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.

3:12 pm

SPX may have completed an Ending Diagonal formation, which tells us it’s the end of the rally.  Confirmation comes when SPX makes a new daily low, which occurs beneath 6535.00 today.  Further confirmation lies beneath the 50-day Moving Average at 5581.25.

ZeroHedge notes, “While commenting to reporters after signing the first (of many) trade deal with the UK, President Trump told Americans that they “better go out and buy stocks now” as he looks forward to signing his “big beautiful bill.”‘

7:45 am

Good Morning!

SPX futures rose to 5698.40 this morning, just points away from the retracement high at 5700.70 made last Friday.  Yesterday was a high volatility day, according to the Cycles Model.  Naturally I interpreted that as a result of the FOMC announcement.  Whether the SPX makes a marginal new high or not, the fractal structure indicates an imminent decline to test the lows.  Note that (technical) overhead resistance appears at 5700.00, while the mid-Cycle resistance lies at 5775.90.

Today’s options chain shows Max Pain at 5635.00.  Long gamma may begin above 5640.00 while short gamma does marginally better beneath 5630.00.

ZeroHedge reports, “US equity futures storm higher, and are back to their post-Liberation Day highs on positive trade news (Imminent “comprehensive” trade agreement with UK the first of his promised deals; removal of chip export restrictions) and a neutral Fed (economy has strength to wait to see trade war impact hit hard data) even as China again reiterated that the US should cancel unilateral tariffs ahead the first official meeting between the countries this weekend amid reports the US is considering exempting child-related goods from its 145% tariffs on China. As of 8:00am ET, S&P futures rose 0.9% while Nasdaq futures are 1.2% higher, both near session highs. Elsewhere FTSE +40bps, DAX +1.2%, CAC +1%, Shanghai +28bps, Hang Seng +37bps, Nikkei +41bps. Intel rose more than 3% in premarket trading, while peers such as Nvidia and Micron also gained on news Trump will rescind restrictions regulating the export of semiconductors to various countries. Outside of tariffs, Norway and Sweden central banks left rates unch (expected) while we get the BoE this morning (25bps cut expected). US Bond yields are 4-5bp higher across the curve and USD is poised to have its best day 6 sessions with DXY +50bp. Today’s macro data focus is on jobless claims, NY Fed 1-year inflation expectations, and labor costs.”

VIX futures made a new Master Cycle low at 22.33 this morning, on day 262 of the current Master Cycle.  While the SPX Master Cycle may become “stretched” with a new high, the VIX is not.  The apparent calm may not last.

Bitcoin rose to 99869.10 this morning, being attracted by 100,000.00 (round number).  The fractal structure appears complete.  Should it halt near there, Bitcoin may begin its decline.  The Cycles Model anticipates the downdraft to last until mid-June.

TNX futures declined to 42.88 while the cash market bottomed at 42.95 this morning.  The consolidation may be over, or nearly so.  The Cycles Model suggests a resumption of the uptrend  with the Cycle Top resistance at 48.03 as the potential target.

The Japanese Yen is pulling back to 68.99 to retest Intermediate support at 68.69.  It may not last, since a surge in trending strength may be imminent.  Should that occur, the rally may be inclined to break through the Lip of the Cup with Handle formation.  The Cup with Handle is related to the Head & Shoulders formation, but has a softer target.  Longer term indicators suggest a target near 75.00.

Gold futures rose to 3421.94 before easing back into negative territory.  Although steep and painful, the retracement may be over without making a new high.  The retracement may be viewed as a “shadow Cycle” since this may be viewed as a possible extension of the April 22 Cycle top.

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.

3:03 pm

SPX bounced off the 50-day at 5575.00. giving the dip-buyers hope.  While that may cause the SPX to close in positive territory, it does not eliminate the overbought condition that is found there.  Once beneath the support of the 50-day and the 1987 trendline there is a long way down before meaningful support may be found.

ZeroHedge remarks, “With no actions taken and no SEP to discuss (although the statement clearly hints at stagflationary uncertainty), all eyes (and ears) are now focused on every word that Powell says for hints about whether prices (inflation) or jobs (growth) are more of a worry (both are lower recently)…

.. and why he cut rates before the election when financial conditions briefly tightened but refuses to do so now…”

7:45 am

Good Morning!

SPX futures ramped to 5669.10 yesterday evening with no particular reason…well, there is a reason.  The powers-that-be did not want to see the SPX drift beneath the 50-day Moving Average at 5584.52 overnight.  In bull or bear markets it is a rare event to see stocks lower before a FOMC announcement.  The April jobs report took away any reason for easing.  Calls for a rate cut have been pushed back to July.  The NYSE Hi-Lo Index closed yesterday at -12.00, suggesting the rally is already winding down.  The markets are likely to be held in suspense until 2:00 pm when the FOMC announcement becomes public.  The Cycles Model anticipates a decline to mid-June.

Today’s options chain shows Max Pain at 5615.00.  Long gamma may begin above 5625.00 while short gamma gasins ascendancy beneath 5590.00.

ZeroHedge reports, “US equity futures are higher while global market are mixed ahead of the FOMC decision later today, following news tariff talks between the US and China will begin, and after a surprise stimulus by China. As of 8:00am, S&P and Nasdaq futures are 0.6% higher (though off the highs) on reports Bessent will meet Chinese Vice Premier He Lifeng in Switzerland this weekend in the first confirmed talks between the two superpowers. Bessent later said on Fox News that the meeting will be more about de-escalation than any sort of big trade deal. In premarket trading Mag7 names and Semis are leading the markets higher while RTY appears to be squeezing into outperformance. Cyclicals are poised for a strong session, too. Overnight China’s PBOC cut its reverse repo rates and lowered lender reserve ratio to help stimulate growth. India conducted military strikes in Pakistan in which Pakistan said it shot down five Indian jets. Attention shifts to the Powell and the FOMC at 2pm which is expected to yield no surprises as the CB preaches patience. Focus during the 2:30pm press conference will be on any commentary on how long Powell intends to wait for further clarity re tariffs/impacts (reminder no SEP). Bond yields are higher alongside a stronger USD which snapped three days of declines as the Taiwan Dollar slid for a second day. Commodities are bid higher led by Ags and Energy; gold/silver are modestly lower after another powerful breakout earlier this week.”

VIX futures eased down to 24.15 in response to the overnight surge in the SPX.  The Master Cycle low was put in on Friday in a timely fashion.  While the VIX shows relative calm, the VVIX may have made a buy signal yesterday.  The March 2020 high at 85.47 may be the minimum target for the VIX in the  upcoming surge.

TNX may be easing lower to test the 50-day Moving Average at 42.79 before resuming its rally.  The Cycles Model calls for a continued rally to the first week of June.  The intended target of this rally may be the Cycle Top at 48.03 and beyond.  Mid-May appears to be a particular hotspot for bonds.  Today the FOMC is expected to sit on their hands and do nothing, despite the Bank of China unleashing  liquidity to jumpstart their own economy.  The Fed’s quandary is that the inflation outlook is clearer than the growth outlook.

USD futures are in suspension pending the Fed outlook.  The Cycles Model suggests a minimum decline to 89.90 with the possibility of reaching the Cycle Bottom at 98.32 in the next couple of days.  However, the trend is higher, with the rally resuming by  the end of the week, extending to mid-June.  This would be a good place to exit, as the USD is heavily shorted and a squeeze may provide fuel for a significant rally.

The Euro has come down from its April 21 high and may be retesting its Cycle Top resistance at 114.48 before turning down next week.  The Cycles Model anticipate a further decline through mid-June, ending near the Cycle Bottom at 101.27.  Should a war develop between NATO and Russia, the decline may extend to August.

Bitcoin rose to 97647 in the overnight session, leaving the Friday high at 97939.99 as the Cycle Top.  The uptrend appears intact, but may be weakening.  Many investors misinterpret this action as a potential safety net in the event of a stock market decline.  However, the Cycles Model suggests otherwise, as the loss of liquidity may affect Bitcoin even more.

Crude oil is consolidating this morning after an abrupt rally off its Monday low at 56.46.  The rally begun on Monday may resume its upward course imminently.   The Cycles Model suggests the rally may continue to the end of May.

ZeroHedge remarks, “Oil pries pumped and dumped back tro unchanged ahead of this morning’s official inventory and supply data after hopeful (demand) signs of US-China trade talks battled with fearful (supply) signals from OPEC*+.

“There is a fear that the trade negotiations in Switzerland with China could backfire and turn into a demand destruction event,” said Robert Yawger, director of the energy futures division at Mizuho Securities USA. Building market sentiment that a rate-cut is not in the cards anytime soon is also weighing on prices, he added.”

Gold futures rose to 3448.50 overnight, prompting some investors to proclaim a new all-time high.  Although the retracement has been steep, it has not exceeded its April 22 high at 3500.00.  I have to admit that the Cycles Model has not slammed the door shut on a new ATH, so we stay neutral until the end of the 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.

12:07 pm

GKX (Agricultural Index) tested the mid-Cycle support at 375.56 this morning, making a 72% retracement low.  While the retracement may go lower, the odds are high that it may be complete.  The last two months have presented an opportunity to accumulate shares in anticipation of a very strong rally out of the low.  The Cycles Model anticipates a potential rally into the third week of June.  Owning agricultural commodities may be an ideal offset to declining stock prices.

ZeroHedge remarks, “During Tyson Foods’ earnings call on Monday, Brady Stewart—head of the company’s beef and pork supply chains—offered fresh insight into what may be the emerging bottom in U.S. cattle supplies, which have fallen to their lowest levels in over 70 years. His comments came in response to a question from one Wall Street analyst.

Barclays analyst Benjamin Theurer asked Stewart about the overall environment in the beef industry:

So it feels like you only had a small volume drop-in the quarter that could almost be explained by just the leap year and some of the calendar effects. So just wanted to understand a little bit better what you’re seeing in terms of supply of cattle and the cost of that into your operations and how you think about the earlier signs maybe as to some of the heifer retention? Is that building or not? So how should we think about just these throughout the cycle? Are we at the bottom or is it just still too early to tell? That would be my first question. 

Stewart explained that while cattle supply remains down year-over-year, record-high animal weights are helping to offset the decline in volume. He added that the U.S. cattle industry is likely at or near the bottom of its inventory cycle, with herd levels now at a 73-year low.”

7:45 am

Good Morning!

SPX futures made a morning low of 5603.40 thus far.  Should it go lower, the 50-day Moving Average lies at 5594.34.  Beneath it lies a sell signal.  The Cycles Model anticipates a decline to mid-June.  Third Waves may never be the smallest of the series of motive Waves.  Assuming a third Wave is next, the minimum target may be 4388.00 while the average target may be closer to 3550.00.  Underneath the hood, the NYSE Hi-Lo Index closed at a marginal 34.00 on Friday, then closed at its low of 26,00 on Monday, at the tipping edge of its range.  The mean value of the Hi-Lo is -30.00, so a reversion to the mean may plunge the Hi-Lo well into negative territory.

Today’s options chain shows Max Pain at 5655.00.  Long gamma may begin at 5660.00 while sort gamma starts at 5650.00.  This morning’s plunge has tested a sizable put wall at 5600.00.

ZeroHedge reports, “US equity futures slumped for the second day, dragged down by earnings and a lack of positive news on trade negotiations. As of 8:00am, S&P 500 futures dropped 0.9% as risk is pared into tomorrow’s Fed announcement and the index failed to breach through technical resistance; Ford slumped after suspending its guidance and warned tariffs will reduce 2025 adjusted EBIT by about $1.5 billion; Nasdaq futures 100 dropped 1.1%, with all Mag7 stocks lower as Tesla and Meta led declines. Palantir tumbled 8% after the software firm’s results failed to meet investors’ expectations, while Ford slipped 3% after the carmaker pulled its financial guidance and flagged a tariff impact of about $2.5 billion on 2025 earnings. German stocks tumbled Estoxx 50 after incoming German chancellor Friedrich Merz suffered a shock setback when he fell short of a majority in an initial vote in the lower house of parliament to confirm him as Germany’s next chancellor. The yield curve is twisting steeper as USD comes for sale. Commodities are higher with WTI crude oil futures rebounding more than 2% from Monday’s YTD low close and gold is marching back to its ATHs. Trade Balance data is the macro data focus.”

VIX futures rose to a morning high of 25.04, still short of the 50-day Moving Average at 25.98.  On a 25-year look-back, the mean value for the VIX appears to be near 18.67.  Note that last week’s low was above that value for the first time since April 2020.

Tomorrow’s options chain shows Max Pain at 24.00.  Short gamma resides between 20.00 and 23.00.  Long gamma may begin above 25.00 and extends to 40.00.

USD futures remain in a corrective decline to a probable target near 98.90 with a possible extension to the Cycle Bottom at 98.38.  Once met, trending strength may reappear by the end of the week.  The Cycles Model anticipates the USD rising to mid-June.

TNX may have begun consolidating  after a sharp rise from its Master Cycle low.  While a correction (pullback) to the 50-day Moving Average at 42.80 may be in order, the uptick may not be over.  An expanded correction may push TNX to 44.00 or higher before the correction is complete.

Bitcoin continues to decline from its Master Cycle high mad last Friday.  Confirmation of a sell signal lies beneath the mid-Cycle support/resistance at 93204.84.  The new Master Cycle may decline to mid-June.

The Japanese Yen made a new high this morning at 70.13 after making its Master Cycle low last Thursday.  The New Master Cycle promises to rise above its Cycle Top at 71.09 and the Lip of the Cup with Handle formation at 71.55.  Should that occur, We may witness the source of a huge liquidity drain in the equities markets accompanied by higher rates in the bond market.  Note that there is resistance at 79.46.  Should the Yen fail to overcome it a new, deeper decline may ensue.

Gold futures rose to a morning high at 3405.71, exceeding the top of its correction at 3386.00.  This may be an expanded correction that indicates an overly bullish sentiment in an overhanging market.  The alternate view is that a marginal new high may occur by the end of the week.

Crude oil futures are consolidating before a possible final decline to a three-year low.  There are tow possible targets for this delcine.  The first is the 61.8% retracement of the 2020-2022 rally near 52.00.  The fractal model suggests a deeper decline to a range near 50.00.  With both of these targets in mind, Crude Oil may be in what is called an accumulation phase.  Given the historic decline and nearby targets. crude offers a viable alternative to equities or bonds.

ZeroHedge observes, “The OPEC price war has made landfall in the US.

Following our report earlier that Saudi Arabia has declared a new price war on OPEC+ quota-busters such as Kazakhstan, and non OPEC+ members such as US shale producers, today after the close Diamondback Energy, the largest independent oil producer in the Permian Basin, made a historic pronouncement today when it said that production has likely peaked in America’s prolific shale fields (something we also mentioned earlier in the day) and will decline in the months and years ahead after crude prices plummeted.”

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.

1:33 pm

The Agriculture Index has been in an accumulation phase for the past two months after a rally from the August lows.  GKX may continue to decline to the mid-Cycle support at 375.18.  However, the Cycles Model anticipates an imminent strong reversal out of this low.  The ensuing rally may be a counterpoint to the likely decline in equities.  In other words, a hedge to a declining market.

1:15 pm

BKX has risen above the d 200-day Moving Average at 122.67 and is testing the mid-Cycle resistance at 123.60.  While it may have another week of time in the current Master Cycle, it has nearly achieved its price target, which is mid-Cycle resistance.   It’s time to prepare for a decline to the Head & Shoulders neckline.  Along with the decline in the BKX may come a decline in overall liquidity for the broader markets.  Today’s rise in the TNX shows a growing reluctance to finance debt, starting with Treasury debt.  Investors are waiting for the May FOMC announcement on the 7th at 2:00 pm.  That may be the focal point for the BKX as well.

7:50 am

Good Morning!

SPX futures hit a  weekend low at 5633.60 while on its way to test the50-day Moving Average at 5603.83.  The Master Cycle may have been completed on Friday at 5700.70.  A further decline beneath the 50-day Moving Average invites a sell signal to be confirmed beneath the 1987 trendline near 5550.00.  The earnings season is almost over, with average earnings better than expected.  However, companies are hesitant to provide forward guidance.  24% of reporting companied mentioned the word “recession” vs. 2% in the previous quarter.  Investor belt-tightening may be putting a drag on forward expectations.

Today’s options chain shows Max Pain at 5650.00.  Long gamma may begin above 5690.00 while short gamma prevails beneath 5635.00.

Zerohedge reports, “US equity futures are lower after the S&P gained 2.9% last week and erasing all post-Liberation Day losses. As of 8:00am, S&P futures were down 0.9%, putting the index on track to snap its longest streak of gains since 2004; Nasdaq futures dropped 1.0% with the Mag7 weaker, pulling markets lower, and cyclicals under pressure. Berkshire Hathaway stock is down 2% after Warren Buffett surprised Berkshire’s annual meeting on Saturday by announcing that he plans to step down at the end of the year. Overnight, Trump’s latest flurry of tariff comments gave little clarity on the path forward for markets: the president suggested some deals could come as soon as this week, but also that he had no current plans to speak with Chinese President Xi Jinping; he also said that a trade deal may come as soon as this week (India? Japan? S Korea?). Trading outside the US has been subdued to start the week, with several financial market including Japan, Hong Kong, China and the UK, closed today. The USD is weaker and bond futures are flat around 4.30%. Crude oil slumped after OPEC+ announced it is increasing supply (411k bpd), hurting oil prices but providing a disinflationary offset to tariff.  Today’s macro data focus is on ISM-Services with the Fed on Weds.”

VIX futures rose to 245.63 this morning.  It may be rising to challenge the 50-day Moving Average at 25.67 where a buy signal awaits.  The Cycles Model anticipates a rising VIX to mid-June.  The big picture shows a possible Cup-with-Handle formation.  A possible target under this formula may be in excess of 100.00.  A Cup-with-Handle is a continuation formation that may indicate acceleration of the trend.

The May 7 options chain shows Max Pain at 24.00.  Short gamma prevails between 20.00 and 23.00.  Long gamma begins at 25.00 and extends to 40.00.

TNX futures rose to 43.33 this morning while the cash market rose to 43.30 thus far.  The Cycles Model shows a possible high trending strength day, reinforcing the reversal from Friday’s Master Cycle low.  Indications are that rates may continue rising to the first week of June.  That allows TNX  plenty of time to challenge the Cycle Top at 48.02.

ZeroHedge observes, “Interest rates are linked to inflation, but they’re also linked to risk.

As a result of recency bias, where we assume the recent past is a permanent state of affairs, many believe near-zero interest rates are “normal.” They aren’t. As the chart of 10-year US Treasury yields–a proxy for interest rates throughout the economy–illustrates, rates in the 3% or lower were an anomaly that only occurred in the relatively brief period of 2011-2022.”

Bitcoin is consolidating after the weekend decline from Friday’s Master Cycle high.  A decline beneath mid-Cycle support at 92108-9.00 offers a possible sell signal.  The Cycles Model suggests a probable decline to mid-June.

USD is pulling back after a breakout higher.  It is possible that the pullback may decline to 99.00 or slightly lower in the next couple of days.  However, trending strength may reappear by the end of the week, suggesting much higher prices.

Gold futures have bounced to a weekend high of 3331.00 as it may have completed its corrective bounce from the Cycle Top.  If so, gold may resume its decline with intensity increasing by mid-month.  Gold may be anticipated to decline over the next two months.

Crude Oil futures made a weekend low of 55.39 as it declined further into its final probe of the current downtrend.  A possible target may be near 50.00 over the next couple of weeks.

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.

4:25 pm

SPX has completed a 30-day correction Cycle from its April 2 high to the April 7 low, then May 2 high.  The panic swings, both up and down, have made this a nightmare roller-coaster ride for investors.  This may be called an Expanded Flat correction where A is the shortest and B is a multiple of A with C being equal to B.

Several items make this correction unique.  First, the unusual length of time.  Usually corrections take only three weeks.  This one has taken over four weeks due to its intermediate size.  Second, Wave B is 1.305 times the size of Wave (1).  Usually it would be a fraction of  motive Wave (1).  Third, it broke through the 1987 trendline, while forming an Ending Diagonal Wave C.    A quick reversal on Monday may confirm this analysis.

7:50 am

Good Morning!

SPX futures bounced from the 50-day Moving Average at 5612.35 but did not make a new high.  Futures peaked at 5651.30 then eased lower.  A decline (close) beneath the 50-day offers a sell signal with further confirmation beneath the trendline near 5550.00.  Equities are running on fumes as the NYSE Hi-Lo Index closed at only 1 new 52-week high yesterday, giving warning of an imminent reversal.  The Cycles Model suggests the decline may be underway with trending strength appearing by mid-week.  The ensuing decline may last to mid-June.

Today’s options chain shows Max Pain at 5560.00.  Long gamma may begin above 5580.00 while short gamma resided beneath 56550.00.

ZeroHedge reports, “US equity futures gained ahead of the April Payolls report, but were well of their highs, after China said it is assessing the possibility of trade talks with the US, the first sign that negotiations could begin between the two sides since Donald Trump hiked tariffs last month. As of 8:10am ET, S&P futures are up 0.4% while Nasdaq 100 contracts add 0.2%, limited by weakness in the tech sector as Apple and Amazon.com shares fall in premarket after their respective updates appeared to underwhelm investors. If the S&P 500 closes in the green on Friday, it would mark a ninth day of gains, the longest winning streak for the US benchmark since November 2004. Asian markets were also broadly higher and Europe’s Estoxx 50 advances 1.5% in early London session, with risk sentiment stoked after China hinted at the possibility of trade talks. Bond yields are unchanged, reversing an earlier drop, oil and USD are both lower, while gold rebounds +0.7% from recent losses. Today, all eyes on NFP at 8.30am ET to assess market sentiment; Consensus expects a 138k print vs. 228k prior and the Unemployment Rate to hold at 4.2% (more in the full preview here).”

VIX futures are consolidating above yesterday’s low, leaving it as a possible Master Cycle low (a completed Cycle).  Should the turn occur today, it may be strong and sharp with follow-0through over the weekend, as trending strength may appear quickly.  VIX has not followed the SPX path to significant new lows, suggesting investor caution.

The May 7 options chain shows Max Pain at 24.00-25.00.  Short gamma dwells between 20.00-24.00, while long gamma may begin at 25..00 and extends to 40.00.

TNX futures dipped beneath the mid-cycle support at 42.31, but rose above it this morning, confirming the buy signal for the 10-year yield.  The next resistance is the 50-day Moving Average at 42.83.  Once above it, the way may be clear for a rally to the Cycle Top at 48.00.  Note the Neckline of a head & Shoulders formation just above it.  The finance minister of Japan threatened to use their US Treasury holdings, the largest of any foreign government, as a negotiation card against the tariffs being proposed by Trump.

USD futures are consolidating within the uptrend established at the Master  Cycle low.  The month of May may show a very strong USD as war is threatened in Europe and the Middle East.  The  flow of money into the USD may be so strong that the EU countries may install capital controls to keep liquidity intact in Europe.

Japanese Yen futures may have made their low this morning at 68.53, completing a foreshortened Master Cycle.  If so, the yen may rise to challenge the Cycle Top and Head & Shoulders neckline, gravely threatening the Yen carry trade.  The carry trade has been especially influential in the rise of the Magnificent 7.  Analysts don’t know exactly how large the Yen Carry really is, but point to a recent figure of $350 billion in short-term external loans in the public domain.  Private loans to US banks and hedge funds may be much more substantial.

Gold futures rose to 3276.85 as it back-test of the trendline overnight.  It is on a sell signal which may be confirmed by a further decline beneath the Cycle Top at 3228.47.

Bitcoin has pulled back from its Master Cycle high made yesterday at 97505.38.  The Master Cycle appears exhausted.  The Cycles Model anticipates a decline may ensue until mid-June.  A spike in volatility is suggested this weekend.

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 overshot the 50-day Moving Average at 5622.00, rising to an overnight high at 5638.50.  Today is day 269 of the current Master Cycle, an allowable extension.  The April month-end was important in that the March 31 closing was at 5611.85, showing a loss of over 50 points for the month in the SPX.  Meanwhile, the NDX made a small gain for the month after a vertical lift-off at the end of the day while the DJIA was down 1332.00 points in April.  The Cycles Model anticipates a decline to mid-June once the reversal is underway.   The sell signal remains beneath 5481.00.  MSFT and META are next for earnings reports.  Both have been running hard to break even in April.

Today’s options chain shows Mas Pain at 56505.00.  Long gamma may begin at 5510.00 while short gamma begins at 5500.00.

ZeroHedge reports, “US equity futures are sharply higher, erasing all of April’s losses on blowout earnings from MSFT and META, and relief over signs the Trump administration is stepping back from its harshest tariff threats. As of 8:00am ET, S&P futures rose 1.2% to 5655, the highest level since before Trump’s Liberation Day announcement and pointing to an eighth consecutive session of gains for the cash index; Nasdaq futures gained 1.7%, as META and MSFT added +6.3% and +7.8%, respectively; most Mag 7 names, NVDA (3.7%) and semis are higher given META’s CapEx increase and MSFT’s reiteration on CapEx guidance. The dollar is higher after the BOJ finally flipped dovish and slashed its growth target pushing USDJPY to 144.5 this morning. It’s light on overnight news as most of Europe is closed today ex-UK along with China; US/Ukraine signed an agreement over the country’s natural resources, UK Manf PMI printed better but remained in contraction, and Trump reiterated that there is a “very good chance” of a deal with China on NewsNation last night. Commodities are mostly lower: WTI -1.2%; Gold -1.7%. The US economic calendar includes weekly jobless claims (8:30am), April manufacturing PMI (9:45am), ISM manufacturing and March construction spending (10am). Fed’s external communications blackout ahead of the May 7 FOMC meeting. Apple and Amazon results are due after the market close.”

VIX futures made a new low at 23.67 this morning, on day 255 of the current Master Cycle.  This may be the final low of the corrective decline.  The Cycles Model shows an increase of volatility tomorrow that may that may be associated with a reversal.  It is also showing a possible panic event starting next week.

10-year Treasury futures declined to 41.23 this morning with a cash open at 41.26 on day 269 of the current Master Cycle.  The powers-that-be are apparently doing their utmost to show a good result for the month of April, as the month of March closed at 42.47, a gain for treasury bonds.

USD futures are lifting above their consolidation above the Cycle Bottom support.  Recognition of the change in trend is still preliminary.  The Cycles Model suggests a possible panic rally as dollar shorts run for cover.

Bitcoin reached its 61.8% retracement level at 96412.00 this morning.   It may yet go higher, but the Master Cycle is stretched and due for a strong reversal.

Gold futures dropped through the trendline to 3209.60 and challenged the Cycle Top at3221.01 this morning, confirming a sell signal.  The Cycles Model has gold declining to mid-July, allowing plenty of time for serious damage being done to the long position.  It is likely to fall to the mid-Cycle support at 2762.69, if not lower.  Gold will ultimately recover, but painfully so for recent investors.

ZeroHedge comments, “Just one week ago, China seemingly couldn’t get enough of gold, and the price of spot briefly touched a record $3500 as a result of, among other things, staggering inflows into Chinese gold ETFs such as the Huaan Yifu, Bosera and Guotai gold ETFs.”

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.

11:09 am

BKX has begun its descent from its Wave (2) Master Cycle high high.  The Cycles Model suggests the decline may be short (about 2 weeks), but deadly, as it is likely to descend sharply beneath the Head & Shoulders neckline.  Note that the 10-year bond yield may be rising as well as the Yen, trapping banks in al illiquid squeeze.  A sell signal has been made.

7:45 am

Good Morning!

SPX futures tested the 1987 trendline near 5530.00 this morning.  Yesterday’s high at 5571.95 occurred on day 267 of the extended Master Cycle.  The extension is simply to get the best month-end result for the SPX on light volume.  A decline beneath 5530.00 may give a sell signal with confirmation beneath the Intermediate support at 5482.00.  The retracement may be considered complete, or nearly so.  Once underway, the ensuing decline may last until mid-June in an intermediate Wave (3), which may be more powerful than Wave (1).  Individual investors may be withdrawing from equities as they seek to reduce the record amount of leverage in the face of growing uncertainty.

Today’s options chain shows puts and calls evenly balanced between 5500.00 and 5550.00.  Long gamma begins above 5570.00, while short gamma rules beneath 5475.00.

ZeroHedge reports, “US equity futures slipped ahead of key GDP and PCE data. As of 8:00am, S&P 500 futures are down 0.3% while Nasdaq 100 contracts lose 0.5%, with Mag 7 names mostly lower (NVDA -1.4%, TSLA -1.1% and META -0.6%) as weak earnings weighed on risk sentiment after Super Micro plunged 16% ahead of Microsoft and Meta numbers later on Wednesday. Bond yields are lower by 1bps to 4.15% while the USD is higher. Overnight, China’s factory PMI slipped into the worst contraction since December 2023 (49 vs 49.7 cons) due to the negative impact of higher US tariffs, while Trump at a rally in Michigan renewed his criticism of Powell, noting he is “not really doing a good job” and that he knows more about interest rates. This morning, Euro Area flash CPI has been mixed, while Q1 GDP data was slightly firmer than expected at 1.2% YoY (vs 1.1% cons). Commodities are mixed: oil is 1.8% lower; previous metals are lower, while base metals are mostly higher. After yesterday’s close, earnings were modestly negative. Particularly, SBUX fell 6.7% on missed earnings amid margin pressure and top-line growth. BKNG commented that there is a moderation in inbound travel into the US, but so far the global leisure travel demand has been stable. Looking ahead today, we have ADP employment, Q1 GDP, PCE and employment cost index. There are no Fed speakers scheduled given blackout ahead of May’s FOMC meeting.”

VIX futures are consolidating beneath the 50-day Moving Average at 25.38.  The low occurred on day 253 of the current Master Cycle.  Should a reversal occur today, the VIX may advance higher to mid-June.,  Wave (3) may be a multiple of Wave (1).  A realistic target may be the March 2020 high at 85.47.  Trending strength may be lurking until the end of the week.

The may 7 options chain shows Max Pain at 26.00.  Short gamma prevails with low conviction between 20.00 and 24.00.  Long gamma rules with even less conviction between 26.00 and 30.00.  Investors are not ready for a trip to the moon.

USD futures may be preparing for a blast higher as the new Master Cycle gains trending strength this week.  The USD shorts may be due for a drubbing as the USD regains its upward trend.  The Cycles Model suggests higher values to mid-June.

The 10-year US Treasury note futures made a low of 4.135 in the overnight market.  This morning it opened at 4.139 and appears to be going higher on day 268 of the Master Cycle.  The decline appears to be over, or nearly so.  Confirmation may be evidenced by a rise above the mid-Cycle support/resistance at 42.26.  Should that occur, the new trend may continue to early June in a very sharp rally above the Cycle Top.  This flies in the face of the argument for reducing rates in a slowing economy.

ZeroHedge reports, “While jobless claims refuse to show even a glimmer of hope to the doomsaying ‘recession is imminent and it’s all because of Trump’ narrative, this morning’s ADP gives us a potential glimpse at what Friday’s ‘most important payrolls print ever’ will offer.

…and the picture is not pretty at all…

According to ADP, the US economy added just 62k jobs in April – the lowest since July 2024’s dip”

Japanese Yen futures are pulling back in a retest of support.  However, another Cycle turn may be imminent.  That being so, the Yen may resume its rally by next week.  Stay tuned for a blow-off above the neckline in the month of May.  The Head & Shoulders formation may be a guide for the next phase of the rally.  In the meantime, those who borrowed from the Yen carry trade may face the dilemma of how much of a loss can they stand?

Bitcoin continues to make its sideways consolidation since the April 23 high.  The trend isn’t clarified yet, but the Cycles Model suggests a strong reaction may be imminent.  Shold the decline be underway, it may also last to mid-June.  A sell signal may be made in a decline beneath mid-Cycle support at 91503.00.

Crude Oil futures may have made their retracement low this morning at 59.20 in a probable Trading Cycle low.  Should that be so, the Cycles Model indicates a resumption of the uptrend through the end of May.

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.

7:40 am

Good Morning!

SPX futures are consolidating beneath yesterday’s Master Cycle high, after having closed beneath the 1987 trendline yesterday.   The NDX also made its retracement high yesterday at the 50% Fibonacci level.  The DJIA retracement high is still intact as of April 15.  Yesterday only 12 of the 3300 companies in the NYSE closed at their 52-week highs.  In other words, the equities market is in shambles after three weeks of bouncing off the April 7 bottom.  The macroeconomic outlook is also getting darker…

Today’s options chain shows Max Pain at 5500.00.  Long gamma begins above 5550.00 while short gamma starts beneath 5450.00.

VIX futures touched a new low overnight at 24.60, but bounced to a high of 25.60 this morning.  It is also due for its Master Cycle low.  Analysts view VIX’s move as a return to normalcy.  However, the technical landscape is far from normal.  The current formation may be labeled a Leading Diagonal.  The stress is gone for now.  However, this suggests the beginning of a new trend.

USD futures may be bouncing from its retracement low at the Cycle Bottom support at 98.63.  If so, it may be on the way to new highs above overhead resistance at 101.95 and the 509-day at 103.27.  USD is on a buy signal above the Cycle Bottom.  There is a double dose of trending strength awaiting in the next couple of days which may surprise the Dollar bears.  The Cycles Model indicates the new trend may continue to mid-June.

TNX futures challenged the mid-Cycle support at 42.24 and has subsequently bounced above it this morning, extending the Master Cycle low another day.  .Today we get the Treasury borrowing estimates while tomorrow we may see the Q2 Treasury refunding announcement.  The Cycles Model suggests trending strength may return by the weekend.  From there we may see yields ramp up through the end of May.

Bitcoin is consolidating beneath it April 23 high at 95924.19.  It has not yet given a sell signal.  However, a decline beneath the mid-Cycle support at 91364.73 may offer one.  Once beneath, the Cyclles Model calls for a steep decline to mid-June.

Gold futures are easing lower, but remain in positive territory.  A decline beneath the trendline at 3250.00 may offer a sell signal.  The All-time high remains from April 22.  The Cycles Model suggest that, once it has begun, the decline may last until mid-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.

8:00 am

Good Morning!

SPX futures may be consolidating beneath Friday’s high at 5528.11, with a weekend high at 5523.10 and a low of 5490.60.  A break beneath Intermediate support at 5484.86 produces a sell signal.  Meanwhile the DJIA made its high on Wednesday at 40376.11.  The SPX exceeded its Fibonacci target at 5491.00 and proceeded to test the 1987 trendline which provides the ultimate resistance.  The immediate Cycles  view is that  SPX may decline to mid-June with a series of panic events starting on Tuesday, if not sooner.  The longer term Cycle view is that the decline may continue with high volatility to mid-May 2026.  This is not a market in which to be long.  However, certain trading desks are turning bullish.

Today’s options chain shows Max Pain at 5475.00.  Long gamma begins at 5500..00 while short gamma may start beneath 5450.00.

ZeroHedge reports, “US equity futures are little changed, reversing earlier losses as much as 0.5%, as global markets are broadly in the green amid a burst of positive sentiment, which even pushed JPM’s recently bearish trading desk to turn tactically bullish this morning (more in a subsequent post). As of 8:00am ET, S&P and Nasdaq futures are down 0.1%, but well off session lows. Nvidia shares fell 1% in premarket after the Wall Street Journal reported China’s Huawei Technologies is getting ready to test a new and powerful artificial intelligence processor that the company hopes can replace some products made by Nvidia; other Mag7 names are mixed with Cyclicals/Semis under pressure and Defensives catching a bid. Europe’s Estoxx advanced 0.5% over early London session with gains led by info tech and consumer staples; Asian stocks were also broadly higher with Japan erasing all post-Liberation day losses.  US equities are focused this week on the tech sector, with Microsoft, Apple, Meta and Amazon all reporting earnings. The week also includes the April US jobs report, due Friday. Bond yields are higher as the curve bear steepens and the USD starts the session stronger. This is a data-heavy week but today’s focus is on regional Fed activity but the key’s this week are NFP, JOLTS, ISM-Mfg, and 25Q1 metrics.”

VIX futures have risen to 26.02 this morning as it may be emerging from a Master Cycle low on Friday.  The Cycles Model shows multiple panic rips to the upside starting this week.  The upside trend may resume to the middle of June.

RealInvestmentAdvice observes, “Market Finds Some Hope

Last week, we discussed the issue with the spat between President Trump and the Federal Reserve chairman, Jerome Powell. As noted then:

“While the markets await the next Federal Reserve meeting, the uncertainty over monetary policy weighs on markets as much as the uncertainty about tariffs. This past week, the market reversed some of its gains from the massive “tariff reprieve” surge. With the MACD back on a buy signal and money flows turning positive, buyers are tepidly stepping back into the market. The 20-DMA continues to act as overhead resistance, defining the current downtrend. While there is undoubtedly a risk of another test of recent lows, which should be expected and why caution remains advisable, a break above the 20-DMA would lead to a rally to the 50-DMA. (Monday’s article addressed the “Death Cross” and what it means for investors.)“”

TNX is emerging from a Master Cycle low made on Friday.  A buy signal for yields may be made above 42.88 with confirmation above the 50-day Moving Average at 43.14.  Trending strength may return by the end of the week, according to the Cycles Model.  A test and possible breakout of the Cycle Top at 48.04 is anticipated.  Investors are questioning the long-held view that Treasuries are a safe haven in times of market distress.  Most commentators believe that interest rates are political and can be manipulated.  That view may come up against a hard wall as interest rates rise in a stagnating economy and a looming war.

On Wednesday last week Bitcoin made its Master Cycle high.  Since then it has been consolidating beneath the high.  A sell signal may be made with a decline beneath the mid-Cycle support at 91211.84.  The Cycles Model calls for a decline to mid-June.  There are multiple potential panic-down days starting mid-week.  The retracement appears to be over.

USD futures are consolidating beneath the high made on Wednesday.  It is on a buy signal above the Cycle Bottom support at 98.70.  The USD appears capable of getting a double dose of energy on Wednesday which should wake up investors to the change in trend.  Analysts are calling the USD low in April “Structural” because   it has dipped beneath previous 2-year lows.  On the contrary, it may be a false flag to turn sentiment in the wrong direction, providing fuel for a huge short-covering rally.

Today’s “spike rally” in gold today may offer hope to investors that the uptrend is still alive.  However, the trend may have turned, leaving investors high and dry.  A decline beneath the trendline at 3250.00 offers a sell signal with further confirmation beneath it.  The Cycles Model tells us to prepare for a decline lasting until mid-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.

9:30 am

Good Morning!

My laptop is still having trouble downloading chart images.  However, a quick summary is sufficient,  Yesterday I observed that three different technical markers suggested that the top of this rebound may be at 5491.00.  Yesterday the SPX closed at 5484.77.  The overnight futures went as high as 5524.60.  However this morning cash market went to 5491.85 at the open, then started to decline.  I don’t know whether that is the top or not, but the issue will be resolved early this morning.

Best wishes,

Tony