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.

7:50 am

NDX futures declined to 18558.00 this morning, then a bounce after making nearly a 50% retracement of the decline in two days after a 47-day decline.  Yesterday morning the Cycles Model labeled the day as a high velocity turn date.  So it was.  The NDX rallies 12.02% after the prior day decline of -9% in a rogue Wave B.  Records like this have not been seen since October 2008.  The Cycles Model suggests a rally to the week of April 21.  Overhead resistance lies at 20000.00, a very round number with a 61.8% Fibonacci resistance nearby.  This suggests a choppy finish of the retracement over the next 1-2 weeks.

SPX futures eased back to 5323.00 this morning after a 9.52% rally yesterday.   The short squeeze rallied SPX up to the 1987 trendline (resistance), which provided support on the way down.   The 1987 trendline also happens to be very near the 50% retracement level, which may cause a lot of choppiness over the next 1-2 weeks.  The 61.8% Fibonacci retracement is above the trendline at 5863.70, which casts doubt on how much further the SPX may rise.

Today’s options chain shows Max Pain at 5450.00.  Long gamma may begin above 5500.00 while short gmma has been cleared to non-existence by yesterday’s short squeeze.

ZeroHedge reports, “The record (notional) bounce-back in global equity markets, which pushed the S&P higher by nearly $5 trilllion in market cap after Trump delayed plans to implement higher reciprocal tariffs on dozens of trade partners, has started to fizzle a bit. S&P 500 futures are down 1.6% after Wall Street logged its best day since 2008 on Wednesday, while Nasdaq 100 contracts drop 1.9% as the market takes some profits and moves to assess Trump’s updates, following a global relief rally. Premarket Mag7 names are under pressure with much of the group down ~2%. Financials, Healthcare and Semis other notable sectors moving lower. Global markets soared in sympathy with the US rally yesterday: Asian equities posted their biggest jump in more than two years and European stocks staging their strongest rally since March 2020, however while the Stoxx 600 surged over 7% at the open it has since pared its advance to less than 5%, as banks and financial services, this session’s outperformers, trim gains. Treasuries reversed an earlier gain, with US 10-year yields first falling 5 bps to 4.28% before reversing and trading unchanged at 4.33%; there is a 30-year bond auction later today which will be closely watched. The mood shift is also evident in currency markets where haven demand has returned, pushing the Japanese yen and Swiss franc to the top of the G-10 leader board. Spot gold climbs $25 to $3,108/oz. The Bloomberg Dollar Index falls 0.6%. Oil prices decline, with WTI falling nearly 3% to $60.70 a barrel. Bitcoin gains fade as it trades lower around $81,000. The main event on today’s calendar is the March CPI which may or may not move markets.”

VIX futures bounced to 39.01 this morning as traders took upside profits in equities.  Monday’s high in the VIX appears to be the master Cycle high on day 260.  The decline may continue to the end of the month to complete the new Master Cycle.

TNX futures declined to 42.63 as it continues to retrace its rally with a possible target of the mid-Cycle support at 42.16.  The Cycles Model suggests the retracement may be over in the next 24-36 hours.  Next week may begin with another surge higher as highly leveraged trades unwind/implode.

ZeroHedge remarks, “While the media focuses on surface-level distractions, a deeper financial crisis is accelerating: the collapse of a $1 trillion+ leveraged trade in the U.S. Treasury market.

ITM Trading’s Taylor Kenney breaks down how hedge funds like Citadel and Millennium—leveraged up to 10:1—are being forced to unwind risky trades that once seemed safe. But as volatility spikes and liquidity vanishes, Treasuries are being dumped en masse, sending yields soaring and swap spreads collapsing.”

ZeroHedge (yesterday) reports, “Well, the 10Y auction is in the bag, and after yesterday’s very ugly 3Y, today’s sale was very solid, at least until one looks a bit deeper.

First, looking at the headline numbers,  we find that the high yield jumped from 4.310% in March to 4.435% today, which is remarkable in itself considering the 10Y was 3.87% on Friday! Still, while the yield was clearly high (and could have been even higher had swap spreads not tightened ever so slightly), it stopped through the 4.465% When Issued by a whopping 3bps. This was tied for the 2nd biggest stop through on record, and the one previous time when we saw a 3bps stop through was in Feb 2023, just as the US banking crisis was raging.”

Bitcoin is consolidating beneath Intermediate resistance at 83331.00 this morning after yesterday’s 12% panic surge.    A potential rally he mid-Cycle resistance  may be forthcoming.

Gold futures rallied to a high of 3154.54 this morning.  It has the hallmarks of a retracement rally which should be ending today.  Standby for a decline beneath the Cycle Top at 3068.00 for  a possible sell signal.

Crude oil may have completed a near-61.8% retracement of the rally out of the 2020 low.  If so, be ready for a surge in oil prices going forward.  If so, the Cycle Top at 78.89 may be a near-term target.

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!

NDX futures have declined to a morning low at 16607.30.  There is a risk of making a further low this morning, with a potential target near 15000.00.  An emerging crisis in the basis trade, primarily in the Treasury markets, has drained liquidity across the spectrum of equities, especially among the Mag 7, which are highly leveraged.  The Cycles Model suggests today may be a high volatility reversal day with a hair trigger in either direction.  Yesterday 53% of the NASDAQ stocks made a new 52-week low, nearly matching the January 2022 low in the NASDAQ, but not at the level of the March 2020 low.

ZeroHedge remarks, “Like orbiting space debris, every loan that has been collateralized by an illiquid asset is a high-speed projectile with the potential to disable any other part of the system it impacts.

Complex systems can undergo what’s known as phase shifts, where the state of the system changes abruptly. The classic example of this is liquid water turning to ice. Since the mechanisms at work–temperature, saline levels, etc.–is known and measurable, then this phase transition is predictable.

Complex systems with emergent properties are unpredictable, and so their phase transitions catch us off guard. The system looks stable, as the risk of sudden instability resolving in a phase shift is not visible.”

SPX futures made a morning low at 4842.00 thus far.  It also has the possibility of a final wash-out that may not have occurred yesterday.  Two possible supports lie at 4744.00 and 4660.00.  Today is day 267 in the current Master Cycle, a turn date with a potential for high velocity.  The Cycles Model calls for a two week bounce out of the low.  Approximately 33% of the NYSE stocks made new 52-week lows on Monday.

10:00 am  The NYSE Hi-Lo Index gave a preliminary buy signal this morning.

Today’s options chain shows Max Pain at 5175.00.  Short gamma offers some support above 5275.00 while short gamma becomes strong beneath 5000.00 with a put wall at 4740.00, 4600.00 and 4500.00.

ZeroHedge reports, “The rollercoaster goes on as stock futures continue to swing wildly, and now we have the extra kicker of the $2 trillion basis trade blowing up and sending bond yields soaring in the US and across most developed economies just as stocks tumble, leading to a complete wipe out of all 60/40 “balanced” portfolios. US futures had slumped as much as 3% overnight amid the ongoing collapse of the basis trade, which we first profiled here, only to reverse and turn briefly green just after 3am ET after China released a White Paper on US trade in which it hinted that it was “willing to communicate with the US” but that initial bounce quickly faded after China also warned it would retaliate… and then it did just that after 7am ET, when Beijing announced it would match Trump’s latest and raise tariffs on US goods to 84%; this quickly sent futures back near sesion lows and down 2%. Pre-market, Mag 7 names were mixed (Tesla +0.39%, Nvidia +0.22%, Apple +1.1%, Meta +1%, Amazon +1%, Alphabet -0.9%, Microsoft -0.8%), while healthcare stocks were lower as pharma tariffs are earmarked to be released soon. Meanwhile, as we described first late last night, forced sales resulting from the unwind of the basis trade have slammed the Treasury market, where yields surged over the last few sessions and 2Y to 30Y yields are higher again today. At one point the 10Y was as high as 4.50%; this morning JPM asks a question: “If trade imbalances are zeroed out, do foreign countries need to hold Treasuries?” USD is weaker and commodities are mixed with Base Metals/ Energy lower, goal soaring higher, and Ags mixed. Fed Minutes are released this afternoon with CP| tomorrow.”

VIX futures ran up to 57.95 in this morning’s session.  Should the SPX decline further,  VIX may rise to the August 5 high at 65.73.  A new high may complete the fractal structure that signals completion of the current iteration.

The April 16 options chain shows Max Pain at 20.00.  Short gamma rests between 15.00 and 19.00.  Long gamma begins at 2.00 and remains strong to 5.00.

TNX leaped above the 50-day Moving Average at 43.52, taking advantage  today’s trending strength day.  This is another blow to the basis trade,  which may be leveraged between 20X and  56X.  That means at 56X leverage, a 1.8% increase in the price of a 3-year Treasury would wipe out the business.  At 20X leverage, a 5% increase in the price of a 3-year T-note would completely wipe out that business as well.  This is reminiscent of the LTCM blow-up in 1998, where the entire financial system was at risk and had to be bailed out by the Fed and a consortium of banks.  In the meantime, bonds are moving with the velocity of small-caps.  Bond volatility is through the roof.  The Cycles Model infers that the crisis may not be over until April 21.

ZeroHedge remarks, “The “Liberation Day” Tariffs announced at the Rose Garden last week went into effect as of 12:01 am. The tariffs on China have been increased since then, as China already retaliated by increasing their tariffs. I, like many refer to them as the “Liberation Day” tariffs, as that is a talking point that seems to appeal to the President and avoids calling them “reciprocal” which they are not.

There have been some interesting “surprises” overnight.

The 30-year bond briefly breached 5%. The always important 10-year yield rose above 4.5% as yields marched incessantly higher from around 10 pm until just after midnight. They are currently back to 4.37%, about 7 bps higher than where they closed.”

Bitcoin made a test of the low, but did not exceed it.  This leaves open the possibility that Bitcoin may have made its master Cycle low on Tuesday at 74426.00 on day 253 of the Master Cycle.  It may be too early to tell, so the Model remains neutral.

Gold futures made a morning high at 3095.00, challenging the Cycle Top at 3061.95, and making s 67% retracement.  It may be a 1-day surge in strength that appears in the Cycles Model.  The Model calls for a continued decline until early May.

Crude oil continues its decline to a new low at 55.13 this morning.  The Cycles Model suggests the panic decline may continue for up to 2 weeks.  The Head & Shoulders formation target appears to be consistent with the model.

ZeroHedge notes, “Oil prices fell to fresh four-year lows early on Wednesday on expectations economies will slump as China, Canada and the European Union push back against tariffs imposed by Trump, but are off the lows ahead of the official inventory and supply data.

“Crude prices slumped to a four-year low with focus squarely on the escalating global trade war and its potential negative impact on growth and demand for energy,” Saxo Bank noted.”

The Shanghai Composite is bumping up against the underside of the neckline of the first Head & Shoulders formation.  The tariff battle rages on with China holding up somewhat better than the US.  Chinese economists are watching this carefully, since that would affect the outcome of the tariff  battle.  The Cycles Model suggests the decline in Chinese equities may last through the month of May, leaving greater losses.

ZeroHedge remarks, “Update: 

After Beijing’s overnight inaction in response to President Trump’s new 104% effective-rate tariff on Chinese goods—and the release of a white paper on trade between the two superpowers—there now appears to be a response from the Chinese side.

Bloomberg reports that China plans to counter Trump’s tariffs with an effective tariff rate of around 84%, escalating the trade war. These countermeasures go into effect on Thursday. ”

The Nikkei Index declined further to a low of 31247.50 today, having fallen through the second Head & Shoulders neckline near 32000.00.  The Nikkei has another 1-2 weeks of decline, leaving a possible support at 25700.00.

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.

1:33 pm

SPX may be making its final test of the lows.  Odds are better than even that it will decline beneath 4835.00, possibly to 4744.00.  This is where you may exit shorts and venture to go long.  Good luck and good trading!

7:45 am

Good Morning!

SPX futures have bounced to 52008.00 thus far this morning, leaving it 15% off the February 19 high.  Yesterday the SPX plummeted to 4835.00, a 21.34% total decline, more severe than a median bear market.  In order to break that (short term) trend, it must rise above yesterday’s high at 5246.67.  However, the Cycles Model infers a deeper low to come, possibly at 4744.00 to 4660.00.  That may complete the Master Cycle low inferred in Path 1.  Despite the strong bounce, there is some (capitulation) selling left to do, especially by retail investors.

Today’s options chain shows Max Pain at 5000.00.  Long gamma begins above 5050.00 while short gamma resides beneath 4950.00.

ZeroHedge reports, “After three days of big losses and record-breaking volatility, equity futures are rebounding sharply following somewhat soothing comments from Treasury Secretary Bessent (although how long the relative calm lasts is anyone’s guess, given there’s little clarity about what Trump wants in exchange for cutting tariffs). As of 8:10am, S&P futures are 2.9% higher, a bounce which started around the time we informed readers that Goldman’s head of risk of risk had turned bullish yesterday afternoon; Nasdaq futures are up 2.7%, with all Mag7 names higher with Semis and Cyclicals also outperforming. European and Asian markets are also broadly higher. The VIX is down 10 vols below 40, while Chinese ADRs are mixed. Bond yields have reversed earlier losses and are up 1bp to 4.22% with the USD dropping. Todays’ macro data focus is the Small Business Optimism report which saw sentiment tumble to 97.4 from 100.7 the lowest since the Trump election (Hiring Plans also slumped; these tend to have a lagged but positive correlation to NFP).”

VIX futures have pulled back to a morning low at 39.71 thus far.  Today is day 263 of the current Master Cycle.  The fractal pattern, however, is not complete.  A potential target may be the August 5 high at 65.73.

Tomorrow’s options chain shows Max Pain at 22.00.  Short gamma resides between 16.00 to 20.00.  Long gamma begins at 23.00 and now extends to 55.00.  Protection has been bought in volume in the last few days.

TNX continued to rise above the mid-Cycle resistance at 42.13.  This may set the stage for a panic rally in the 10-year yield.  It is now on a buy signal.  A potential target for this rally may be the Cycle Top at 47.88.

Bitcoin has bounced, yesterday, but the fractal construct may not be complete.  The Cycles Model also agrees, suggesting another possible week of decline.  Today is day 253 of the Master Cycle, suggesting the decline may be nearing the end.  A reversal in the SPX may spark a reversal in BTC.

US Dollar futures are in consolidation after a sharp rally out of its Master Cycle low.  While not on a confirmed buy signal, the current action supports buying on the pullback.  The new Master Cycle may continue higher until mid-May.

Gold futures have formed a bounce at yesterday’s low with a possible retest of the Cycle Top at 3058.71 before resuming its decline.  The Cycles Model suggests the decline may last another month before a meaningful reversal.  A possible target may be the lower trendline near 2800.00.  Should it decline through the trendline, the next support may be near 2500.00.

Crude oil futures have declined precipitously until yesterday’s bounce, which may end today.  The Cycles Model suggests that crude may have another two weeks of decline ahead of it.   While the Head & Shoulders formation may not be in an ideal part of the structure, it has proven its reliability thus far.  The removal of tariffs may be the spark for this price decline.

OikPrice.com reports, “Trump’s sweeping tariffs and China’s retaliation triggered a sharp drop in oil prices.

• The oilfield services sector is particularly vulnerable, facing reduced demand and profit margins due to falling oil prices, higher import costs, and tighter client budgets.
• With WTI hovering near breakeven levels and OPEC+ unexpectedly ramping up output, analysts foresee consolidation among oilfield service companies as a survival strategy.”

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.

10:35 am

Volatility is spiking as SPX reached a low of 4835.04, then spiked up 8.5% within a half hour on rumors of a 90-day pause in the tariffs.  It is now back beneath 5000.00 and sinking fast.  It appears that we may see a 10% down day from here.  Capitulation may rule the day.

7:45 am

Good Morning!

NDX futures traded down to 16332.50 this weekend before a bounce this morning.  Friday’s close was beneath the mid-Cycle support at 17428.00, leaving it vulnerable to a further decline.  An important support to point out is the 1987 trendline near 15000.00.  Should today be another 10% down day, we may see a bounce at that trendline.  However, a failure to hold at 15000.00 today assures the decline may extend to the next support level at   10440.00.  The Cycles Model calls for a possible high velocity reversal by Wednesday.  Commentators are now discussing past bear markets.  There is no sign of capitulation, yet.

SPX futures plummeted to a critical support at 4802.70 this morning, then bounced to 5000.00.   The selling isn’t over yet.  Should SPX find today’s support at 4800.00, this crash may have the same magnitude as the 2008 decline.  Failure to hold today at 4800.00 suggests a much larger magnitude decline may ensue.  This may bring on capitulation, where everyone is headed for the exits.  Further supports today include 4744.00, 4660.00 and 4500.00.  The Cycles Model suggests a high volatility reversal no later than Wednesday.

Today’s options chain shows Max Pain at 5300.00.  SPX options are deep in to short gamma.  There are put walls of 5000 contracts or greater starting at 4950.00 and every 50 points down to 4500.00.  The reason for the morning bounce was to enable dealers to short SPX futures as payouts may explode.

ZeroHedge reports, “US equity futures are pointing to another day of staggering losses – even as they rise from session lows – as Trump doubled down on sweeping tariffs and as the world continues its flight to safety. S&P futures had plunged as much as 5.5% around the time Europe opened but the stock selling stampede abated as traders boosted expectations for Fed rate cuts amid economic fears just days ahead of Trump’s deadline for reciprocal tariffs to take effect. The rout accelerated late on Sunday after President Trump struck a defiant tone and repeatedly defended the tariff barrage unveiled last week. His remarks underscored those of his top economic officials, who on Sunday doubled down on Trump’s plan, dampening risk sentiment further. Some comments this morning by Jamie Dimon urging a quick resolution to the trade war, helped calm sentiment. As of 8:00am S&P futures are down -2.6% with Nasdaq futures dropping around 3.0% but there is zero liquidity so it’s pretty much impossible to ascribe a snapshot to what is happening. The yield curve is bull steepening, with 5x rate cuts now fully priced in by YE25. USD is flat and commodities are being sold with Energy complex the biggest laggard, though oil is also well off session lows. The VIX is rising again, and is around 50, while oil falls below $60/barrel for the first time since April 2021 on fears that demand will collapse. Ten- and two-year Treasury yields are falling with traders pricing in five Fed cuts this year and a possible emergency move. This is a light macro data week with CPI on Thurs the highlight as earnings kick off later this week, although nobody will care about anything besides tariffs and trade war.”

The VIX index rallied to 60.13 this morning at the European open before calming down somewhat beneath 50.00.  Investors are paying top price for protection that may be needed in the next couple of days.  The next resistance is the August 5 high at 65.73.  Further resistances may include 75.95 and 85.78.  The VIX term structure is showing extreme stress.

The April 9 options chain shows Max Pain at 22.00.  Short gamma remains between 16.00 and 21.00.  Long gamma begins at 24.00 and peaks at 30.00.  This op-ex is catching VIX traders by surprise.

TNX reversed out of its Master Cycle low on Friday and continues its climb toward the mid-Cycle resistance at 42.12.  TNX only has two weeks in the new Master Cycle.  However, it may prove to be a powerful rally, despite the short duration.

Bitcoin extended its decline beneath the March low.  The Cycles Model suggests the decline may extend for another week.  Should the strength of the decline continue, bitcoin may test the August 5 low near 48200.00.

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.

10:57 am

SPX may have completed Path 1.  The low thus far was 5118.78, accomplishing the target of 5119.25.  There may be another test of the low.  If the trendline holds, there may be a 2-week rally that may test the 1987 trendline at 5500.00.  A buy signal may be offered above the Cycle Bottom resistance at 5330.08.

Should the SPX  go lower, here is a likelihood tat SPX may be taking path 2, which  allows a much deeper decline.

10:26 am

BKX is crashing.  The problem is that the current Master Cycle has at least another week to go.  The next support at 101.05 may not hold at this rate.  Should BKX go lower, the next support may be near 70.00.

10:11 am

NDX continues its pace of decline to a possible target at 17435.00, potentially entering the bear Market (-20%).  It has fallen through the Cycle Bottom support and the August 5 low appears to be the next support level.  A Goldman trader quipped, “…the world/market is changing every 15 minutes…”

8:00 am

Good Morning!

SPX futures made a morning low of 5174.40 thus far, shoeing the characteristics of a third Wave.  However, there are  at least two alternate paths being proposed by today’s action thus far.  The first (and highest confidence) path is a low today near the August 5th low at 5119.26, ending the current Master Cycle on day 262. This suggests a two-week rally in the new Master Cycle before rolling over into a panic decline.

The Second path suggests the Master Cycle may have completed early on March 25 (day 252). That suggests a two week further decline in the new Master Cycle.  This infers a take-down of sorts that may go much lower.

SPX is deep into short gamma with massive put holdings every 50 points down to 5100.00.  The largest is 35,469 put contracts at 5100.00.

ZeroHedge reports, “For a few hours it seemed like we could even stabilize, if only a bit, ahead of today’s scheduled main event: the March jobs report at 8:30am ET. And then all hell broke loose at 6:08am when this Bloomberg headline hit:

• *CHINA ANNOUNCES EXTRA 34% TARIFFS ON US GOODS

In other words, far from seeking concessions, Beijing is now looking to escalate the trade war further, and forcing Trump to double down with even harsher retaliatory tariffs on China of his own, which at this point may push the blended tariff rate on Chinese goods above 100%.

What followed instantly was sheer, unadulterated liquidation panic:

• *S&P 500 FUTURES DECLINE 4.1%, NASDAQ 100 FUTURES DOWN 4.6%
• *COPPER PLUNGES MORE THAN 5%, BIGGEST LOSS SINCE JULY 2022
• *US 2-YEAR YIELD FALLS TO 3.498%, LOWEST SINCE SEPTEMBER 2022
• *BRENT OIL DROPS BELOW $65 FOR FIRST TIME SINCE AUGUST 2021
• *US CREDIT RISK GAUGE JUMPS MOST SINCE REGIONAL BANKING CRISIS
• *STOXX EUROPE 600 INDEX FALLS 5.2%, MOST SINCE MARCH 2020

Instead of writing, we’ll let the charts do the talking, summarizing the bloodbath so far. The S&P is set to record losses on six of the past seven weeks.”

VIX futures rose to 32.68 this morning, but eased back under 30.00 at this writing.  While the SPX is making record lows, the VIX hasn’t panicked, yet.  Should the SPX decline to 5100.00, the VIX may very well match the August 5 high at 65.73.

The April 9 options chain shows Max Pain at 22.00.  Short gamma resides from 16.00 to 21.00.  Long gamma occupies the space from 23.00 to 30.00.

Bitcoin did not reach a new low in the overnight market.  Instead, it may  have reversed course to go higher.  Should that be so, a new buy signal may be made with a rally above Intermediate resistance at 84882.00.  Bitcoin has another week to go in its current Master Cycle.  The potential target may be the 100-day Moving Average at 93045.41.

TNX futures made a morning low at 38.60 while the cash market made a low of 38.86, very near the rising trendline beneath it.  Today is day 260 in the Master Cycle, very near the 258-day average.  What may come next is a 2-week reversal that may challenge the Cycle Top.

Gold May have made its Master Cycle top yesterday, at 3163.99 on day 260 of its former Master Cycle.  Today is fell to a low of 3089.00 before a minor bounce.  The Cycles Model suggests a 1-month decline which may break the uptrend.  A sell signal may be obtained beneath the Cycle Top at 3050.00.

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.

1:30 pm

SPX may have made its Master Cycle low at 5415.66 (cash) late this morning.   It may make yet another low before today’s session is closed.  However, chances of nailing the exact low are slim.  It’s time to find a spot to cover shorts and go long.  Good trading!

10:25 am

SPX is headed for the 2-hour Cycle Bottom at 5408.70 today.  This may be the area to cover shorts and go long.  A lot of people are guessing what comes next.  Most are extremely bearish.  “Throwing in the towel” may be a good indicator of a change in trend.

ZeroHedge observes, “Apple shares are plunging almost 10% in premarket trading, as the iPhone maker is viewed as especially exposed to the Trump administration’s tariff announcements.”

7:45 am

SPX futures plummeted to an overnight low of 5440.10 as Trump delivered the “Declaration of Economic Independence” after hours, leading to massive selling of Tech names and hedge fund shorting across the board.  The decline still has the ability to go near  5400.00 (revised) today.  However,  be prepared for a strong reversal near mid-day.  Today is day 261 of the Master Cycle, suggesting a reversal may be imminent.  This is the position from which to cover shorts and go long for an approximate 3-week correction after six weeks of decline.

Today’s options chain shows Max Pain at 5650.00.  Long gamma may begin above 5675.00 while short gamma rules beneath 5600.00.

ZeroHedge reports, “Well, Trump’s “liberation day” is here… and it has liberated countless traders of their net worth and risk assets: the market’s reaction to Trump’s newly-instituted “much worse than expected” reign of tariffs is nothing short of a bloodbath, with a global selloff hitting stock markets everywhere but especially in the US where conventional wisdom, at least early on, is that the recession will be worst. As of 8:00am ET, S&P futures are down 3.5%, while Nasdaq futures tumble 4%, but should really be down more: Pre-market, AAPL (-7.5%), AMZN (-5.6%) and TSLA (-4.6%) are among the worst performing stocks within Mag 7, which is red across the board. As Trump unveiled yesterday (after the close), all US imports will have a minimum 10% tariff, with additional duties for big trading partners. China faces a tariff of well above 50% on many goods; the EU is subjected to a 20% levy. Bond yields crash in anticipation of a looming recession, down 4-10bp lower across the board, the Bloomberg US Dollar index is down -1.6%, set for its biggest drop . Commodities are all also sharply lower: WTI -3.9%, silver -3.4%, even gold is back under $3000. On today’s calendar we get initial and con continuing jobless claims as well as the latest ISM Services data.”

VIX futures rose to 24.03 this morning and may challenge the Cycle Top resistance at 25.10.  Today is day 258 of the current Master Cycle, suggesting a reversal may also be imminent.

The April 9 options chain shows Max Pain at 19.00.  Short gamma resided at 16.00-18.00.  Long gamma begins at 20.00 and extends to 30.00, where it is quite strong.

Bitcoin rose to its mid-Cycle resistance at 284.56.  It has up to two weeks left in its Master Cycle.   The Cycles Model suggests the Bitcoin may go higher, with the 100-day Moving Average at 93206.87 as a potential target.  There are no alternate views at this time.

TNX futures declined to an overnight low of 40.33, potentially making its Master Cycle low on day 259 of the current Cycle.  The Cycles Model suggests an approximate two weeks of rally from the low.  What makes it unique is that there are several indicators of strength in the next two weeks.

USD extended its Master Cycle low today to 101.07 futures and 101.37 cash.  The decline may be complete, or nearly so.  The USD suffered a sharp decline since Trump announced his new tariff policy.  However, with that behind us, adjustments may be made that may normalize the USD position.  The Cycles Model suggests a rising USD through mid-May.

The Nikkei 225 Index plunged beneath 35000.00 in overnight trading, dropping as low as 33729.50.  There is a double Head & Shoulders formation here that indicates serious weakness in the Nikkei.

The EuroStoxx 50 Index fell over 3% in overnight trading toward the ETF mid-Cycle support at 51.17.  It has been on a sell signal the past week, so this shoul not be a surprise.  The Cycles Model suggests the decline may continue through the month 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.

8:05 am

Good Morning!

SPX futures have declined to a morning low of 5581.50 thus far.  While the risk remains that the SPX may decline to the Cycle Bottom at 5343.93, today is the day to begin shedding the shorts.  Trump’s “Liberation Day” looms big at 4:00 pm.  No matter how this is spun, the effect of the tariffs may do much for the US economic image and attract even more capital to the DJIA while lesser amounts may funnel into the SPX and NDX.  The majority of the money will go into the 30 Industrials because these stocks are the most stable.

Today’s options chain shows Max Pain at 5645.00.  Long gamma begins at 5660.00 while short gamma resides beneath 5600.00.

ZeroHedge reports, “Stocks resumed their slide and Treasury yields held near one-month lows with just hours to go before President Trump’s tariffs tariff announcement, amid swirling speculation over the details of the proposed trade action. As of 8:00am, S&P futures traded 0.5% lower; tech underperformed sending Nasdaq futs down 0.7% with Mag 7 all lower with TSLA (-1.0%) and NVDA (-0.6%) being the biggest laggards; Newsmax dropped 25%, pausing a blinding IPO rally that briefly pushed the company above Fox Corp. European and Asian stocks both slumped.  The Dollar sank and the yield on 10-year Treasuries was steady after falling on Tuesday to the lowest since early-March. Commodities are mixed: base metals are lower, while precious metals are mostly higher (silver +1.0%) and gold just shy of its record high. All eyes on the Rose Garden event “Make American Wealthy Again” at 4PM with Trump delivering his announcement on tariffs. On today’s data calendar, we get ADP (exp. 120k) and Factory Orders (0.5%, ex trans 0.4%).”

VIX futures reached a morning high at 21.98, remaining beneath the Cycle Top at 25.08.  Equity drawdown risk remains high for the next few days, suggesting the VIX may go higher.  However, today is day 257 in the Master Cycle, suggesting a turn lower by the end of the week.

Today’s options chain shows Max Pain at 19.00.  Short gamma resides between 16.00 and 18.00.  Long Gamma begins at 20.00 and has large footprints all the way to 30.00.

The 10-year Treasury Note futures sank to 41.22 this morning.  Today is day 258 in the Master Cycle, suggesting a strong reversal may be imminent.  While there are no immediate indicators of a low, the Cycles Model suggests a Master Cycle low may be in place by the end of the week.  A cross above the mid-Cycle resistance at 42..16 offers a potential buy signal for higher yields.

Bitcoin may be consolidating beneath Intermediate resistance at 85070.00 this morning.  The probable pathway for the next week may be to rise as high at the 100-day Moving Average at 93387.29 prior to a strong reversal.

Gold futures may have reached a lesser high this morning at  3166.69, short of yesterday’s high at 3177.00.  The numbers are not yet final, due to the tariff announcement after the close.  So we wait for the CME close and the announcement.  Futures may reach the trendline at 3200.00 tonight while the cash market remains lower.

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.

11:10 am

The Agricultural Index is showing signs of strength and may continue to do so during the month of April.  The Cycles Model suggests the Ag Index may rally through the month of May as well.  This may be one of the few assets showing long-term bullish propensities going forward.

8:00 am

Good Morning!

SPX completed a Fibonacci 38.2% retracement of its last week’s decline yesterday.  This morning’s futures have made a partial pullback  to 5575.60 thus far.  We are neutral thus far, waiting for the pullback to be complete.  Yesterday was day 258 of the Master Cycle, giving us a completed formation to the downside.  However, there may be a retest of that low in the next couple of days.  Once the retest is complete, there may be a three-week correction of the decline.  There is an alternate view, calling for the SPX to decline beneath the 1987 trendline.  Should that occur, there may be a decline to the Cycle Bottom at 5342.86.  a 13% decline from the peak.  As it stands, the decline thus far is a little more than 10%.  Yesterday’s buying came mostly from a one-off pension quarter-end rebalancing.  That leaves the commercials and hedge funds to decide whether to participate in buying as well.  With earnings reports coming in the next week, a lot may depend on the results. Retail investors are a bit stand-offish yet.

Today’s options chain shows a highly contested Max Pain level at 5600.00.  Long gamma may begin above 5650.00, while short gamma may proceed beneath 5550.00.  The options landscape has changed to a more neutral tone.

ZeroHedge reports, “US equity futures fell abruptly just around 6am ET, reversing earlier gains and unable to benefit from the positive risk tone in European trade, hinting at another very volatile session on Wall Street, as tomorrow’s tariffs “liberation day” loomed over markets. Gold extended its winning streak, rising to another record high. As of 8:00am ET, S&P futures were down 0.5%, reversing an earlier gain of 0.2%, after the Washington Post reported a White House proposal to impose tariffs of around 20% on most imports. Nasdaq futures slid 0.6% as Tesla rose modestly but other Mag 7 stocks were in the red. European and Asian markets both rose. Bond yields slid 4bps, pushing the 10Y yield to 4.16% while the USD traded higher on the back of Euro weakness. Commodities are mostly flat this morning with base metals declining (copper -0.9%). Overnight, headlines were largely light, with geopolitical tension and trade policy remaining uncertain. Trump seems to dial back his criticism on Putin, per BBG article (here). We will get the Final March ISM-Mfg this morning: consensus expects the Index to print 49.5 survey vs. 50.3 prior; we also get the latest JOLTS report.”

VIX futures bounced to 21.63 after testing the Cycle Top resistance at 25.06 yesterday.  The Cycles Model suggests a new high may be in the making this week, with the current Master Cycle ending no later than Friday.  This leave a lot of uncertainty about the direction of the SPX in the next few days.  Speculators are net long the VIX, leading to more volatility.

Tomorrow’s options chain shows Max Pain at 19.00.  Short gamma resides from 15.00 to 18.00.  Long gamma resides from 24.00 to 32.00.

TNX futures declined to 41.47 while the cash market low was 41.50.  Today is day 257 in the current Master Cycle.  TNX is in the reversal window and may have met its target for this decline.  A bounce above the mid-Cycle resistance at 42.16 may confirm the change in direction.  Most investors assume that interest rates may stay low or go even lower.  That is a false assumption that may meet with dismay in the next week, as TNX may power its way above the current consolidation range.

Bitcoin may be completing its retracement to a Fibonacci high.  The most likely target may be the 50% retracement at 92900.00 or the Intermediate resistance currently at 93470.00.  The retracement may last another two weeks before reversing back into a decline.  While bitcoin has been a favored tool for money laundering, Trump’s crackdown on the cartels and Chinese fentanyl suppliers may deal a blow to the dark side of bitcoin.

The Nikkei 225 Index may be ending its 7-month consolidation to break through the neckline of the Head & Shoulders formation, ending in a 10% loss for the first quarter.  It had made its Master Cycle high on March 26 and has the green light to decline over  the next three weeks.  While that doesn’t seem to be a very long time, the decline may redouble through the month of June, as well.  There may be two Head & Shoulders formations that would offer successively more bearish targets.  Be aware that money escaping the declining Nikkei may find its way into US equities.

The Japanese Yen emerged out of its March 27 Master Cycle low to begin to challenge the USD for supremacy.  The simple reason is that the Yen offers liquidity and may benefit from the declining Japanese equities.  This may mean trouble for the Yen carry trade, which is dependent on a low valuation for the Yen.  This may spell the end of the leveraged trades that are available today.

The EuroStoxx Index has bounced this morning after crossing beneath the 50-day Moving Average at 54.33.   Anyone thinking of investing in European stocks should reconsider.  The sell signal prevails and the Cycles Model suggests the decline may continue to the end of May.  This may send more European investors’ money to the US, at least until capital controls are set.  Should war break out in Europe, assets may be trapped by capital controls keeping European investors to flee to the US>

Gold futures have extended their gains to 3177.00 while the Merc has lagged a bit.  However, both have made their respective targets on day 258 of the Master Cycle. There is an outside chance that gold may extend to the Cycle Top at 3200.00, so the current stance i remains neutral.  Gold is claimed to have the highest return-to-risk ratio, but that is looking through a rear-view mirror.

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″55 pm

SPX may have completed its initial bounce.  If so, there is the possibility of a retest of today’s low.  A decline through the 1987 trendline may signal a continuation of the decline while a bounce above it confirms the three-week reversal.

10:18 am

The Ag Index is emerging from its Master Cycle low last Friday.  It is on an aggressive buy signal that may not be confirmed until it rises above the Intermediate resistance at 389.79.  However, the bounce from the trendline and ,id-Cycle support at 370.93 confirms the reversal.   This is one asset class that is on the rise for a long time.

9:55 am

BKX continues its decline that may last to mid-April.  Liquidity may be more influenced by the 10–year Treasury yields than the stock market itself.

7:45 am

Good Morning!

NDX futures have declined to a morning low of  18963.30 thus far as domestic indices are at day 258 of the Master Cycle. The decline may reach its intended target near 18407.66 in the next 24-48 hours, followed by a tradable 3-week bounce back to the mid-Cycle resistance at 20366.38.  This has been the worst first quarter and worst month of March for NDX since 2022.

SPX futures have declined to 5507.90 thus far this morning.  Should SPX decline beneath its 1987  trendline, a 3-week bounce may elevate it back to the mid-Cycle resistance at 20366.72, with a future bearish path to follow.  However, should the SPX bounce at or above the 1987 trendline near 5480.00, the 3-week bounce may go considerably higher.

Today’s options chain shows Max Pain at 5595.00.  Short gamma begins beneath 5575.00 and extends to 5475.00.  SPX is currently beneath a massive wall of puts exceeding 45,000 contracts at 5565.00.  No catalyst is needed to push the SPX lower.

ZeroHedge reports, “US equity futures and global markets tumbled on the last day of the worst quarter for US stocks in 23 years as the April 2 “liberation day” comes into sharp view. As of 8:00a, S&P futures are down 1.1% after Trump dented hopes he would limit the initial scope of levies set to be unveiled on Wednesday, telling reporters aboard Air Force One he plans to start with “all countries” leading to Goldman promptly slashing its S&P price target for the second time in weeks, now seeing the index dropping to 5300 in 3 months; Nasdaq futures tumbled 1.6% driven by heavy selling of the Mag 7 stocks (NVDA -3.2% and TSLA -4.1%). It wasn’t just the US: Europe’s Stoxx 600 slid 1.2% and Asian stocks suffered sharp losses, with the Japan’s Nikkei 225 index losing 4% and Taiwan’s stock index falling into a correction. Bond yields are 4-7bps lower; the USD was lower at first but has since rebounded . Commodities rise across the board: gold trading up 1.1% to a new record high of $3120, with base metals mostly higher, and Brent above $74. This week, all eyes are on April 1st (all studies related to trade policy will be completed) and April 2nd (reciprocal tariff announcement, sectorial tariffs such as pharma, semis and commodities, the resumption of 25% tariffs on USMCA-compliant goods). We will also receive ISMs and NFP this week.”

DJIA futures have declined to a morning low at 41241.50 thus far.  I am showing a weekly chart, since the DJIA bullish impulse may not be complete.  The 1987 trendline is not shown on the daily chart since the DJIA is still a considerable distance beneath it.  This chart shows that the bullish impulse may not be complete until the DJIA reaches 48000.00.  It is possible that the next three weeks may elevate the Industrials above the recent highs with 48000.00 possible by the end of April.

Why is the bullish outcome for the DJIA possible?  Aside from having an incomplete fractal, the DJIA is considered the safest haven in the world at this time.  War may be breaking out in Europe and the Japanese economy is failing.  Investors in those two regions may choose to flee to the safest investment possible.  While US treasuries may attract some cash, the DJIA offers the best long-term safety net.  As the war drums in Europe beat louder, investors there may be fleeing the crumbling political and economic train wreck to a place of relative safety in the US.

VIX futures rose to 22.42 this morning.  The odds of making a new high are substantial.  However, it may be end end of the Master Cycle as well.  Trade it if you wish, but have your exit close at hand.

The April 2options chain shows Max Pain at 19.00.  Short gamma resides between 15.00 and 18.00.  Long gamma may begin above 20.000 and extends to 32.00.  Options investors have been slow to hedge until now.  Unfortunately new hedges may be trapped by a sudden reversal.

TNX has continued its decline beneath the mid-Cycle support at 42.16.  However, the current Master cycle is on day 256, suggesting a reversal may be imminent.  So, although there is a sell signal, it is not likely to be tradable.  What is to follow, ay be imminently tradable as TNX may be due for a two-month rally following the potential reversal.

Bitcoin continues its consolidation with two more weeks left.  It is possible that the consolidation may end in a high near Intermediate resistance currently at 93583.34.

Gold futures rose to a morning high at 3160.14 while the CME trades closer to 3100.  A possible reversal may be made over the next 2-3 days.  Once the reversal is made, gold may be traded lower over the next month.  A likely target may be near the lower trendline at 2800.00.  Should it remain above the trendline at the end of April, gold may actually go higher.  However, once beneath the trendline, the futures become more bearish.

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.

11:54 am

SPX has been unable to make an appreciable bounce at 5600.00, leaving the possibility of continuing the decline toward the 1987 trendline this afternoon.  SPX is in deep short gamma, forcing the dealers to go short as well to cover the expiring puts at the end of the day.  This morning I mentioned a “wall” of puts at 5675.00.  That is not the end of them.  Here are the major layers:

5675.00 – 13681 put contracts

5650.00 –  17134 put contracts

5600.00 – 11503 put contracts

5500.00 – 9911 put contracts

There are multiple layers of 5000+ contracts between these layers.  Once the market “let’s go” there is little to stop the carnage.  No catalyst is needed.

ZeroHedge remarks, “Are Democrats trying to spark a recession by cr”ashing the stock market with their insanely partisan and outlier-ish survey responses?

10:37 am

The Ag Index has reached its target at 370.85 today, on day 252 of its Master Cycle.  It is possible a week early with some additional downside to go.  However, this is an ideal place tto accumulate shares of agricultural commodities, or buy a basket of commodities through an ETF.  Now that the lustre has worn off equities, food producing commodities offer a tangible alternative.

10:10 am

BKX has crossed beneath mid-Cycle support at 123.07 and is testing the 200-day Moving Average at 121.52, creating a potential sell signal.  The Cycles Model suggests a decline may be in order until mid-April.  Should the BKX decline beneath the 200-day, the target may be the Cycle Bottom at 101.61 in a rather sharp decline.  The Cycles Model infers multiple bouts of trending strength over the next two weeks.

9:55 am

The EuroStoxx 50 is going lower.  The ETF has crossed beneath Intermediate support at 55.29, creating a sell signal.  Those investing in EuroStoxx seeking maximum gains may see losses, instead.

ZeroHedge remarks, “A few harsh realities to consider: 

1) The hard-left has infiltrated all Western institutions and actively seeks to undermine and subvert all Western nations – regardless of which particular puppet politician is in power.

2) Most countries within Western Europe will see their native young become a minority well before 2050. …”

8:00 am

SPX futures declined to 5665.00 before a bounce which hasn’t regained lost ground thus far, having crossed beneath the 200-day Moving Average at 5757.00.  This action generated a new sell signal.   The Cycles Model indicates growing trending strength starting next week that may allow the SPX to pierce the 1987 trendline.  Should that be so, the fractal pathway appears to lead the decline to 5100.00, approaching bear market territory.  Volume has been thin thus far, as investors take a wait-and-see approach.  However, volume may accelerate as SPX begins to make new lows, crossing the trendline.

Today’s options chain shows Max pain at 5725.00.  Long gamma may begin above 5750.00 while short gamma rules beneath 5700.00, with a massive put wall at 5675.00.  Dealers and hedge funds are already asking the Fed to bail them out in the next crash.

ZeroHedge reports, “US equity and global stock markets slumped while gold topped a fresh all time high as investors braced for today’s core PCE report, the Fed’s preferred inflation metric, and continued to worry about the lasting economic damage of the trade war amid daily tariff news and a halt in progress on the geopolitical front, as the market now awaits the April 2 tariff announcements. As of 8:00am ET S&P futures are down 0.2% but off session highs, with the Nasdaq lagging -0.4% and small caps modestly higher; Mag 7 names are mostly lower premarket: AAPL -0.7%, AMZN -0.5%, while TSLA +1.6%. European and Asian stocks are also lower: Bond yields are lower and the USD trades near session highs. Commodities are mixed with base metals all lower this morning, but gold is making a new record high rising above $3,080 per ounce. Brent trades near session highs above $74/bbl. Looking ahead today, we will get PCE data for February at 8:30am (consensus expects headline and core PCE up 0.3% MoM, and 2.7%/2.5% YoY headline/core) followed by UMich survey data at 10am. Following the data, we will hear from Fed voter Barr and non-voter Bostic.”

VIX futures rose to 19.58 in the overnight session.  In doing so, it has risen above the 50-day Moving Average at 18.61, creating a buy signal.  The next move may be substantial, as the length of third waves are often multiples of Wave 1.  VIX may meet or exceed the height of the August 5 rally.

The April 2 options chain shows Max Pain at 18.00.  Short gamma occupies 15.00-17.00.  Long gamma may begin at 20.00, but only extends to 24.00.  The options market may be about to wake up.

TNX is pulling back impulsively with a potential target at the mid-Cycle support at 42.17.  Pullbacks such as this are typical after a breakout.  Investors are interpreting this as a resumption of the sideways trend  However, once TNX meets its target the Cycle will flip upward in a dramatic way by early next week.

ZeroHedge reports, “Moments ago, the Treasury sold the week’s final coupon auction and after a stellar stopping through 2Y sale, a mediocre, tailing 5Y, today’s 7Y was the ugliest of the lot.

Stopping at a high yield of 4.233%, the auction yielded 0.4bps more than February and also tailed then When Issued 4.227% by 0.06bps; this was the first tail for the 7Y tenor since August 2024.”

Bitcoin has pulled away from the mid-Cycle resistance at 87698.70 and has fallen beneath Intermediate support at 85904.08, creating a sell signal.  The Cycles Model suggests a decline until mid-April that may hit or exceed the Cycle Bottom support at 60775.03.  Should that be so, the alternate target may be the August 5 low at 49202.91.  Bitcoin has been favored by investors to expatriate their wealth away from countries such as China and some European countries.  That impulse has already seen its peak and the onset of capital controls may now have the opposite effect.

USD futures are consolidating beneath the mid-Cycle resistance at 104.89.  The Master Cycle bottom was made on March 18 and the USD may be about to launch a 6-7 week breakout rally soon.  Note that both USD and the Yen are set to rally simultaneously.

The Japanese Yen has marked a Master Cycle bottom yesterday, signaling a potential resumption of the uptrend.  As the Yen appreciates, those who have been using the Yen carry trade for financing may get squeezed.  Note the potential target should the neckline be breached.

Gold is fast approaching its  Cycle high as futures top out at 3124.40 while the CME trades about $50.00 lower.  The initial target of 3100.00 has been met (futures) and there are only a few days left in the Master Cycle.  Futures are trading higher due to foreign demand, while domestic demand is lagging.  Gold prices may decline through the month of April.  The initial target may be 2300.00.  A decline beneath the Cycle Top at 3010.00 may invoke an aggressive sell signal (reduce exposure).  A confirmed sell signal may lie beneath Intermediate support at 2945.00.