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.

7:30 am

Good Morning!

SPX futures rose to a weekend high at 5899.20, in line with expectations set out last Friday.  I had expected the SPX to complete its high on Friday, but there wasn’t enough participation prior to the Memorial Day holiday.  Thus, the target was made during light trading over the weekend.  The 61.8% Fibonacci retracement level it 5891.25, also in line with expectations.  The Cycles Model suggests the rally may not last the morning session.  The implosion of the Japanese bond market, second only to the US bond market, may have staggering consequences for market liquidity.  Stay tuned!

Today’s options chain shows Max Pain at 5830.00.  Long gamma begins above 5850.00 while short gamma starts beneath 5800.00.

ZeroHedge reports, “US equity futures are higher on US/EU trade optimism as well as global bond yield stabilization after the BOJ is reportedly looking to reduce domestic bond vol following last week’s historic selloff which led to record losses on Japanese life insurers and other financial firms. As of 8:00am, S&P futures are up 1.5%, and Nasdaq futures gain 1.6% after Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9; Stocks look like an ‘Everything Rally’ led by TMT in premarket trading with multiple Mag7 names are up more than 2% including NVDA +2.8% ahead of earnings tomorrow, buoying Semis, and Cyclicals over Defensives. The yield curve is bull flattening amid USD strengthening, perhaps setting the stage for US outperformance. 30Y yields fell six basis points to move below 5% as Japanese long-end bond yields plunged after reports that Japan’s finance ministry asked market participants for their views on the appropriate amount of debt issuance, suggesting Japan’s MOF is looking to bring calm to a market where relentless selling had pushed yields to record highs and left demand for fresh supply floundering. The dollar rose 0.3%, setting the currency on track for its biggest gain in more than two weeks. Today’s macro data focus in Durable/Cap Goods, Housing Prices, and Consumer Confidence with the critical catalyst being tomorrow’s NVDA print.”

VIX futures consolidated above the mid-Cycle support at 19.79 over the weekend.  The support given at that level should tell us that something may be afoot.  Trending strength may make an appearance today giving the VIX a boost higher.

USD futures made a weekend low at 98.68 as it may have completed its retracement to test the Cycle Bottom support at 98.12.  The USD may be at a crucial turning point that allows it to rally to the Cycle Top at 110.74.  I hate to say this to the shorts, but we may be in for a panic rally in the USD.

Japanese Yen futures have pulled back to the Intermediate support at 69.33 this morning.  The Cycles Model suggests another week of rally with growing strength as the Yen challenges the Cycle Top at 71,21 and possibly rises through the lip of the Cup with Handle formation.  Should that happen, it may be a triggering event that could lead the Yen toward its its formation target near 80.15 by mid-July.  The Japanese bond market is rife with staggering losses, especially for their insurance companies, who primarily invest in long bonds.  Currently there seems to be an impasse, as no one is selling, yet no one is buying, either.  Should insurance companies be unable to meet their liquidity needs from the JGBs, there may be a liquidation of other assets to fill the void.

Gold futures declined to 3314.54 over the Memorial Day weekend, then bounced.  It has given a preliminary sell signal by declining beneath the Cycle Top at 3344.63.  The next level of support is at the trendline at 3300.0, beneath which confirms the decline.  Should the liquidity dam burst in Japan, one of the first assets to be affected would be gold, since it has international acceptance and may be the most profitable asset to sell at this time.

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.

1:30 pm

The Japanese Yen has appreciated by 4% since the beginning of the month and over 9% since the beginning of the year.  Those highly leverages trading accounts borrowing against the Yen are suddenly finding themselves under water.  This will force the unwinding of the Yen carry trade and the dissolution of huge swaths of Treasuries being used in these trades.

12:45 pm

NDX gapped beneath its trendline near 21050.00 this morning.  It is now on a sell signal.

7:30 am

Good Morning!

SPX futures made a brief foray to a low at 5819.60 around 6:00 pm yesterday, but recovered.  The Fractal path allows the SPX allows a further decline  this morning, then a possible bounce to a target near 5900.00 this afternoon, setting up for the next downdraft. An alternate view allows the decline to resume today with no bounce.

The NYSE Hi0Lo index made a modest high on Tuesday, May 20 at 159.00.  Yesterday it closed at -30.00, its lowest in a month.  The internals have gone negative.  Normally the Memorial Day week is the high point of the Spring positive seasonality.  However, the Cycles Model suggests that record may be broken as the peak may have come a week early.

Today’s options chain shows short gamma at all levels beneath 5900.00.

ZeroHedge reports, “It was set to be a relatively quiet day, with stock futures unchanged, yields modestly lower, bitcoin just shy of record highs… and then Trump woke up. 

First, in a post on his Truth Social just after 7:20am ET, the clearly angry president said that unless iPhone that are sold in the US are not also built in the US, then a “Tariff of at least 25% must be paid by Apple to the U.S.”

The comment immediately wiped out tens of billions in value from AAPL stock, which tumbled $10 to $193, or more than 4%…

… and while the news also dragged broader futures lower, Trump saved his second market punishment for 25 minutes later when at 7:45am ET, the president doubled down on his post-awakening stream of Truth Social consciousness and wrote that he is “recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States.” ”

VIX futures are maintaining their elevation, but have not moved higher this morning.  The Cycles Model anticipates a rising VIX until mid-June.  The early April rally may be matched or exceeded.

The May 28 Options chain shows short gamma beneath 19.00 and long gamma above 20.00.  However, long gamma does not have the strength of conviction of a rally above 30.00-35.00, making it a bargain, should the SPX fail.

USD futures made a morning low at 99.03 while the cash market bottomed at 99.14.  This action may complete the pullback and allow the USD to rally toward the Cycle Top.  A rise above the Intermediate resistance at 100.10 may confirm the move by reiterating the buy signal.  The rally may be fueled by short covering, as that is the dominant position held by traders and hedge funds.

The 10-year bond futures made a temporary low at 44.45 this morning as it approaches its Cycle Top at 48.16.

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 declined to 5821.00 thus far this morning, possibly on their way to the mid-Cycle support at 5793.24.  We may expect a bounce near there as the first technical support is reached.  The 100-day and 200-day Moving Averages are nearby, adding to the probability of a bounce lasting at least a day.  The bounce may go as far as 5883.00 to 5923.00.  Use the bounce to sell longs and place shorts.

Today’s options chain shows Max Pain at 5890.00.  Long gamma may begin above 5900.00 while short gamma resides beneath 5850..00.

ZeroHedge reports, “US stocks and treasuries sold off after President Trump’s signature tax bill passed the House by the narrowest of margins (214-215), sparking fears that the surging deficit – already at a nosebleed 6.5% of GDP – necessary to fund the bill will spark even higher rates at a time when foreign buyers are boycotting US Treasury purchases. As of 8:00am, S&P futures slumped by 0.5%, trading near session lows and reversing an earlier gain of about 0.3%. Nasdaq futures dropped 0.4%. Treasuries also slumped, extending days of losses in which the 30-year yield hit the highest since 2023: the 10Y was trading at session highs of 4.62%. The dollar ended a three-day losing run while Bitcoin pushed further into record territory. Commodities are weaker across all 3 complexes: oil slumped again after BBG reported that OPEC+ is considering another production hike at the June 1 meeting. SCMP reports that Mexico pledges neutrality between US/China in the Trade War; this follows a similar announcement from Indonesia last month. Today’s macro data focus is on Flash PMIs, weekly claims, existing home sales, and regional Fed activity indicators.”

VIX futures are consolidating above the mid-Cycle support at 19.73 after a day of trending strength pushed it through. There is room to move higher  as long as it stays above support.  However, there may be a pullback in the next 24 hours to test that support before the next move higher.  Trending strength may reappear early next week.

The May 28 options chain shows Max Pain at 19.00.  Short gamma resides between 16+.00 and 18.00.  Long gamma may begin at 20.00 and runs to 35.00.

TNX advanced to 46.29 this morning, but that may not be the last of it.  Today $160 billion in Treasury bills are up for auction,  In addition $18 billion in 10-year Tips are on offer.  The Cycles Model suggests there may be stress in the bond market.  It is stress such as this that may break the equities market.

Bitcoin is on its way to a new all-time high.  However, the Cycles Model suggests that this may be the final day of strength in the current Master Cycle.  Bitcoin has risen above the Cycle Top at 109898.89.  A plunge beneath it may signal a change in direction that may not leave a lot of time to adjust.  Due care is needed as a reversal risk is rising.

USD futures are coming off a mid-Cycle low that has given encouragement to the USD shorts.  However, the trend has changed.  Evidence of that change may come with the USD rising above Intermediate support/resistance at 100.22.  Further confirmation may arrive at the crossing of the 50-day Moving Average at 101.44.  The Cycles Model anticipates the USD rising to mid-June as it remains the only safe haven from declining stocks and bonds, both domestic and international.  RealInvestmentAdvice offers some background for review.

The Japanese Yen continues its rally, caused by dramatically rising rates in the JGBs.  This may cause liquidity to be drained from the markets, as it did last August.  This will cause blow-back on the Yen carry trade, as well, as the Yen has appreciated more than 3% since the beginning of the month.   Further appreciation is inferred by the Cycles Model, which may increase the pain in thhe carry trade and disrupt the markets.

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.

11:20 am

The Agriculture Index advanced above the combination 50-day and Intermediate support lines today.  This action gives a long-awaited confirmed buy signal.  For the past three months, the Cycles Model has suggested an accumulation period before taking off to new heights.  The near-term targets may be the Cycle Top at 406.06, then the neckline of the Head and Shoulders formation, approaching 425.00.

11:06 am

The Banking Index has also crossed beneath its Ending Diagonal, offering a sell signal.  The Master Cycle high was made last Friday, at 131.43.  The Cycles Model allows the BKX to decline to the first week of June.  The Head & Shoulders target may come into view during that time.

10:55 am

SPX has broken through the lower trendline of the Ending Diagonal formation, offering a possible sell signal.  Close-by supports are at 5895.00 and 5850.00, should you care to use them instead of the ED formation as a sell signal.  Additional weakness may be due in the next few days.

8:00 am

Good Morning!

SPX futures dipped to 5887.50 this morning as it leaves Monday’s Master Cycle high behind.  It’s time to take upside profits while SPX remains in a throw-over above the Ending Diagonal formation at 58850.00, beneath which an aggressive sell signal may be found.  The mid-Cycle support at 5792.11 may confirm the sell signal.  The Cycles Model anticipates a decline to mid-June with a potential low beneath the April 7 low at 4835.04.

Today’s options chain shows Max Pain at 5930.00.  Long gamma rises above 5950.00 while short gamma resides beneath 5900.00 with a huge put wall at 5875.00.

ZeroHedge reports, “US equity futures and global markets are weaker with both tech and small caps underperforming as yields rise (10Y TSY  at 4.53% last) and the curve bear steepens. As of 8:00am ET, S&P futures are down 0.5% with sentiment hit by a CNN report that Israel may be preparing to strike Iranian nuclear facilities. That sent oil higher, while haven assets outperformed; Nasdaq futures also drop 0.6%, with Mag7 names mostly lower and Semis/Cyclicals underperforming. In Europe major markets are mostly lower with the UK leading and France lagging. UK inflation his a 15-month high. Treasury yields ticked above key psychological levels, with the 30-year above 5%. The dollar lost ground against all major currencies pushing the DXY index back below 100 as the yen continues its relentless ascent while Japanese long bonds crater. Commodities are higher this morning, benefiting from the lower dollar and led higher by energy and precious metals with the former higher on elevated geopolitical risk. Oil climbed about 0.7% on a report that Israel could be gearing up for a possible strike on Iran’s nuclear facilities. It is another light macro data day with no macro news but with multiple Fed speakers. Earnings from big retailers will be in focus for clues on the impact of tariffs.”

VIX futures rose to 20.08 this morning, potentially offering a buy signal above the mid-Cycle resistance at 19.20.  The Master Cycle low was made on Friday.  The VIX may not remain near its “floor” as it offers another potential day of strength off the low.  VIX may recognize the 30-year bond is above 5% again, where larger moves are anticipated.

TNX futures rose to 45.48 this morning, as it resumes its upward trend, challenging the Cycle Top resistance at 48.13.  Today’s 20-year Treasury auction is on tap for some possible fireworks with a follow-up of the 10-year auction on Friday.  The Cycles Model anticipates a panic rally in yields lasting to early June.

ZeroHedge observes, “Late last week, the Joint Committee on Taxation (JCT) released its preliminary score of the House Ways and Means Committee mark-up of the large budget reconciliation bill working its way through Congress, also known as Trump’s “Big, Beautiful Bill” (BBB). And while the BBB is inching to passing through Congress – despite holdouts still remaining especially over the size of the SALT deduction – here is a snapshot of what is in the Bill, and how it will affect the US in the coming decade.”

Bitcoin rose to 108040.51 before easing back.  It has not exceeded the January high.  Failure to do so signals a potential decline ahead that may shake up the Crypto sector.

USD futures declined to 99.27 this morning, just above the Cycle Bottom support at 98.23.  Should it bounce at support, we may see an uptrend developing.  Currently, the USD is considered a short candidate.

Japanese Yen futures rose to 69.69 this morning as it continues its rally toward the Cycle Top at 71.19 and possibly beyond.  It is on a doubly confirmed buy signal that may last to the first week of June.  Should the Yen slip back beneath Intermediate support at 69.17, an alternate route (decline) may be taken.  The BOJ is in a quandary whether to raise rates, thereby strengthening the Yen or let things take their course and postpone the inevitable collapse.  The Yen carry trade is at risk.

Gold futures rose to test the Cycle Top and trendline resistance at 3322.07 this morning.  Having tested its strength against resistance and finding it wanting, it is likely to reverse course today.  It remains on a sell signal that may obtain additional confirmation beneath Intermediate support at 3248.72 and the 50-day Moving Average at 3166.43.   The decline may continue to mid-July.  Nearby support lies near 2600.00.  However, should a panic ensue, supports may be found at 1900.00 and 1600.00.

Crude oil futures rose to 64.13 this morning, emerging above the 50-day Moving Average and confirming the buy signal made at the Intermediate support/resistance at 61.76.  There is approximately a week left in the current Master Cycle, allowing crude to rise to  the mid-Cycle resistance at 69.09 and possibly higher should war intensify in the Middle East.

ZeroHedge observes, “Oil prices are modestly higher ahead of this morning’s official energy inventory and supply data, but have come dramatically back off the overnight spike highs driven by CNN headlines suggesting Israel is ready to strike Iranian nuclear enrichment sites.

“Either the impact on the oil market in case of an attack is assumed to be low, or the probability for an attack is assumed to be low,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. 

Wednesday’s gain “is not much when we are talking bombs in the Middle East major oil producing region.””

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.

8:35 am Note: This blog will be abbreviated due to a medical procedure later today.

Good Morning!

SPX futures rose to 5973.70 this morning before easing back beneath yesterday’s high at 5968.61.  I have red-lined the level of the 50-day Moving Average (6006.00) at the end of February as it marks the beginning of the short covering in earnest for that decline.  As mentioned last week, this rally is largely due to short covering as new money lags behind, until yesterday.  The past six weeks have been painful for the shorts.  You may recall that on April 8 I had instructed to take short profits in anticipation of this rally.  Since then I have remained neutral, looking for a potential sell signal to develop.

ZeroHedge reports, “US equity futures are weaker with Tech underperforming, threatening a six-day winning streak that propelled the S&P 500 to the brink of a bull market. Then again, Monday started off even worse and then we saw the biggest burst of retail buying on record resulting in one of the biggest intraday reversals in recent history (according to JPM, more here), so brace for more unexpected moves. As of 8:00am ET, S&P futures are down 0.2%, while Nasdaq 100 futs drop 0.3% with Mag7 stocks mixed amid weakness in semis into today’s Google I/O developer conference; healthcare is leading Defensives over Cyclicals. The yield curve is twisting steeper with the 10Y yield flat and USD weakening. Commodities are mixed with crude down, natgas up, base metals down, precious up, and Ags generally higher. Macro data is light, with just the Philly non-mfg PMI on deck ahead of Thursday’s Flash PMIs & Claims prints, but we have another round of Fed speakers where the message continues to be patience.”

VIX futures have been consolidating above the trendline as Friday’s low at 17.15 remains the Master Cycle low.   Volatility compression is extreme. It has yet to cross above the mid-Cycle resistance at 19.70 where a buy signal may be found.  VIX may have found its “floor” from which the next rally may emerge.

TNX may be bouncing again after a brief pullback.  The Master Cycle has two more weeks left to venture toward the Cycle Top at 48.12.  A 20-year and 10-year auction will be held in the next two days.

Bitcoin consolidates beneath the Cycle Top resistance at 108760.00 this morning in a somewhat stretched Master Cycle.  Once the turn is made, Bitcoin may decline to the end of July.

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.

7:30 am

Good Morning!

SPX futures are testing the upper trendline near 5847.50 this morning as it begins to roll over.  The trendline may offer an opportunity for aggressive shorts to weigh in.  The  lower trendline, the 100-day MA and mid-Cycle support lie at 5784.64, giving confirmation of the sell signal beneath.  The steep rally doesn’t offer as clear a re-entry as one would wish and many shorts who were squeezed out may be reluctant to short again as confidence may have been broken.  This is the first real bear market rally and there will be more.  Instead of SPX reaching 6000.00 or 7000.00 this year, we may see SPX attain 3500.00 instead.

Today’s options chain shows Max Pain at 5875.00.  Long gamma may begin above 5900.00 while short gamma resided beneath 5845.00.

ZeroHedge reports, “US equity futures are lower as investors take profits on Thursday and tech stocks fell as investors worried about an economic slowdown after Steve Cohen warned the chance of a recession is 45% and today’s retail sales numbers are expected to be a miss. As of 8:00am ET, S&P futures are down 0.4%, rebounding from session lows after Walmart reported solid earnings; Nasdaq futures dropped 0.5% with Nvidia, Palantir and Tesla falling about 2% in early trading.  On Wednesday, the S&P failed at 5,900 for the second consecutive day. The silver lining according to JPM is that yesterday, NVDA turned positive on the year, joining META and MSFT; if the remaining members follow suit, there is another ~10% upside to the index assuming positive members are flat. YTD, AMZN is -4.2%, GOOG -12.6%, TSLA -13.9%, and AAPL -15.2%. In trade news, China removed curbs on rare earth exports to the US. Trump says India is willing to drop is tariffs on US goods. Brent sank below $64, down more than 3% after President Donald Trump said the US is getting closer to a deal on Iran’s nuclear program, fueling concern that additional oil supply may pressure the market. Bond yields and the USD are lower. Today’s macro data focus is on Retail Sales which are expected to remain unchanged in April (versus 1.5% prior); PPI, Jobless Claims, Philly Fed and Empire Manufacturing numbers are due at 8:30 am in New York, while Industrial Production prints at 9:15am. Also, traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell.”

VIX futures rose to a morning high at 19.23 thus far.  A buy signal appears above the mid-Cycle support/resistance at 19.66.  The Cycles Model anticipated a high velocity rally for the next four weeks.

The May 21 options chain shows Max Pain at 22.00.  Short gamma resides between 16.00 and 20.00.  Long gamma prevails above 25.00 and 75.00.

USD may have found its retracement low at 100.44 in the overnight session.  Since then it has risen above Intermediate support at 100.69.  Should the rally resume, USD may simply bypass the 50-day Moving Average and target the mid-Cycle resistance at 104.43 in short order.   The Cycles Model offers another month of rally in which the target may be the Cycle Top at 110.53.

The Japanese Yen has risen to 68.71 thus far this morning, surpassing the 50-day Moving Average at 68.30 and offering a buy signal.  The Cycles Model anticipates a rally to early June, but the effects may last longer than expected.  Taking out a loan in Yen is, in effect, shorting the Yen.  While the interest rate may be very low, the currency loss may be enormous.

TNX futures rallied to 45.42 before the open, setting the stage for another rise in the cash market.  Trending strength is growing and may last over the next three weeks as the Cycle Top may be challenged.  A breakout above the neckline of the Head & Shoulders formationmay set the tone for a further rally this summer.

Gold futures reached a morning low at 3124.51, beneath the 50-day Moving Average.  This offers gold investors a triple confirmed sell signal.  The next layer of support lies at 3000.00.  However, a true impulsive decline may take gold beneath its Cycle Bottom at 2318.34.We may expect the decline to last as far as mid-July.

Crude oil futures retraced the rally down to the Cycle Bottom, making a low at 60.47 before a bounce.  This has been a difficult place to go long, yet the longer-term Cycles Model strongly supports it.  The possible target for the next 3 weeks may be the Cycle Top resistance at 78.09.

Bitcoin is easing lower as it consolidates beneath the Master Cycle high.  Round number support at 100000 provides a floor thus far and beneath it one may infer an aggressive sell signal.  Confirmation of the sell lies beneath mid-Cycle support at 93646.84 today.

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.

7:30 am

Good Morning!

SPX futures consolidated beneath yesterday’s high on day 260 of the Master Cycle.  Monday’s gap up into the open is reported to be the second largest net buying in 5 years, mainly due to short covering.  Capitulation may have already occurred.  We will be able to determine that event has happened when buyers run out of money or simply lose confidence in their ability to make money in equities.  The Cycles Model anticipates that, once the buying (short covering) has stopped, the SPX may be due for a month-long decline.  Ending Diagonals are often completely retraced, at a minimum.

Today’s options chain shows Max Pain at 5880.00.  Long gamma may begin at 5900.00 while short gamma may start beneath 5850.00.

ZeroHedge reports, “US equity futures are modestly in the green with tech/AI stocks leading and small caps lagging as equities may see some profit-taking given the relentless strength of the rally. Stocks has now erased their YTD losses, and the recovery pace of the past 6 weeks is the fastest since the 1980s. As of 8:00am ET, S&P futures are up 0.2%, near session highs after reversing earlier losses; Nasdaq futures gain 0.4% with chips higher on new deals being made by Trump in the Middle East regarding chips/AI infra build. Pre-mkt, NVDA/TSLA are higher with the rest of Mag7 mixed but Semis are higher though other Cyclicals are slightly weaker. AI theme is higher, too. The yield curve is twisting steeper as USD strength fizzles sparked by concerns Trump may turn to dollar strength next (following overnight Bloomberg report there was discussion between US and SKorea on dollar strength). Commodities are lower as Energy sells off, and gold is flat around $3220. The macro data focus is on mortgage applications (up 1.1%) and XHB is +5% over the last two days.”

VIX futures are consolidating above yesterday’s low at 17.65 on day 267 of the Master Cycle.  A further decline may be minimal, if any, as VIX has reached a “technical floor” of support.  Once the reversal takes place, the Cycles Model calls for a month-long rally with rising strength being revealed next week.  A buy signal may be obtained with a rise above the mid-Cycle support/resistance at 19.64.

The May 21 options chain shows Max pain at 22.00.  Short gamma is back with investors crowding with puts from 16.00 to 21.00.  Long gamma begins at 25.00 and is filling in longst to 75.00.

USD futures may have made  a retracement to 100.11 this morning.  The Cycles Model shows trending strength coming back today, suggesting the pullback may be over.  Dollar shorts are licking their wounds, but more pain is yet to come, as the rally still has legs to go another month.

Japanese Yen futures rose to 68.66 this morning, potentially sending the cash market above the 50-day Moving Average at 68.26.  This may result in a buy signal with the Yen subsequently rising to challenge the Cycle Top at 71.17.   Those who borrowed in Yen may have to unwind.  The largest players in the carry trade are commercial traders who borrow Yen and buy Treasuries, making a profit on the spread.  However, the spread disappears as the Yen appreciates vis-à-vis the USD.

TNX may be consolidating after yesterday’s powerful move higher.  The Cycles Model calls for three more weeks of such moves with the Cycle Top at 48.09 a likely target.  Be aware that the neckline for the Head & Shoulders formation is just above the Cycle Top.  Should TNX break above it, yields are sure to go higher this summer.

Bitcoin is lingering beneath its retracement high made on Monday.  The Master Cycle appears to have run its course of 260 days.  Note that the rally in Bitcoin mirrors the rally in equities.  This suggests that Bitcoin may not offer any protection in the event of a market decline.

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.

3:37 pm

As SPX completes its second day of throw-over, the room to move becomes narrower.    Top-picking is frustrating.  Most shorts were made between 5900.00 and 6000.00, just beneath the 50-day Moving Average on February 26 when it was 6006.00.  This rally may collapse when the last bear has thrown in the towel.

7:45 am

Good Morning!

SPX futures drifted lower, bottoming out at 5816.60 in the overnight session.  Yesterday’s spike rally took the form of a throw-over, having risen above the trendline of the Ending Diagonal.  Commercial traders (trend followers) may be buying this week as the SPX has crossed the median pivot level.   Short-term support lies at the combined 100-day and mid-Cycle support at 5780.95.  The 50-day Moving Average and 1987 trendline are at 5563.20.  The Cycles Model suggests the current Master Cycle may have played out, leaving the probability of an imminent decline to mid-June.  Ending Diagonals are often completely retraced.

Today’s options chain shows Max Pain at 5795.00.  Long gamma may begin above 5800.00 while short gamma may begin beneath 5770.00 and intensifies beneath 5750.00.

ZeroHedge reports, “US equity futures are modestly lower ahead of today’s CPI report, but well off session lows, as markets take a slight pause following yesterday’s surge and as trade war truce euphoria gives way to lingering concerns about inflation and economic growth. As of 8:00am ET, S&P and Nasdaq 100 futures were down 0.2% with Mag7 and Semis names weaker pre-mkt, pulling the index lower. UnitedHealth Group sank 10% in pre-market trading after suspending its 2025 outlook. In the latest trade war news,  US reduced the tariff on ‘de minimis’ shipments from China, per Reuters, from 120% to 54%, while China reversed its ban on Boeing jets. Appetite for safer assets picked up again, with Treasury yields falling and gold prices on the rise. The dollar slipped after gaining more than 1.4% yesterday, its strongest day since Nov 6, 2024, the day after the election. Today’s macro data focus is on CPI where the YoY numbers are expected to remain flat MoM despite an acceleration in the MoM prints. Earnings prints are not expected to be market moving today.”

VIX futures are consolidating near yesterday’s low after an exhausted close at the lower trendline.  This may be the last bottom-test for quite some time.

Tomorrow’s options chain shows Max Pain at 20.00.  Short gamma has a big presence at 18.00 while long gamma begins at 24.00 with a very large presence at 30.00.

TNX is consolidating with a slight slope downward.  It may have not yet reacted to this morning’s news of a treasury surplus.  The Cycles Model allows three more weeks in the present Master Cycle.  This may allow for a pivot lower to the mid-Cycle support at 42.48 or possibly lower, near 40.00.  Despite the “good news” from the Treasury Department, tariffs are considered inflationary in the longer term.

ZeroHedge remarks, “Two weeks ago, as part of its quarterly refunding announcement, the Treasury surprised the market when it unveiled a funding need for the current quarter that was $53 billion lower than it had initially forecast in February, and which we said “indicates that DOGE is indeed working and the US funding needs are actually declining.”

Needless to say, for a market that was habituated to Joe Biden’s debt-funded drunken sailor spending ways, the news that the US would needs less – not more – spending than previously expected, came as a shock, and yields slumped as less debt than expected would be required to fund the world’s most indebted government.”

Bitcoin is consolidating beneath yesterday’s Master Cycle high.  Should the Master Cycle pivot have been made, an extended decline may be underway.

USD is consolidating between Intermediate support at 100.89 and the 50-day Moving Average at 102.01.  The Cycles Model indicates a blast of trending strength may appear once the consolidation is done..  This may be the cause of pain for the USD shorts and add fuel to the rally as they cover.

Gold futures bounced off the Intermediate support at 3219.00 and may be consolidating beneath the Cycle Top resistance at 3287.98.  The Cycles Model suggests the decline may strengthen towards the end of the week.  A likely downside target in the near term may be the bottom trendline of the upward-sloping trading channel near 2900.00.

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.

8:00 am

Good Morning!

SPX futures rose to a weekend high of 5846.80, then eased lower on day 259 of the Master Cycle.  Should the SPX open above the mid-Cycle support at 5778.85, a decline beneath that level offers a sell signal.  SPX is nearing the maximum retracement for a bear market rally.  Retail investors have been buying the dip while certain institutions have been selling.  The mechanical systems of commercial traders have been buying again.  But the rally has taken the form of an ending Diagonal, suggesting the end may be near.  Today’s blow-off may bring in the last retail holdout from this rally.

Today’s options chain shows Max Pain at 5650.00.  Long gamma begins above 5700.00 while short gamma may start beneath 5600.00.

ZeroHedge reports, “US equity futures and the dollar soared after China and the US agreed to slash tariffs and de-escalate a trade war that had sparked turmoil in global markets. Treasuries and gold tumbled after the US cut China tariffs from 145% to 30% while China slashed US tariffs from 125% to 10% for 90 days. With the countries agreeing that they do not want to de-couple, there is optimism that a longer-term deal can be reached. As of 8:00am, S&P futures surged 3% and Nasdaq futures spiked almost 4%. JPM writes that while Trade War 1.0 tariffs remain, as do sectoral tariffs but, this is an unambiguous positive for all global risk assets and will allow markets to look through any near-term weakness in macro data but if CPI, PPI, and Retail Sales surprise to the upside, then that will provide another tailwind to risk assets. Premarket Mag7 names are higher with many up more than 3%, Semis/Cyclicals are also higher as the market will need to reset its growth expectations higher. Commodities are higher, led by Energy, despite a spike in bond yields/USD.”

VIX futures dropped to a morning low at 19.87 on day 266 of the Master Cycle.  Usually the VIX turns about a week or two ahead of the SPX.  However, the decline from the April 7 high was on of the longest declines in recent memory, taking 35 days.  The Cycles Model suggests a strong reversal this week with growing strength in the new rally by the middle of next week.

The May 14 options chain shows Max Pain at 23.00.  Short gamma dwells between 19.00 and 22.00.  Long gamma may begin above 24.00 and remains strong to 35.00.

TNX rose to 44.69 this morning as it continues its rally into early June.  TNX is on a buy signal with a clear path to the Cycle Top at 48.06.

The Japanese Yen extended its retracement toward the 50% level this morning on day 270 of its Master Cycle.  This is a bit of a stretch which shows some institutional interference, possibly the Bank of japan.

Gold futures declined to 3211.29, beneath the trendline and Cycle Top at 3282.19 today, creating a sell signal.  The Cycles Model suggests the decline may have legs, lasting to mid-July.  Trending strength appears at mid-week with potentially dire consequences.

Crude oil futures rose to 63.59 this morning, before settling back.  It may retest the Cycle bottom at 60.76, which it crossed on Friday.  Oil futures may continue rising to the end of May.  A rally above the mid-Cycle resistance at 69.55 may indicate a new trend is forming.

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.

10:09 am

BKX may have made its Master Cycle high yesterday while challenging the mid-Cycle resistance at 123.92.  This offers a potential aggressive sell signal that may be confirmed as BKX declines beneath the 200-day Moving Average at 122.84.  There is a tremendous hidden risk in the banking sector that may reveal itself as highly leveraged investments sour.

ZeroHedge notes, “While the media fixates on interest rates and inflation, a $250 trillion shadow banking monster quietly grows, hidden from traditional regulation. Hedge funds and private equity firms operate with 100x leverage, taking massive risks backed by the very banks holding your savings.”

8:00 am

Good Morning!

SPX futures rose to 5695.80 this morning, matching the top of Wave A in this corrective rally.  While individual investors remain bearish, the Commercials who buy systematically have poured in $100 billion in the past 10 days, keeping the SPX above the 50-day Moving Average.  The Ending Diagonal trendline shown in the chart provides the first breakdown of support at 5635.00.  Beneath it lies the 50-day Moving Average at 5571.00, giving a sell signal which is further confirmed at the 1987 trendline near 5560.00.  Pick your level.

Today’s options chain shows Max Pain at 5630.00 to 56660.00.  Long gamma begins above 5680.00 while short gamma resides beneath 5600.00.

Zerohedge reports, “US equity futures traded modestly higher pointing to a third day of gains, until just before 730am ET when Trump decided to play bad cop to Scott Bessent’s good cop and posted on Truth Social that “80% Tariff on China seems right!” but then added that the final tariff rate is “Up to Scott B.”

That comment promptly hit futures, erasing the market’s modest gains, but upon reflection and realization that Trump was probably just in one of his moods, futures resumed their ascent after yesterday’s trade deal with the UK and Trump’s comments to buy the market. The focus is on the start of China trade talks this weekend, but if we use the US/UK deal as a template, it is light on details with a seemingly minimal economic impact. As of 8:00am ET, S&P futures are up 0.2% and Nasdaq futures gain 0.3%. Pre-market, all Mag7 names are higher with cyclicals mixed but with a bias to Quality names. Markets also benefited from a slew of positive earnings, with Microchip Technology, Lyft, and Pinterest surging while Expedia plunged after it cut bookings growth forecasts. Bond yields are flat as the yield curve bull steepens and the USD sells off after its strongest day since Nov 6 (day after the US Pres. Election). In commodities, energy continues to see a bid with WTI now above $60/bbl, Ags are higher, and precious metals are outperforming base. There is nothing on the macro data calendar, and earnings are light today so today’s session will likely be investors trying to position for outcomes after this weekend’s US/China summit.”

VIX futures consolidated near the low at 21.88 this morning.  The new Master Cycle runs to June 15.  While comments are being made about the oacki of bullishness, the VIX options show little faith in either the bullish outlook or the bearish one.

The May 14 options chain shows Max Pain at 24.00.  Short gamma occupies the space between 19.00 to 23.00.  Long gamma kicks in above 25.00 but only runs to 35.00.  The May 21 options chain shows more bullish conviction up to 75.00.

TNX rose to 43.98, just shy of the resistance at 44.00.  There may be a pullback to test support at the 50-day Moving Average at 42.88 before ramping higher.  Otherwise the trend is higher until the first week of June.

Bitcoin may have made its Master Cycle high at 104353.74 in the last 24 hours.  With that in mind, I am neutral until either the Cycle Top at 107677.00 is challenged or the round number support at 100000.00 is defeated.

USD futures rose to 100.71, short of meeting the Intermediate resistance at 101.06.  USD is on a buy signal and shows a propensity to break through that resistance as well as the 50-day Moving Average.  The USD stands to gain should trade talks with China this weekend show success.  Adding fuel to a potential panic rally is the large short positions on the USD.

The Japanese Yen may be consolidating above its Master Cycle low at 68.41 made yesterday on day 266 of its Master Cycle.  The Cycles Model suggests today may be a day of strength for the Yen.  If so, the Yen may challenge its Cycle Top at 71.16.  A breakout above the Lip of the Cup with Handle formation at 71.55may cause much pain for those involved in the Carry Trade which involves borrowing against (shorting) the Yen.

Gold futures tested the Cycle Top and upper trendline today at 3275.00 and bounced.  The threat of losing support is tangible, with a potential two-month decline ahead.  Gold’s long-term outlook is positive.  However, a liquidity event may stand in the way of higher short-term values.

West Texas Crude rose to an overnight high at 61.45, breaking through the Cycle Bottom resistance at 60.28 and offering a confirmed buy signal.