be making its second lower high since February 9.  Should it reverse back beneath the 52-day Moving Average at 167.08, a sell signal may be created.  A reversal higher in the 10-year US Bond Yield may create a downside vacuum in the banking index.  Thus far, no one is paying attention.

7:45 am

Good Morning!

SPX futures rose to 7549.00 over the Memorial Day weekend, threatening a new all-time high.  It may do so in the futures, due to the thin trading conditions.  The trendline is near 7550.00, offering resistance to the rally. Structurally, this probe may be a minute Wave (b) may exceed the prior high or low in a corrective, zig-zag formation. This formation suggests a swift but short decline to the end of the month.

Today’s options chain shows Max Pain at 7450.00.  Long gamma rules above 7475.00 while short gamma lurks beneath 7425.00.

ZeroHedge reports, “US futures are higher again, led by tech and small caps. As of 7:30am, S&P 500 futures rose 0.7%, signaling US stocks are set for another record high when the market reopens after Memorial Day weekend. Nasdaq 100 contracts, supercharged by the artificial intelligence trade, gained more than 1% as Magnificent Seven big tech shares rallied in premarket trading.”

The premarket VIX is consolidating above Friday’s low.  While a new low in the VIX may flip the Master Cycle down, there is a better than even possibility of the VIX testing the neckline of the Head & Shoulders formation in the next week, leaving a master Cycle high, as illustrated.

Tomorrow’s options chain shows short gamma at 16.00.  Long gamma may begin at 17.00 and runs hot to 45.00.

The 10-year Bond Yield is now testing the Head & Shoulders neckline in mid-Cycle.  Should its bounce here, it may approach its H&S Target in the next week.  Analysts are hoping that last week’s breakout may have been a head fake.  However, the Cycles Model allows the higher move that the Head & shoulders formation anticipates.  This may send shock waves through the rest of the market.  Will the bond market intimidate stocks?

The USD may be consolidating above its 52-day Moving Average at 90.97.  It also has the potential of exceeding the Head 7 shoulders neckline near 100.75.  The Cycles Model allows up to 2 weeks to accomplish this, as it lags the TNX Cycle somewhat.  The Cycles Model anticipates rising strength into early June.

Bitcoin may have made its Master Cycle low on Saturday, May 23.  It has found support at the 52-day Moving Average at 76791.00 and may use this support to launch higher, as  the 52-day offers a buy signal above it.  This may give bitcoin a month-long window to rally as it may be used as a conduit for assets fleeing political oppression and economic uncertainty.

TheEpochTimes reports, “China’s securities regulator has opened enforcement actions against Futu, Tiger Brokers, and Longbridge Securities, accusing the offshore online brokerages of illegally serving mainland investors who used the platforms to trade U.S. and Hong Kong stocks.”

Crude oil may be set up for a bounce as central banks may be loading up on oil under $100.00.  The bounce may be suppressed at the 52-day Moving Average at 97.47 as the decline in crude may not be complete.  A possible target may be near 80.00 by mid-June, although it may go lower.

ZeroHedge observes, “President Trump is signaling “make a good deal” or walk away with no deal at all.

Overnight hostilities around the Hormuz maritime chokepoint highlight just how fragile the ceasefire remains as Washington and Tehran try to solidify a peace deal to end the conflict.

The timing of a peace deal is very important because, as we have warned readers, a no-deal scenario would collide with a deteriorating oil-supply backdrop by summer, when global buffers and floating storage begin to run down, and SPR releases become less effective in offsetting lost supply from the Gulf region.”

OilPrice.com reports, ”

• Europe risks a major gas storage shortfall if disruptions through the Strait of Hormuz continue for another 1–3 months, with inventories still far below normal seasonal levels.
• LNG supply disruptions, strong Asian demand, and distorted gas pricing have made refilling storage unusually difficult and expensive across the EU.
• Equinor warns prolonged disruptions could push Dutch TTF gas prices toward €90/MWh, forcing industrial demand destruction and fuel switching across Europe.”

Gold is consolidating above mid-Cycle support at 439.40.  Beneath that is a sell signal that may allow gold to decline beneath 4000.00.  A possible target may be near 3600.00.  The strength of the decline may be indicated by this weekend.

The Agricultural Index may be nearing the end of its decline.  The Cycles Model suggests a possible target for the current Master Cycle may be near the mid-Cycle support at 360.62.  This is where buying the di makes a lot of sense, as the subsequent rally may proceed into early 2027, or longer.  Inputs, such as fuel and fertilizer are climbing while drought conditions are growing.  It’s time to plant a vegetable garden, as the alternative may be non-existent.

ZeroHedge observes, “For most people, the price of gasoline is the most obvious consequence of the war in the Middle East. As I write this article, the average price of a gallon of gasoline in the United States is $4.56. Of course, in some parts of the country, consumers are paying much more than that. This is a big story, and the truth is that gasoline prices are going to go even higher in the months ahead.”

(Please read the full article.)

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.

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

Please note:  Due to a family obligation, I will not be available for commentary between May 20 and May 26,

Good Morning!

SPX futures declined to 7354.00 over the weekend, beneath the Ending Diagonal trendline near 7400.00.  The Cycles Model allows up to three weeks for a correction to develop after a Master Cycle high, which occurred on May 14, coincidently 14 days beyond the mean Master Cycle terminus.  There is an aggressive sell signal beneath 7400.00.  Confirmation lies beneath the Cycle Top support at 7454.72.    Many market watchers use the 52-day as the jump-off point, which may be the halfway point for the correction.  The most likely target has a strong probability of reaching the Cycle Bottom at 6369.41.

Today’s options chain shows Max Pain at 7410.00.  Long gamma rises significantly above 7450.00 while short gamma lurks beneath 7400.00.  SPX may not succeed in staying above short gamma.

ZeroHedge reports, “Futures are lower, but off their overnight lows as markets focus on soaring global yields after US/Iran talk progress remains stalled (but at least armed hostilities did not resume contrary to some speculation). Yields also spiked on rising oil prices, concerns of an extra budget in Japan and continued political chaos in the UK.”

The premarket VIX reached a weekend high at 19.44 before easing down.  It remains above the mid-Cycle support at 18.54, presenting a buy signal.  Confirmation may come above the 52-day Moving average at 21.70.   A possible target for this rally may be the neckline of the Head & Shoulders formation at 35.30.  It may go higher.  However, the decline from the high may not follow the Head & Shoulders pattern.

The May 19 options chain shows Max Pain at 20.50.  Short gamma lurks beneath 16.00 – 20.00.  Long gamma begins at 23.00 and strengthens above 25.00.  Long gamma becomes strong above 25.00 and has call walls every 5 points up to 70.00.

The US 10-year Bond Yield futures rose to 46.32 over the weekend before easing down.  There may be a short-term pullback to test the neckline of the head & Shoulders formation before moving higher.  After a short lull, trending strength may pick up into the end of the month.  Speculators are increasing their net short in treasuries.

QTR observes, “Bond yields are doing exactly what I warned about yesterday: forcing reality back into a market that had become increasingly detached from it.

Heading into Friday’s cash open, U.S. equity futures are under pressure, with S&P 500 futures down roughly 1% and Nasdaq futures off even more sharply as global bond markets sold off overnight.”

USD made a marginal new high before pulling back.  The pause may not last as the current master Cycle a possible two more weeks of rally.  The Head & Shoulders neckline may be exceeded.  USD is likely to follow 10-year yields higher for the duration of this Cycle.

Bitcoin may be making a Master cycle low today, or very soon.  What follows may be a month-long rally to the cycle Top at 98898.70.  The trendline may have lost its potency.  With stocks and bonds selling, bitcoin may be looked upon as a “safe haven” foe the time being.

Crude oil dropped precipitously (futures low at 98.68) this morning after testing the upper trendline of its Triangle formation at 108.70 over the weekend.  This may unleash buying of oil under 100.00 this week.

Zerohedge remarks, “Summary

• A flurry of (the somewhat typically-timed) Monday opener headlines have pushed oil prices lower, erasing weekend gains, including Al Arabia reporting that Iran is ready to accept a long-term nuclear freeze.
• Iran has submitted its latest proposal comprising 14-points through Pakistan, amid reports that the US has offered to lift sanctions on Iranian oil during the interim negotiating period.
• Reports further add that Russia’s offer to take and hold Iran’s enriched uranium stockpile on its territory is being taken seriously.”

Gold has made a minor bounce on its way to a lower level.  The nearest support is the mid-Cycle level at 4408.83.  However, it may go lower over the next three weeks as proposed by the Cycles Model.  No particular target has been given.  The Cycle Bottom at 3428.00 is possible.

The Ag Index bounced off Intermediate support at 373.95 this morning.  The Cycles Model allows another two or more weeks of decline which offer investors an opportunity to buy the dip.

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 dropped to 7413.50 before bouncing off the lower Ending Diagonal trendline.  It is hovering above the trendline as I write.  Today is monthly options expiration and the morning options are about to expire.  The further the SPX declines, the more options expire worthless, which may cause a selling feedback loop as remaining call holders scramble to unload.  This may be further exacerbated in the leveraged ETFs.   A further decline beneath 7400.00 issues a sell signal that should not be ignored.   The Cycles Model allows a possible 2-3 week decline.  Possible targets may be the 52-day Moving Average at 6906.99 or the mid-Cycle support at 6806.60.

This afternoon’s options chain shows Max Pain at 7465.00.  Long gamma begins at 7470.00 while short gamma prevails beneath 7460.00.  There is a put wall at 7400.00.  Should the SPX go beneath it, prices may go over a cliff.

ZeroHedge reports, “Bond yields, oil and the dollar are surging this morning as US futures tumble from all-time highs, with Tech underperforming driven by a series of factors including i) surging energy prices on lack of Iran war progress, ii) elevated positioning into options expiry; iii) Central bank repricing, iv) Tech sell-off driven by higher yields, and v) strikes at Samsung Electronics.”

The premarket VIX rose to 19.24 this morning and may close in on the 52-day Moving Average at 21.80 in short order.  Should the VIX reach the neckline by May 20, the Master Cycle may be adjusted from May 6 to May 20 to reflect that move, called a “double reversal”.

The May 19 options chain shows Max Pain at 22.00.  Short gamma resides between 16.00 and 20.00.  Long gamma begins with a call wall (over 250,000 contracts) at 25.00 and runs with call walls nearly every 5 points to 95.00, signifying institutional interest.

The US 10-year Bond Yield burst through its neckline at 44.84 to exceed the dreaded 45.00 level.  The Japanese 10-year rate is also rising, causing potential destabilization in the equities markets.

USD vaulted above the 52-day Moving Average, cementing the buy signal.  The Cycles Model suggests the rally may last to early June, causing grief to the dollar shorts.  A further rally from here may instigate a short squeeze that may propel the USD above the Head & Shoulders neckline, with knock-on effects.

Bitcoin tested the horizontal trendline yet again this morning, then fell away.  The Cycles Model calls for a short, but possibly deep decline to a lower support before resuming its rally.  It may be targeting the Cycle Top currently at 99837.00 by the end of June.

Crude oil may be nearing the end of its current Master Cycle.  While it may appear to be going higher, it is testing the Cycle Top resistance at 104.13 and may not succeed in closing above it today.  The Cycles Model suggests the current Master Cycle is ending with a new decline pending.  The target may be the lower Triangle trendline near 85.00 with a target date near the end of June.  As inventories run low, countries may pounce on the lower oil prices to rebuild reserves.  More purchases may be made as the price declines beneath $100.00.

Gold has begun another decline that may last to early June.  The next support level is the mid-Cycle at 4402.00.  It may decline beneath it, but final support may lie at 4100.00.

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 rose up to 7472.90, only ticks away from the estimated trendline resistance near 7475.00.  Retail dip-buyers are now driving 20% of the trading activity with increased leverage and options.  However, the melt-up has narrowed, increasing fragility.   While the market appears calm, retail investors are the most incapable of handling a spike in volatility.  Tuesday’s volatility spike offered a warning, but did not break beneath the lower Diagonal trendline.  The next break may propel the SPX as far as the Cycle Bottom at 6370.95.

Today’s options chain shows Max Pain at 7440.00.  Long gamma resides above 7470.00 while short gamma dominates beneath 7400.00.

ZeroHedge reports, “US futures are higher as we await color on the Trump-Xi summit and US- Iran negotiations, which are said to be ongoing, and as the tech meltup continues. What is known so far is that Trump / Xi agree that Iran cannot have a nuclear weapon, Hormuz should reopen without a toll or militarization; the countries will look to increase investment in each other as NVDA H20 chips are approved for a set of Chinese companies.”

The premarket VIX is consolidating beneath the mid-Cycle resistance at 18.51.  The VIX has been released from Wednesday’s expiration, allowing it to rise out of its compressed state.  A buy signal has been made above the mid-Cycle resistance and may be confirmed above the 52-day Moving Average at 21.88.

The May 19 options chain show Max pain at 21.00.  Short gamma resides beneath 20.00 while long gamma dominates above 23.00 and remains strong to 95.00 with heavy institutional participation.

The US 10-year Bond Yield gapped down after challenging the Head & Shoulders neckline at 44.84 yesterday.  It closed beneath the neckline yesterday, allowing yet another dive in yields that may reach the mid-Cycle support at 41.78 in the next 2-3 weeks.  This is an early warning that all is not well, since investors saw the 4.5% yield as an opportunity for a safe haven that portends a warning of the fragility in equities.

ZeroHedge reports, “Moments ago, the last refunding auction of the week, the sale of $25BN in 30Y paper, made history: it was the first 30Y auction to print with a high yield above 5%, and a coupon of 5%, since August 2007… which as veteran traders will recall was the month of the historic quant crash which marked the S&P highs at the time and eventually culminated in the global financial crisis. 

The auction priced at a high yield of 5.046%, up sharply from 4.876% in April, and tailed the 5.041% When Issued by 0.5bps, the second consecutive tail following 4 stop-throughs.”

The US dollar rose above mid-Cycle resistance at 98.56 and may offer a buy signal should it close above that support.  Dollar shorts may begin to feel the pain above the 52-day Moving Average at 98.98.

Bitcoin is making new lows as it has been repelled from the  trendline at 80600.00 and  mid-Cycle resistance at 80083.00.  The Cycles Model infers a rather short Master Cycle, possible a week or so.  The only available target is the 52-day Moving Average at 74586.30.

Crude oil has been repelled at the Cycle Top resistance at 103.55, but remains above Intermediate support at 98.71.  Should it decline further, it may proceed sharply to the lower trendline of the Triangle formation in the next week or so.

Gold has been repelled by the 52-day Moving Average at 4756.14 and is challenging Intermediate support at 4791.00 this morning.   A close beneath Intermediate support implies a further decline to the mid-Cycle support currently at 4395.90.  The Cycles Model allows 2-3 weeks of potential decline before resuming its uptrend.  The mechanics are simple.  Central banks are willing to part with their gold hoard to buy crude oil beneath $100.00.

The Ag Index came down dramatically, indicating a probable reversal from the neckline of the Head & Shoulders formation.  The Cycle Model suggests a possible three week correction down to the mid-Cycle support at 359.89.  There is a close correlation between the price of oil and the price of food.  What makes the situation worse is a megadrought plaguing farmers who are not only beset by higher fuel and fertilizer prices, but uncertainty of the water supply.

ZeroHedge observes, “Chicago wheat futures surged on Tuesday, hitting two-year highs after the USDA’s latest WASDE report signaled a much tighter U.S. supply outlook than traders had anticipated.

Production stress across America’s breadbasket is now converging with a megadrought and mounting fertilizer constraints, adding upward pressure on prices at a time when global food prices are rising.”

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

3:26 pm

The SPX top of the Master Cycle has been evasive.  However, trendlines were more accurately drawn and the upper Ending Diagonal trendline appears to offer resistance at 7475.00.  The final probe may be complete or nearly so.  Meanwhile investors and managers have continued buying the dip.

8:00 am

Good Morning!

SPX futures reached a new high at 7430.50 this morning before easing back.   A marginal new high is possible, as the normal Master Cycle has the capability to extend to the end of the week in overtime.  However, yesterday’s tremor, which fell short of a sell signal, may be a warning of larger moves ahead.  The most comfortable place to be may be on the sidelines.

Today’s options chain shows Max Pain at 7385.00.  Long gamma begins above 7400.00 while short gamma strengthens beneath 7330.00.

ZeroHedge reports, “US equity futures are up (alongside oil and yields, go figure), reversing yesterday’s modest losses, as optimism around the earnings potential of AI outweighs concerns over hot inflation readings bringing dip buyers back to drive tech stocks higher, with traders betting that the tech rally has further room to run while also hoping on good news from the Trump-Xi summit set to start today in Beijing.”

The premarket VIX probed lower, to 17.82 this  morning, testing a short term support at 17.80.  It may go lower, but a new low beneath 16.18 may not be probable.

Today is options expiration  for the VIX, so we turn our attention to the May 19 (monthly) expiration.  The options chain shows Max Pain at 22.00.  Short gamma resides beneath 21.00 while long gamma strengthens above 23.00.

ZeroHedge comments, “One macro strategist is now making, in far more measured institutional language, the same argument I made days ago: this is not a normal bull market.”

The US 10-Year Bond Yield may have challenged the neckline of the Head & Shoulders formation at 44.84 this morning, with implications that it may go higher.  Should it close above the neckline, the formation may be activated.  The current Master Cycle stretches to early June,  giving TNX enough time to make a significant attempt at the potential target.

ZeroHedge observes, “With 30Y yields trading on the wrong side of 5% today, all eyes were on today’s 10Y refunding auction to see if it would be ugly enough to push yields to 4.50% or higher. Here is what happened.”

This morning, ZeroHedge reports, “After yesterday’s hotter than expected CPI (driven in large part by Energy, but seeing some contagion into Services costs), this morning’s Producer Price print for April was expected to show a major surge in annual wholesale inflation.

With the eight straight monthly increase, PPI rose by a massive 1.4% MoM (vs +0.5% MoM exp) – the biggest MoM jump since March 2022, lifting PPI by a stunning 6.0% YoY (vs 4.8% YoY exp). That is the hottest PPI YoY since Dec 2022…”

The US dollar is challenging mid-Cycle resistance at 9856.  Should it close above it, a buy signal may be obtained.  This may escape the attention of the dollar bears until it rises above the 522-day Moving Average at 98.99.  There are a lot of vocal dollar bears who do not recognize how valuable the USD may be in these times.

Bitcoin is straddling its two support/resistance lines, remaining just beneath the trendline at 80600.00.  It is due for a decline over the next couple of weeks with a possible target near the 52-day Moving Average at 74433.00.  It could go lower, but lacks a potential target.

Crude oil rose to its cycle Top resistance at 103.11 , but did not cross it, leaving open the possibility of a pullback to the lower Triangle trendline to complete the formation.  Wave E’s are know to be rogues, so the price of crude may drop beneath the trendline in the next week or so.  Most investors are looking for higher prices, which may be a disappointment.

Gold has been consolidating between Intermediate support and the 52-day resistance for the past week.  It may be due for a decline to the mid-Cycle support at 4388.46 by the end of the month per the Cycles Model.