The Practical Investor

9:42 am

BKX is edging higher this morning as it completes its current Master Cycle.  Today is day 252, leaving only 3 more market days of possible new highs.  The financial system is showing signs of stress.

ZeroHedge remarks, “The banking industry has benefited from the Federal Reserve’s measures to control inflation.

Over the past two years, the U.S. central bank paid out more than $400 billion to banks and money market funds in interest payments and other transactions meant to curb lending to fight inflation, based on data published by the Fed as of July 1.

After a rate hike spree in 2022 and 2023, the central bank now pays 5.4 percent annual interest on “reserves” – any money a bank leaves parked at the Fed overnight.

The banks, on the other hand, haven’t necessarily passed on the windfall to its customers, as deposit rates remain very low compared to the rates banks receive from the Fed.”

8:30 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

SPX futures reached an overnight high at 5514.40, signifying a high probability that the Current Master Cycle may end at a high.  Resistance lies at 5543.00, which may provide a suitable target.  Overnight money flows are fleeing from Europe and Japan while domestic retail investors provide daytime inflows.  Dealers are net long, while hedge funds continue to sell.  There is no exuberance.  The sentiment is that there is no alternative.  One must not be short while the market continues to rise.  Today is day 250 in the Master Cycle. The Cycles Model suggests a reversal is due in the next week or so.  Earnings reports start next week with high expectations.

Today’s options chain shows Max Pain at 5500.00.  Long gamma may start at 5525.00 while short gamma may begin at 5495.00.  Options are tightly wound and may react violently to any stimulus.

ZeroHedge reports, “US futures traded at new record highs amid rising optimism a Fed rate cut is coming, perhaps as soon as the end of the month, and ignored sticky high yields which traded near the highest level in a month. As of 8:00am ET, and ahead of a data barrage later in the day which includes ADP, Trade and claims data, as well as the latest PMI, ISM, Factory orders and Durable goods reports, S&P and Nasdaq futures were flat, erasing a modest gain earlier in the session, and ahead of a shortened-session that will end at 1 p.m. because of the July 4 holiday. On Tuesday, the S&P 500 closed above 5,500 for the first time notching its 32nd record this year. Tech and small-caps are outperforming as the market received a bullish boost from Powell but now the question is whether the macro data (and earnings) can deliver with ISM Services today and NFP on Friday. European markets took heart from Wall Street’s latest all-time highs and efforts to block a right-wing majority in French elections. Bond yields are flat to +1bps as the curve is flattening; USD is lower and commodities are higher led by metals where silver is the standout. Today’s macro data focus is on ISM Services, ADP/Jobless Claims, Factory Orders, and Fed Minutes (released after the Equity close).”

VIX futures are consolidating near yesterday’s low.  Today is day 252 (of an average 258 days) in the current Master Cycle.  A major reversal may be imminent.  The market is increasingly vulnerable to higher volatility.

The July 10 options chain shows a very small contingent of puts at 12.50.  Long gamma may begin at 17.00.  Next week’s op-ex appears to be a nothing burger.

TNX has pulled back beneath its 50-day Moving Average at 44.40 after its breakout to a Master Cycle high on Monday.  The mid-Cycle support lies directly beneath it at 43.40.  Investors are speculating on an imminent rate cut in July, assuming a low jobs number on Friday.

10:04 am

The Ag Index (raw goods) has broken beneath the neckline of a Head & Shoulders formation spanning 5 years.  GKX has already declined beneath the 61.8% Fibonacci level aa t387.76.  But the H&S formation is being challenged, suggesting a larger decline to come.  This is the worst of both worlds, since prices at the farm are declining while rising at the checkout counter (stagflation?).  This may be due to bottlenecks in transportation and processing that have an inflationary effect on prices and may cause shortages.  Home gardening is catching on, but many don’t have the wherewithal to make a dent in their grocery bills.

ZeroHedge observes, “If you are really struggling with the high cost of living, I want you to know that you aren’t alone.  In recent months, I have been hearing from so many people that feel like they are drowning financially.  Have you experienced a palpable sense of panic when you compare your rising bills to the level of income that you are currently bringing in?  So many people out there are stressed out of their minds because it has become such a struggle to pay the bills each month.  As I discussed a few days ago, a typical U.S. household must now spend $1,069 more a month just to buy the exact same goods and services that it did three years ago.  Over the course of an entire year, that is almost an extra $13,000 dollars.  Month after month, prices just keep going higher, but those that are running things continue to insist that everything is just fine.”

9:32 am

BKX may be reversing from a Master Cycle high made yesterday after testing the lower trendline of the Ending Diagonal formation.  Yesterday was day 250 in the Master Cycle.  While time still allows a little “play,” the price may be right.  Earnings may start next week with very low expectations for regional banks.

8:00 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures have declined to 19672.40, remaining above yesterday’s intra-day low at 19577.54.  Should the NDX decline beneath that level, it introduces the probability of a further decline to short-term support at 19358.00.  Otherwise, the options dealers may be able to maintain a tight grip on equities, although bullish sentiment is waning.  Earnings estimates for the past three quarters were set low, but earnings came in lower.  Now the talk is of an earnings recovery, which may lead to a severe disappointment.  This far this market is marked by extremes, leading us to the conclusion that a reversion to the mean is looming.

Today’s options chain shows Maximum Investor Pain at 19800.00.  Long gamma may start above 19900.00.  Short gamma is creeping up to 19750.00.

SPX futures have declined to a morning low of 5444.60, then bounced from short-term support at 5447.20.  This action may allow SPX to go lower, possibly to Intermediate  and trendline support at 5362.00 .   That action may be countered by the options dealers who are long the SPX and would be inclined to keep it higher for the holiday.  Earnings reports don’t begin until July 8 and the majority of reports may be due after July 15.  The NYSE Hi-Lo Index closed beneath its 50-day Moving Average at 14.55 yesterday and is spending more time in the single digit range..

Today’s options chain shows Max Pain at 5475.00.  Long gamma may start at 5500.00 while short gamma may begin at 5450.00.

ZeroHedge reports, “US equity futures are sliding, reversing all of Monday’s gains and then some, with tech and small-caps stocks underperforming even though bond yields are lower by 2bps ahead of the latest JOLTS data that will give clues on the outlook for US interest rates while French stocks give up all of the post-vote gains as the relief rally reversed. As of 8:00am ET, S&P futures are down 0.5% and Nasdaq futures lose 0.6%. Treasury yields held most of Monday’s rise, which was fueled by speculation that a Donald Trump presidency would lead to greater US fiscal deficits and higher inflation. The US Dollar is stronger for a second day and commodities continue to find a bid, led by oil and energy. Today’s macro focus will be on JOLTS and Powell (9.30a) as the world adjusts to the new political outlook, one where Trump replaces Biden in November, and which appears to be the near-term driver of bond yields and commodity prices; the hurricane in the Atlantic is also supporting energy prices. These moves may be exacerbated by the low volume associated with the holiday week. ”

VIX futures bounced to a morning high at 12.88.  A buy signal may be achieved above the 50-day Moving Average at 13.38.  There is a growing likelihood of the VIX  putting in a Master Cycle low this week or early next.  It may take the earnings season to break the VIX out of its slumber.  Implied correlations in equities are near an all-time low.  What that means is that stocks are performing out of sync with one another, giving the impression of calm on the surface.  Should correlations begin to align, a spike in volatility may result.  Substantially lower earnings may be the catalyst.

Tomorrow’s options chain shows Max Pain at 13.50.  There is a large nest of puts at 13.00.  Long gamma may begin at 20.00 in the event of a surprise.

TNX has pulled back beneath the 50-day Moving Average at 44.46 this morning.  Today is day 253 in the Master Cycle, leaving an approximate week to complete the Cycle.  There is an overhead trendline at 45.50 which may define the upper limits of this move.

ZeroHedge remarks, “Higher for longer

US 10 year bounced perfectly on the big trend line, and is now reaching the short term negative trend line. This last move higher has taken most by surprise. Note we are above all major moving averages as of today…”

USD futures are pulling back beneath this morning’s Master Cycle high.  The Cycles Model suggests a decline in USD to mid-August.  The target may be the Cycle Bottom at 101.60.

9:40 am

BKX made a marginal new high this morning, but may be nearing its retracement limit.  The Cycles Model suggests a reversal may be imminent (this week).  It may be possible that news of small bank failures may be postponed until after the 4th of July holiday.  Should that occur, the subsequent decline may last approximately 2 months.

ZeroHedge reports, “Money market funds saw modest inflows last week (up around $5BN) as bank deposits (NSA) saw $25.7BN outflows…

Source: Bloomberg

However, on a seasonally-adjusted basis, total bank deposits rose by $38BN last week to their highest since SVB’s collapse…

8:15 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures traded between 19658.00 and 19780.00 over the weekend, well beneath its Friday high at 20017.71.  In fact NDX made a Key Reversal on Friday, signifying a potential change in trend.  Should that be so, the Cycles Model offers us about 2 weeks of potential decline.  It doesn’t seem like a lot of time, but the possible loss of confidence after the presidential debates and diminished purchasing power may have a dramatic influence on individual investors and the outcome of this potential decline.  It is being reported that the June net selling of tech stocks by hedge funds has led to a reversal in the last  holdout of the Magnificent 7, NVDA.

Today’s options chain shows Maximum Investor Pain at 19775.00.  Long gamma may start above 19800.00 while short gamma resided beneath 19750.00.

SPX futures have consolidated between 5460.00 and 5480.00 after a Key Reversal from an all-time high at 5523.64 on Friday.  The Cycles Model suggests the bounce may be transitory.  Institutional and hedge fund purchases have diminished, leaving the beleagured retail investors pulling the load.

Today’s options chain reveals Max Pain at 5470.00.  Long gamma may start at 5500.00 while short gamma begins near 5550.00.

ZeroHedge reports, “US equity futures are higher boosted by a relief rally in French stocks and European bonds, where the result of the French parliamentary election (no outright majority for Le Pen) was not as bad as some had feared. As of 8:00am ET, S&P futures are up 0.3, trading near session highs,while Nasdaq futures gained 0.2% with Nvidia dropping as much as 2.8%, but off the lows. Major European markets are higher led by France and Italy after Le Pen’s National Rally led the first round of snap polls but failed to secure an absolute majority as some polls had suggested; CAC +1.4%. On macro data, Germany regional CPI suggests some cooling. We will receive the national German CPI at 8am ET. In Asia, PBOC signals possible government bond sales to cool market rally which pushed Chinese bond yields to record lows. Meanwhile bond yields in the US are 1-2bp higher, the 10Y TSY trading at 4.41%, following higher EU yields; the USD is lower. Commodities are higher led by oil and base metals. Today, the macro focus will be June ISM-Mfg where consensus expects a modest increase to 49.1 vs. 48.7 prior.”

VIX futures rose to 13.16, lifting out of the slump from last week.  It also has about two weeks to the  potential Master Cycle terminus.  The Wave structure may allow a spirited rally out of the low.

Wednesday’s options chain shows possible Max Pain at 13.50.  Short gamma lies at 13.00 while long gamma does not begin until VIX is above 20.  However, there is no follow-through.  Basically dealers are long SPX gamma and are not expecting a rise in volatility this holiday-shortened week.

TNX is on the move, having risen to 44.59 thus far.  Today’s breakout above the mid-Cycle resistance has placed TNX on a confirmed buy signal.  The breakout may only last a week prior to a pullback.  TNX has challenged the 50-day Moving Average.  Once above it, TNX may rise to the Cycle Top resistance at 48.70.

10:40 am

SPX is rising to new all-time highs.  NDX is also at a new ATH.  The DJIA has not exceeded its May 20 high.  Most of the money flow for this market is coming from overseas.  There are two fractal calculations for maximum resistance near 5550.0.  However, the Cycles Model tells us that a turn may be made at any time over the next 8-9 market days.

RealInvestmentAdvice observes, “Financial advisors get a bad rap. Some deserve it; most don’t. The problem for the entire investment advisory and portfolio management community stems from the “career risk” they inevitably face. That “career risk” has been exacerbated over the last decade as massive monetary interventions and zero interest rates created outsized returns. A point we discussed last week in “A Permanent Shift Higher In Valuations.”

“The chart below shows the average annual inflation-adjusted total returns (dividends included) since 1928. I used the total return data from Aswath Damodaran, a Stern School of Business professor at New York University. The chart shows that from 1928 to 2021, the market returned 8.48% after inflation. However, notice that after the financial crisis in 2008, returns jumped by an average of four percentage points for the various periods.””

8:15 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

SPX futures rose this morning to 5506.30.  It may be noted that on June 20, the futures rose to 5513.10, so this is not a new ATH in the futures.  Should the June 20 cash high at 5505.53 not be exceeded, we may see an 8-9-market – day decline to the Cycle bottom at 4172.77.   The alternate view is a new ATH may be made in the same time period, should the rally persist.    The DJIA and NDX futures are not making new highs, so there is no confirmation that the SPX may make new highs.  This is a confusing market as liquidity rotates to find a new home.  An open beneath 5490.00 suggests the decline may resume.

Today’s options chain shows Max Pain at 5475.00.  SPX may be in long gamma, above 5480.00.  Short gamma may begin at 5460.00.

ZeroHedge reports, “Futures are higher led by small caps with tech stocks also mostly higher, as markets start pricing in a Trump presidency following what even Bloomberg admitted was a “disastrous” debate performance by Biden which is making Democrats panic. As of 7:45am ET, S&P and Nasdaq 100 futures rose 0.4%, suggesting this week’s rally on Wall Street is set to continue, with both indexes on course for a third quarter of gains amid expectations that signs of more bad economic growth will give the Fed more room to ease policy this year. That said, not even a looming core PCE which will likely show continued easing in prices (May PCE est 0.0% MoM, down from 0.3%, 2.6% YoY, down from 2.7%) is having an impact on bond yields which are notably higher this morning as is the USD as markets take a long, hard look at what inflation will look like under Trump’s tariff-ridden regime (spoiler alert: higher). Commodities are mixed: oil and precious metals are higher; base metals are lower. Today’s macro focus will be the May PCE release to access the Goldilocks narrative. Survey expects a 0.1% MoM print vs. 0.2% prior; on YoY basis, survey sees the number dropping to 2.6% survey vs. 2.8% prior).”

VIX futures made a new corrective low at 11.87 this morning.  The Cycles Model shows the VIX is within 2 weeks of the end of the current Master Cycle.  A new low beneath the May 23 low at 11.52 may pinpoint the end of the Master Cycle.  The alternate view is a possible volatility outburst that may upend the current “calm” environment.

The July 3 options chain shows Max Pain ar 12.50.  Long gamma may begin at 13.00, but does not have a loot of conviction.

TNX futures have fallen to new low at 42.61 thus far and may continue toward the trendline or lower.  The Cycles Model calls for a possible week of further decline.  This may boost equites to a new all-time high.  Liquidity for Treasuries (UST) may be arriving from European and Japanese investors who are fleeing a meltdown in their currencies.  A sell-oof in US equities may exacerbate the flow.

ZeroHedge observes, “Following two very solid coupon auctions, when the US sold 2Y and 5Y paper earlier this week, moments ago the Treasury completed the week’s final coupon sale when it sold $44BN in 7Y paper in yet another very strong auction.

The high yield of 4.276% was almost 40bps below May’s 4.650% and also stopped through the When Issued 4.279% by 0.3bps. This was the 4th stop through for the tenor in the last 5 auctions.”

USD futures declined to 105.42 this morning as it may complete its correction to the June low.  Both the Euro and the Yen have made their Master Cycle lows on Wednesday.  The reversal of money flows back into those currencies may bring USD futures down temporarily while the other major currencies recover.

10:09 am

The Ag Index suddenly took a dive beneath its prior low and may have triggered a Head & Shoulders formation.  Normally H&S structures occur above or beneath a Wave (1).  This pattern is beneath a Wave (3), which is a bit unusual.  However, the pattern is valid.  The normal Wave structure allows for a decline to 225.00, so the H&S may allow for an extension.  Something may be going on that is quite unexpected.

Food wars?  ZeroHedge observes, “Sunny Verghese, CEO of Olam Agri, a Singapore-based agricultural trading firm, spoke at the Redburn Atlantic and Rothschild consumer conference last week, warned the audience that the world is heading towards a period of “food wars” as geopolitical wildfires spread across the globe.

“We have fought many wars over oil. We will fight bigger wars over food and water,” Verghese said, quoted by the Financial Times, adding that food protectionism has forced some governments to boost domestic food supplies, exacerbating food inflation.

Meanwhile, consumers hesitate at the grocery stores.  ZeroHedge remarks, “General Mills shares plunged nearly 8% at the start of the US cash session, marking its steepest intra-day drop since May 2022. The decline followed the packaged-food company’s report of fourth-quarter sales that missed average analyst estimates, coupled with a full-year sales forecast that also fell short. This disappointing outlook signals more evidence of a consumer pullback amid elevated food prices and builds on our weak consumer theme. ”

7:50 am  2 Chronicles 7:14

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures declined this morning to 19618.30.  NDX is on an aggressive sell beneath its Cycle Top and may be due for a further decline today.  Short-term support is at 19572.00.  Intermediate support and the 2-month trendline is at 19949.30, where a confirmed sell signal may be made.  The 50-day Moving Average is  at 18493.58.  NDX has the “feel” of going higher, but insiders and hedge funds are distributing a record amount of shares shares to retail investors.

Today’s options chain shows Maximum Investor Pain at 19760.00.  Long gamma may begin at 19770.00 while short gamma may start at 19750.00.  The lines are being clearly drawn.

SPX futures declined to 5451.60 this morning, testing short gamma at 5450.00.  A decline beneath that level is an encouragement for an aggressive sell.  Short-term support lies at 5420.64 while Intermediate support and the trendline lie at 5343.67, where a confirmed sell signal may be made.

Today’s opotions chain shows Max pain at 5475.00.  Long gamma may start at 5500.00, while short gamma may begin at 5455.00.

ZeroHedge reports, “US index futures are down but well off session lows as Treasury yields stay at a two week high high this morning ahead of a flurry of economic data over the next two days which will help set the path for Fed policy. At 8:00am ET, S&P futures were down 0.1% as ugly earnings from Walgreens confirmed the consumer weakness is spreading, while Nasdaq futures dropped 0.2% after Micron’s disappointing sales forecast weighed on tech giants. Semis are mostly lower post MU’s earning as hedge funds continue to dump TMT/semi names to retail investors: NVDA -1.1%, AMD -47bp, QCOM -40bp. MU is down -5.4% pre-market, partially recovered from the initial 7% loss. Bond yields are flat while the USD is modestly lower. Commodities are mostly higher led by oil complex, ags and precious metals. Today, the key macro catalysts are Jobless Claims, Durable/Cap Goods Orders and the first presidential debate tonight, while tomorrow we get the closely watched core PCE figures. The figures come after Fed Governor Michelle Bowman yesterday tempered market expectations for interest rate cuts. We also receive WBA and NKE earnings.”

VIX futures consolidate as the market winds up for  a release of volatility next week.  A Minsky Moment may be coming, as call chasing equities by investors may do a turnabout.  The Cycles Model suggests a very intense 2-3 week reversal just ahead.

The July 3 op-ex shows a very calm volatilities scenario.  There is no short gamma, but long gamma is also scarce.  The July 17 monthly options expiration comes alive at levels not seen in a while.

TNX futures raced up to 43.47, testing the mid-Cycle resistance at 43.53., then backed away.  The Cycles Model suggests a further decline to the trendline over the next week before moving higher.  The volatility in bonds is striking, mirroring the European chaos as money flees to the US.

ZeroHedge reports, “After yesterday’s solid 2Y auction stopped through with the best Bid to Cover in one year, moments ago the Treasury sold $70BN in 5Y paper in another very strong auction.

The high yield of 4.331% stopped through the When Issued 4.335% by 0.4bps, the third consecutive stop through in a row, and also the lowest high yield since the 4.235% in march.

The bid to cover rose to 2.35 from last month’s 2.30, but it was still well below the six-auction average of 2.39 and was the second lowest this year.”

USD futures may have put in a Master Cycle high yesterday and shows signa of reversing lower, down to 105.40 today.  The Cycles Model suggests a decline toward 103.00 before resuming its uptrend.

1:12 pm

GKX, the ag index, is testing its February 24 low at 363.23, but has not ventured beneath it.  Today is day 267 in the current Master Cycle and may have produced a high probability low.  Should it decline beneath that level, we may see a multi-month decline.  The Wave structure favors a multi-month rally instead, so we await the final outcome.

ZeroHedge advises, “General Mills shares plunged nearly 8% at the start of the US cash session, marking its steepest intra-day drop since May 2022. The decline followed the packaged-food company’s report of fourth-quarter sales that missed average analyst estimates, coupled with a full-year sales forecast that also fell short. This disappointing outlook signals more evidence of a consumer pullback amid elevated food prices and builds on our weak consumer theme.”

7:45 am  Are you praying for our country?

Good Morning!

SPX futures topped out at 5488.40 this morning, then subsided to the flat line.  This formed a possible flat correction, nearly matching the previous high at 5490.66.  Having completed its correction, it may resume its decline.  SPX may be on an aggressive sell signal.  There is a minor support near 5408.00.  Intermediate support and the 2-month trendline lie at5330.00, beyond which the sell signal may be confirmed.  The 50-day Moving Average is at 5241.00.

Today’s options chain shows Maximum Investor Pain at 5470.00.  Long gamma starts at 5500.00.  Short gamma may begin at 5450.00.

ZeroHedge reports, “Futures are trading modestly in the red near sessions lows, erasing earlier gains of as much as 0.2% even as gigacap tech stocks continue their meltup. At 8:00am ET, S&P futures were down 0.1%, while Nasdaq futures were still green, rising 0.1% but also fading their earlier gains in another quiet start to the day (volumes this week have been tracking down 10-15% vs 10dma), with the snapback in momentum yesterday looking to continue its rally this am (NVDA +2% in premarket). Bond yields are 2-4bp higher after Fed Governor Michelle Bowman reiterated her view that borrowing costs should remain elevated for some time; USD is higher as the yen plunges below 160 vs the USD, the lowest since 1986 with another BOJ intervention now imminent. Commodities are mixed: oil and Ags are higher, while base metals are lower. Today, the key macro focus will be on MBA Mortgage Applications (up 0.8%), New  Home Sales (10am, est 633k), $70bn UST 5yr note auction, Fed will release bank stress test results after the close today; Micron, Jefferies and General Mills are among companies reporting results.”

VIX futures may have reached their corrective low at 12.75 this morning.  The Cycles Model suggests a relative calm for the rest of June, but volatility may strengthen in early July.

Today’s op-ex shows calls dominating the chain above 13.00.  Long gamma may exist at 22.00, but that may not be of any significance on such a short notice.

TNX futures made a morning high at 42.95, while the cash market topped out at 42.90.  The Cycles Model shows TNX entering the reversal window that may last a week or more.  The Wave structure is incomplete,  favoring another probe lower.  The possible target ma be the trendline near 41.50.  The Treasury auction schedule shows $70 billion of 5-year notes being offered today.

ZeroHedge reports, “Another week of coupon auctions has begun, and with $70BN in 5Y paper due Wednesday, and $44BN in 7Ys for sale on Thursday, moments ago the Treasury sold $69BN in 2Y paper in a solid auction.

The high yield of 4.706% was “on the screws” with the When Issued which was also 4.706% ahead of the 1pm auction deadline, in fact this was the 2nd On The Screws auction this year, following a similar result in January; it was also the lowest 2Y auction yield since March and well below the 4.90% in both April and May.”

The USD (cash settle) market reached a morning high at 106.08.  It is very near its Master Cycle high today on day 267.  Should that be the case, we may see USD decline toward the Cycle Bottom at 101.58.

11:10 am

BKX tested Intermediate resistance at 103.86 and failed.  It has since declined beneath the 50-day Moving Average at 102.87, reinforcing the confirmed sell signal.  Ahead of it is a two-week decline that may take your brea(d)th away.  Its target may be the Cycle bottom and Head & Shoulders neckline near 72.50.  This Cycle may complete a round trip to the October low.  The question is, how may banks are set to fail in the next two weeks?

8:15 am  Ar you praying for our country?

Good Morning!

NDX futures rose to a morning high of 19592.00.  A bounce ending beneath 19689.00suggests a minor correction with a resumption of the decline to Intermediate support and the 2-month trendline at 18853.00.  The NDX star performer, NVDA, gained $1 trillion in 23 days, but lost $430 billion in 3 days.  The market is dependent on this single pony to pull a wagon loaded with expectant investors.  Good luck.

Today’s options chain shows Maximum Investor Pain at 19525.00  There is no discernible long gamma.  Short gamma begins at 19500.00.

SPX futures bounced to 5463.00 this morning.  The bounce may not last before resuming its decline.  Smart money is shorting the bounce.  The Cycles Model calls for an intensification of the decline starting today.

Today’s options chain shows Max pain at 5465.00.  Long gamma may begin at 5500.00 while short gamma starts at 5450.00.

ZeroHedge reports, “US index futures are higher, led by a rebound in the tech names in general and Nvidia in particular which rose as much as 3.5% in premarket trading after getting routed by a three-day, 13% selloff that wiped out $430 billion in market cap and saw it drop back into 3rd place behind Microsoft and Apple, after briefly becoming the world’s most valuable company last week. As of 8:00am ET, S&P futures are up 0.1% while Nasdaq futures gain 0.4%. European stocks are in the red, led lower by industrial names, while Asian equities gained, snapping a three-day losing streak, as advances in value stocks helped offset weakness in the tech sector. Bond yields reversed a modest rebound and have extended their Monday drop with 10Y TSYs trading at session lows of 4.21%, down 2bps, while the USD is at session highs. Commodities are mostly lower, particularly base metals and Ags. Overnight, the news flow was relatively quiet as investors are mostly digesting the tech correction. Today, we will receive Conf. Board Consumer Confidence data at 10am. On earnings, FDX will report after market close.”

VIX futures have risen to 13.52 this morning.  A rise above the 50-day Moving Average earns the recognition  by many of a possible buy signal.

Wednesday’s options chain reveals Max pain at 13.00 with no short gamma.  Long gamma begins at 15.00.

USD futures continue their rise above the  50-day Moving Average at 105.08.  A brief decline to retest the mid-Cycle support is possible.  However, the trend is higher over the next six weeks.

TNX futures tested last week’s low with a morning low of 42.08.  TNX shows a possible Triangle formation that points to a final probe lower.  The target may be the trendline at 41.50.  Today is day 246 in the Master Cycle, suggesting another week at or near the lows.  Today’s auction of ($70 billion) 5-year notes and tomorrow’s auction ($44 billion) of 7-year notes may either make of break this outlook.

Gold futures declined to a morning low of 3332.95 in a two-week consolidation beneath the 50-day Moving Average at 2356.52.  This is not a healthy sign.  The Cycles Model suggests the path of least resistance may be a decline to the mid-Cycle support at 2132.82.  The Cycles Model suggests a decline to a lower target may be possible.

ZeroHedge comments, “Central banks have been gobbling up gold, and based on responses to the World Gold Council’s 2024 Central Bank Gold Reserves Survey, their appetites for the yellow metal aren’t going to be satisfied any time soon.

Last year, central banks added a net 1,037 tons of gold to their reserves, just slightly below the record of 1,082 tons in the previous year.

That pace of buying will likely continue.”

Crude Oile futures rose to a morning high of 81.89 in a likely completion of a three week correction of its decline.  The Cycles Model calls for a possible 5-week decline that may breach the Head & Shoulders neckline.

ZeroHedsge remarks, “Don’t tell Greta, or her much easier on the eyes replacement, Sophia.

At a time when the peak of “green” virtue signaling has come and gone, we regret to inform you that all that jawboning and posturing has achieved… absolutely nothing because according to the Statistical Review of World Energy report released on Thursday, global fossil fuel consumption and energy emissions hit all-time highs in 2023 (even as fossil fuels’ share of the global energy mix decreased slightly on the year).”

:45 am  Are you praying for our country?

Good Morning!

NDX futures are hovering in a 60-point renge on either side of 19700.00.  It is beneath the Cycle Top support/resistance at 19901.50, making it a candidate for an aggressive short position.  At the very least, longs should consider lightening positions.  Investors have been jumping almost entirely into tech, causing the internal supports to weaken.  Should those supports give way, the losses may be shocking.

Today’s options chain shows a very large short position at 19750.00, clustered in an environment of indecision.

ZeroHedge remarks, “Ok, calling this a “one stock” stock “market” seems a bit extreme, but is it? On Thursday when stocks rolled over (the Nasdaq 100 started higher at the open and then dropped almost 300 points from there), virtually everyone I spoke to pointed to NVDA shares reversing as the main weight on the overall indices. Throughout much of Thursday and Friday, I was receiving many more notes on support/resistance related to NVDA than the indices, Treasuries, or anything else that could be whipping markets around. Yes, Friday was “triple witching,” which likely added to the volatility, but there was one stock that dominated all market conversation.

I’m wondering if that is why it is so difficult to make sense of markets on many fronts? Why we seem to be getting a variety of indicators, all pointing in different directions?

Breadth, one of the topics in last week’s Same But Different, is clearly front and center in this report.”

ZeroHedge shrugs at the news, “NVDA: Probably nothing…

First negative week for Nvidia since April. Only short consolidation or trend reversal?

Source: Bloomberg

Probably nothing (II)

Insider selling in NVDA is at the fastest pace in years.”

SPX futures have been hovering between 5452.00 and 5479.00, waiting for a break in either direction.  Short-term support lies at 5379.67, where an aggressive sell may be made.  A two month trendline lies at 5350.00.  Intermediate support lies at 5312.99 where sell signal confirmations begin.  The Cycles Model shows downside strength building with risk intensifying over the next two days.

Today’s options chain shows Maximum Investor Pain at 5470.00, with long gamma above and short gamma beneath it.

ZeroHedge reports, “Futures are flat, set for a muted open after erasing an earlier drop, and trading at record highs after three straight weeks of gains ahead of key inflation data later this week and the first debate between Joe Biden and Donald Trump, as well as the first round of the French snap elections. At 8:15am, S&P futures were unchanged while Nasdaq futures dropped 0.1% pressured by a 3% fall in Nvidia, which was set to extend losses for a third consecutive session, and poised to wipe out another $70 billion in market capitalization after news that ByteDance and Broadcom were discussing collaborating on a potential AI superprocessor. Bond yields are higher, and the Bloomberg Dollar Spot Index falls 0.2% after a five-week rally. Over the weekend, macro catalysts were relatively quiet. Oil prices have calmed after a drop last week, while iron ore futures sunk amid further fears about a recovery in the Chinese property market. Bitcoin tumbled on a report the MtGOX trustee will begin $9 billion in repayments in July. This week, traders will be focused on the release of the Fed’s favored inflation gauge, the core PCE, which is expected to show the slowest advance since late last year and open the door to possible interest rate hikes. Other key events include the first presidential debate on Thursday and earnings from Fedex (Tue), Micron (Wed) and Nike (Thu).”

VIX futures have broken out higher to 13.88 this morning.  The 50-day Moving Average lies at 13.99.  A breakout above that level confirms the buy signal for the VIX.  The Cycles Model shows building strength, with particular intensity in the first two weeks of July.

Wednesday’s options chain shows heavy long positions at 15.00 and 22.00.  There is no short gamma.

TNX continues to consolidate as it closes in on the next master Cycle.  The next two weeks open the window for a reversal, but the structure lacks completion.  The primary move may be to test the trendline near 41 b efore moving to higher ground.  The crumbling economies in Europe and Japan are bringing overseas investors into US Treasuries, causing yields to decline.  The trendline near 41.00 defines the floor of the uptrend and is likely to be tested or challenged.

7:45 am.  I am leaving this morning for an out-of-state conference.  I will return on Monday, June 24. 

Good Morning!  Are you praying for our country?

SPX futures have risen to an overnight high of 5516.10, precisely in the center of the proposed target of 5510.00-5522.00.  This is not a place to linger on the long side to see what happens next.  Even the bullish analysts are beginning to suggest it’s time to hedge.  There is no sell signal, yet time and price are getting very thin.  The NYSE Hi-Lo Index shows only 27 companies out of 3300 have made new 52-week highs, compared to 283 last week.  The Magnificent 7 have pared down to the Magnificent 3.  The Cycles Model is proposing a possible surprise low by mid-July.  It may be time for a Key Reversal.

Today’s options chain shows Maximum Investor Pain at 5475.00.  Long gamma begins at 5500.00 while short gamma may start at 5450.00.

ZeroHedge reports, “After hitting the beach during yesterday’s blistering Juneteenth holiday, the “buy everything” algos are back and bigger than ever, pushing futures to a fresh all time high with tech leading – as always – and small-caps lagging after the Swiss National Bank unexpectedly cut rates for a second time this year, setting the stage for much more monetary easing. As of 8:00am, S&P 500 futures are up 0.4%, while the ongoing AI frenzy pushed Nasdaq 100 futures 0.6% higher, and are now up for an 8th straight day, the longest stretch since November.”

VIX futures are consolidating inside yesterday’s trading range.  VIX is signaling a potential change in trend, as it did not make new lows as the SPX made its ATH.  The Cycles Model infers the VIX may be at new highs by mid-July.

The June 26 options chain shows long gamma beginning at 13.00, but there is little or no conviction for VIX to rise appreciably above 20.  This is where surprised may occur.

TNX futures have risen to an overnight high at 42.59.  The Cycles Model suggests TNX may be making new highs by the second week of July.

The bounce in the BKX may have met its waterloo at the Intermediate resistance at 102.83.  If so, the ensuing decline may have a touch of panic.  However, there may be enough time to make a low at the Cycle bottom at 72.92.

the next visual support is at the mid-Cycle at 93.18.

I’ll write again on Monday.  Have a good weekend!

12:43

A Fractal analysis of the NDX shows the limitations of the rally.  There are two Fractal resistances that emerge from this analysis.  The first Fractal resistance is at 20097.00, near the trendline.  The second Fractal resistance is at 20172.00, the maximum for this rally.  Keep in mind that any rally above 19977.84 fulfils the minimum value that completes the Fractal.

ZeroHedge remarks, “Holding and Hoping

US stocks reset record highs overnight as the NASDAQ rose 1.25% and the S&P500 closed up 0.77%. Even European stocks shook off the turmoil of the last few days to close higher. The EuroStoxx 100 was up 0.85%, the DAX rose 0.37% and the CAC40 rebounded from steep losses last week to close up 0.91%.”

7:35 am

Good Morning!  Have you been praying for our country?

SPX futures are in a flat correction with yet a final probe higher to go.  The probable target may be from 5510.00 to 5522.00.  Then a reversal.  You may notice that I have determined that the Master cycle had ended on May 23.  You will see why on the next chart of the DJIA.  Structurally, the May 23 high had all the elements of an all-time-high.  However, it extended due to the magnificent 5 stocks that caught investor’s attention.  In the meantime, the internals have been deteriorating.  The percent of SPX stocks above their 50-day Moving Average have fallen to 43.6% last week.  The NYSE Hi-Lo Index has fallen to -9.00.  All of these (and other) indexes have begun to fail on May 20.  In other words the SPX is in a rogue Wave based almost solely on the Magnificent 7 stocks.  A Key Reversal is possible with a close beneath 5420.00.

Today’s options chain shows Maximum Investor Pain at 5450.00.  Long gamma may begin at 5475.00 while short gamma starts beneath 5440.00.

ZeroHedge reports, “Futures are flat with gigatech naturally outperforming into today’s retail sales print where the expectations are for beats to resume after last month’s sharp miss. As of 8:00am ET, S&P futures were completely flat, while Nasdaq futures were up for the 7th day in a row as it nudges toward the 20,000 mark, with semi shares higher of course, while Mag7 names are also up small. European stocks rise for a second session as political premium fades while French government bonds drift as investors keep a close eye on political developments. Bond yields are up 1-2 bps across the curve after falling Monday amid a flurry of high-grade corporate bond sales that exceeded $21 billion. A gauge of the dollar was higher with EUR, GBP, and JPY weaker. Commodity markets are mostly lower, but WTI remains above $80/bbl with CTAs now set to buy over $30BN. The macro data focus is on Retail Sales but there is another batch of Fedspeakers; yesterday’s speakers indicated a still strong economy with no consensus among the path of inflation with risks tilted more towards a growth slowdown rather than another inflation spike.”

The INDU futures are also flat, but due for a final probe higher, but not to an all-time high.  The DJIA shows its all-time-high on May 20.  Normally the SPX more closely follows the Industrials with the NDX being the occasional outlier in the Cycles.  However, the Magnificent 7 had a larger weighting in the SPX than the DJIA, causing it to part ways with the Industrials.  So, both SPX and NDX are in an inversion to the normal Cycle.  You may recall that I had been predicting an all-time-high near May 18, which was a Saturday.  That prediction may still prove to be correct, since the correction in the DJIA may be over today.

VIX futures have also been trading flat in the overnight market.  You will notice that the VIX made its Master Cycle low on May 23, when the SPX put in its high.  However, the VIX did not make a new low, even though the SPX was making new highs.  There is no inversion here.  The VIX is simply waiting for the SPX final reversal, possibly due today.

Today’s op-ex shows Max Pain at 14.00-14.50.  Short gamma resides between 12.00 and 13.50.  Long gamma may begin at 15.00 and rises to 47.50.  A lot may depend on the timing of today’s possible reversal.

TNX declined to 42.35 this morning.  TNX has also been in an inversion, with money flow likely coming from a collapsing European market.  Note that TNX has about 3 weeks left in its Master Cycle.  The likelihood of a new low in the TNX may be declining.

USD futures declined this morning beneath the 50-day Moving Average at 105.04 and may be testing Intermediate support at 104.78.  Today is day 259 in the Master Cycle and a possible Master Cycle low.  An alternate view may be that the USD low may be due at the mid-Cycle support at 104.22.