The Practical Investor

2:09 pm

SPX is rising back above its 50-day Moving Average at 5125.00.  The next hurdle is close by at 5138.00.  Once above thos3e hurdles, it may have a target of 5370.00-5400.00.  However, next week opens the door for a major Cycle Turn.  The catalyst for the turn may be surprising…

8:00 am

Good Morning!

SPX futures are have overtaken yesterday’s high, rising to 5090.50 thus far and remains near that level.  The 50-day Moving Average is at 5122.00, a level to watch as the reaction to the jobs report comes in.  Should SPX go higher, it may accelerate the Master Cycle, as the “turn window” opens next week.  The Cycle Top is 5366.23,, the maximum high in a fifth Wave.

Today’s options chain shows Maximum Investor Pain at 5060.00.  Long gamma begins at 5075.00 while short gamma may start beneath 5050.00.

ZeroHedge reports, “US stock futures pointed to further strength on Wall Street ahead of the April jobs report after solid earnings and a record buyback announcement from Apple As of 8:00am, S&P futures rise 0.3% while Nasdaq 100 contracts add 0.6% thanks to a 6% surge in Apple in premarket trading.  The dollar weakened for a third day, while Treasuries were steady. The US 10-year yield is down about 9 basis points this week at 4.57%, its first weekly drop since March, after Powell struck a less hawkish tone than feared. Traders have also pulled forward expectations for the Fed’s first full interest-rate cut by a month to November.”

VIX futures are consolidating above the Master Cycle low made on Wednesday.  The correction is very near its maximum pullback.  The Cycles Model may allow a rally starting today.

Wednesday’s op-ex shows Max Pain at 14.50.  Short gamma resides at 14.00 while long gamma starts at 15.00 and extends to 30.00.

TNX plunged to 44.53 thus far this morning, as it declined beneath Intermediate support at 44.63.  This has created a sell signal for TNX (a buy signal for UST (10-year Treasury bonds).

ZeroHedge observes, “US yields are at the margin more exposed to a lower-than-expected payrolls release today after Powell’s pushback on a rate hike this week. Nonetheless, leading indicators are pointing to an inflection higher in payrolls growth in the coming months.

Yields are off their recent highs, but are still prone to falling further if payrolls disappoints. My fair value model for 10-year yields, which uses global central-bank rate policy, the yield curve, oil prices and the Federal Reserve’s policy rate, suggests a 10-year yield ~40 bps lower.”

ZeroHedge announces, “‘Bad’ news is back to being good news for markets as a disappointing rise in payrolls pushed rate-cut expectations higher. 2024 is now fully pricing in two rate cuts and 2025 an additional three rate-cuts…

Source: Bloomberg

As Academy Securities’ Peter Tchir writes, this report should be very good for bonds.”

USD futures declined to 104.41 while the cash market sank to 104.52.  USD has declined beneath the Intermediate support at 104.89, creating a potential sell signal.  The 50-day lies beneath that at 104.37.  The current Master Cycle may run to May 18.  The Cycles Model shows a possibly dramatic uptick in volatility over the weekend.

Gold futures have plummeted to 2285.65 this morning, beneath Intermediate support at 2297..5 and confirming its sell signal.  The 50-day Moving average is at 2231.00 and may give more credence to the bears.  The Current Master Cycle may last to early June with a possible target of 1996.40.  This may not be an ordinary pullback.

7:45 am  I will be away for the day.  Perhaps tomorrow may bring more certainty.

Good Morning!

NDX futures rallied to an overnight high at 17502.50, a 57% retracement, but deflated back beneath the 100-day Moving Average at 17485.15.  The loss of critical support is telling, since the next support is at 16419.47.  This suggests the decline may have resumed with the Cycle bottom at 13850.54 being a possible target in the next 2-3 weeks.  However, should the 100-day Moving Average be surpassed, the near-term outlook may be positive.

Today’s options chain shows short gamma beneath 17390.00.  Watch that level today.

SPX futures bounced in the overnight session to 5057.40, a 50% retracement of the Wednesday afternoon decline.  This appears to be bearish, but SPX must decline beneath yesterday’s low at 5013.00 to confirm the sell signal.  The 1987 trendline lies near 4970.00, beneath which a panic decline may occur.  Assuming the Cycle turns at the regular time, we may see a decline lasting 2-3 weeks.  As an alternate, a “push” higher over the weekend may hasten the Cycle Pivot to next week, leaving a much more bearish scenario.

Today’s op-ex shows Max Pain at 5055.00.  Long gamma kicks in above 5075.00, whereas short gamma reigns beneath 5050.00.

ZeroHedge reports, “After a bizarre reversal when US stocks first slumped and then dumped after Powell’s very dovish FOMC statement and press conference, US equity futures have regained their footing this morning and advanced as traders took comfort from the Fed’s signal that there’s no plan to raise interest rates and looked ahead to Apple’s earnings after the close. As of 7:40am, S&P 500 contracts climbed 0.7%, while Nasdaq 100 contracts add 0.9% with Apple, Amazon.com and Nvidia all posting small gains in pre-market trading.”

VIX futures are consolidating this morning after having made a possible Master Cycle low yesterday at 14.35 on day 258.  However, there is just enough uncertainty to suggest a deeper low may be in the works.

TNX is barely positive this morning after yesterday’s dip beneath the trading range.  The Cycles Model calls for a possible decline lasting 2-3 weeks that may set the tone for equities, as well.  Traders’ attempt to front-run the June taper.  However, rising prices (including stocks and bonds) are inflationary and may nip the mythical taper in its tracks.

ZeroHedge comments, “More problematically, since the last FOMC meeting, inflation data has dramatically surprised to the upside and growth data to the downside – screaming stagflation in the face of the Fed…

Source: Bloomberg

Rate-cut expectations (for 2024 and 2025) have plunged significantly since the last FOMC (that is now just one 25bps rate-cut priced in for 2024)…

Source: Bloomberg

Expectations are fully priced for a nothing-burger today on rates…”

4:00 pm

SPX made a 75% correction of the decline, then puked to the lows.  This is not a good sign.  Could this be the beginning of a Wave 3 decline?  Comments in the morning.

ZeroHedge remarks, “Powell to traders today…

…but who will have the last word?

11:10 am

SPX is in no-man’s land, waiting for the verdict.  What is announced and interpreted today may have a strong effect on the direction of the SPX.  More to come after 2:00 pm.

ZeroHedge observes, “Higher for Longer Anxiety

Markets are very, very nervous going into the FOMC decision. The Wall Street Journal’s Timiraos tells us the Fed’s message will be “higher for longer”, language that had been dumped in December.”

8:00 am: Day 23 of the Nineveh Cycle (April 8 – May 18)

Good Morning!

SPX futures declined to 5008.90 thus far this morning, threatening the 1987 trendline at 4970.00 and a Head & Shoulders formation at 4953.56.  The probability of a follow-through to the downside is high.  Traders are still pricing rate cuts into the market amidst a declining GDP and sticky inflation.  Will their hopes be dashed…or will Powell offer some hope for easing?

Today’s options chain shows short gamma beneath 5065.00.  Can Powell save the day?

ZeroHedge reports, “US equities were set for a second day of losses, as investors weighed disappointing tech earnings and braced for today’s Quarterly Refunding Announcement and Fed rate decision and Powell press conference where the Fed chair is expected to signal a delay to rate cuts. S&P 500 futures slid 0.4%, while Nasdaq 100 contracts dropped 0.8% as of 7:40 a.m. in New York, extending losses from Tuesday with markets digesting the surge the employment cost index, a measure of wages and benefits, driven by soaring union and government wages as well as the drop in US consumer confidence to its lowest since level 2022. Europe’s Stoxx 600 gauge edged lower in holiday-thinned trading. The Bloomberg dollar index was little changed, while the two-year Treasury yield held near a six-month high. Gold rebounded from yesterday’s rout but bitcoin did not and instead tumbled deeper below $60,000 driven by European selling. It’s a busy calendar and besides the FOMC, we also get the April ADP employment change (8:15am), April US manufacturing PMI (9:45am), March construction spending and JOLTS job openings and April ISM manufacturing (10am).

Trannies all-time high remains at November 1, 2021.  A second attempt to make a new high this year failed with dire consequences.  Dow Theory tells us that this non-confirmation is not healthy for the rest of the market.  In addition, there is a Head & Shoulders structure that indicates a major decline, should it be breached.  Trannies are beneath all Cyclical supports, including the mid-Cycle support at 15404.00.

ZeroHedge remarks,”Remember Trannies?

Dow Jones Transport index closed at the lowest levels of the year, not far from the 200 day moving average. These days it is all about AI, but do we worry about the weakness in the Trannies?”

VIX futures have risen to a new high at 16.15 after putting in its Master Cycle low on Monday, day 256 of the old Master Cycle.    The new Master Cycle may last until early July.  This does not bode well for equities.

Today’s options chain shows Max Pain at 15.00.  Short gamma inhabits 12.50 – 14.50.  Long gamma begins at 16.00but doesn’t show a lot of enthusiasm, yet.

TNX continues its consolidation, awaiting a directional push.  Whichever direction it takes may last until May 18.  Today traders will monitor Powell’s plan to taper the balance sheet runoff.  Remember, the Fed has no control over interest rates.  It can only follwo what the market dictates.

ZeroHedge comments, “How the Treasury intends to meet its borrowing requirements – the mix between shorter-term bills and longer-term coupons – will strongly influence liquidity and thus the performance of risk assets.

Quantitative tightening is thus on borrowed time, and the Federal Reserve’s next move this year is still likely to be an interest rate cut, despite the re-emergence of inflation.

On Wednesday the Treasury will announce how it intends to borrow $243 billion in Q2 and $847 billion in Q3, the amounts it announced on Monday that it wanted to raise. Q2’s figure was above the previous estimate, while Q3’s number was toward the upper end of expectations. The consensus is leaning toward the increase being made up for by issuing bills rather than coupons.”

USD futures are easing lower as the market focuses on the FOMC announcement this afternoon.  Continued higher rates may strengthen the USD.  The current Master Cycle may continue through May 18.

8:15 am

Good Morning!

SPX futures slipped to 5104.40 this morning after having tested short-term support at 5085.29 (not shown) during yesterday’s session.  The 50-day Moving Average remains as resistance at 5121.79.  Intermediate resistance is at 5147.06.  A break higher may lead to a new all-time high.  Should the SPX decline, the 1987 trendline at 4960.00 remains as support.  The Cycles Model allows up to three weeks to resolve its dilemma of what to do next.  However, should the SPX remain elevated this week, it may hasten the arrival of a Master Cycle high.

Today’s options chain shows Maximum Investor Pain at 5075.00.  Long gamma may begin at 5100.00 while short gamma starts at 5050.00.

ZeroHedge reports, “US equity futures dropped, and European markets were mixed on the last day of the month amid concerns the Fed may stick to its hawkish messaging at its meeting on Wednesday. As of 7:40am, S&P 500 and Nasdaq futures were down 0.1% while Europe’s Stoxx 600 index retreated 0.4%, while Asian stocks gained on Japan’s return from holiday. The Bloomberg Dollar Spot Index climbed and 10-year Treasury yields were steady at 4.62%. The yen resumed its decline even as a Bloomberg analysis found that Japan almost certainly conducted its first currency intervention since 2022 to prop up the yen on Monday. Commodities were mixed with metals down and oil rebounding from its biggest drop in almost two weeks amid discussions on a possible cease-fire in the Middle East. Macro data today includes Q1 employment cost index, Case Shiller home prices, April MNI Chicago PMI, consumer confidence and Dallas Fed services activity. Bitcoin tumbled after activity on Hong Kong’s new crypto ETFs came in far below expectations.”

VIX futures are consolidating above the mid-Cycle support at 14.94 after having made a potential Master Cycle low on day 256.  Should yesterday’s action mark the low, we may expect to see  the VIX resume its rally to early July.

Tomorrow’s options Chain shows Max Pain at 15.00.  Short gamma rules from 12.50 to 14.00.  Long gamma begins at 17.00, but doesn’t show much enthusiasm.

TNX is rising this morning.  The new Master Cycle is due for completion by May 18.  We may see a phase shift into high gear (rates) over the next 2-3 weeks.

ZeroHedge comments, “Highlighting just how sensitive the market is to any ‘inflation/deflation’ narrative questions, the Q1 Employment Cost Index (ECI) – a data point that is typically of secondary import – printed hotter than expected this morning and sent markets reeling.

The ECI rose from +0.9% QoQ in Q4 to +1.2% QoQ in Q1 (well above the +1.0% QoQ expected). That is the biggest QoQ jump in a year…”

ZeroHedge remarks, “The Federal Reserve’s next move this year is likely to be a rate cut – despite the re-emergence of inflation – leaving markets at risk of a dovish repricing.

When it comes to the Fed, it’s easy to get hung up on what they should do, and neglect what they actually will do. From an inflation perspective, it’s becoming increasingly clear the central bank needs to raise rates further to quell resurgent price growth. But that’s unlikely. Instead, the risks to government funding costs and mounting pressure on liquidity are likely to tilt the Fed in favor of cutting rates, even as inflation is making an unwelcome return.”

USD futures are consolidating in place.  The Wave structure allows the USD to go higher.  Should that happen, we may see a “phase shift” into higher rates until the end of May.

Gold futures have declined beneath the Cycle Top at 2315.23, creating a sell signal.  Further support lies at the Intermediate level at 2285.32.  Critical support lies at the 50-day Moving Average at 2214.23.  The Cycles Model suggests a possible decline to early June, where the 50-day May come into play.

8:00 am

Good Morning!

SPX futures are edging higher, having made a new weekend high at 5115.40.  The 50-day Moving Average is at 5118.66.  A close above that level indicates an ability to go higher, completing a complex fractal with a fifth Wave.  Should that happen, the target may be near the Cycle Top at 5348.74.  The process of making a new high may only take 1-2 weeks.

Today’s options chain shows maximum Investor Pain at 5075.00  Long gamma may begin at 5100.00.  Short gamma may start beneath 5050.00.

ZeroHedge reports, “US equity futures swung between gains and losses and traded near session highs as US traders walked to their desks on Monday morning after a rollercoaster day for the Japanese yen, which increasingly looks like some 3rd world banana republic currency instead of belonging to the world’s 3rd largest economy, and which first plunged below 160 vs the USD – the lowest level since 1990 amid dismal volumes thanks to the Japanese market holiday on Monday – only to soar more than 500 pips in what is now the first confirmed BOJ intervention since 2022. Futures were buoyed by rising earnings optimism as traders looked ahead to another very busy week for company results, and as of 7:40am, S&P futures gained 0.2% with Nasdaq futures rising 0.3%, boosted by another surge in Tesla shares.  10Y Treasury yields fell four basis points to 4.62% ahead of today’s announcement by the Treasury of its funding needs for the coming quarter, while the dollar weakened. Oil retreated, with Brent first trading below $89 a barrel, only to rebound higher amid the endless speculation that a peace deal between Israel and Hamas is coming that would reduce geopolitical tensions in the Middle East (spoiler alert: there will be no deal). Gold rose and bitcoin fell.”

VIX futures are consolidating within last Friday’s trading range after possibly completing its Master Cycle low on Friday at the mid-Cycle level at 14.95.  Friday was day 253 in the Master Cycle, so there may be another few days of correction/consolidation before launching its new Cycle.

TNX has declines since last Thursday’s Master Cycle high.  The Cycles Model suggests that the decline may last 2-3 weeks, but then may resume its march higher.

(Reuters) –  ‘As U.S. inflation worries grow, some investors are preparing for the 10-year U.S. Treasury yield to breach a 16-year high of 5% hit last October.

Bond yields, which move inversely to prices, have climbed in recent weeks as signs of persistent inflation erode expectations for how deeply the Federal Reserve will be able to cut interest rates without further fueling consumer prices. The yield on the benchmark 10-year note is up 80 basis points this year and last stood at 4.70%, a five-month high.”

The Nineveh Cycle?

On April 8, 2024 the nation was transfixed by a celestial phenomenon – A total solar eclipse that could be seen by a significant population in the US.  The first city in the United Stated that it traversed was Jonah, Texas.  The path of the total eclipse also traversed through two cities in the Continental US named Nineveh and a third eponymous City in Ontario, Canada.  Oddly, there are four additional cities named Nineveh within the partial eclipse zone, making a total of seven cities in the North American continent named Nineveh in the path of the eclipse.  Read the book of Jonah in the Bible.

The question arises, is there any spiritual significance to this date?  April 8 happens to be the Feast of the Annunciation in which the angel Gabriel announced to Mary that she would be the mother of Jesus.  The feast was moved due to March 25 being in Holy Week, during Christ’s Passion and death.  April 8 was also the day after the feast of Divine Mercy.

Let’s assume there is a spiritual significance to this date.  What next?  Jonah was told by God to tell Nineveh to repent and pray to avoid destruction that would occur in 40 days.  Jonah went through the city of Nineveh in three days and the people listened.  The king declared a time of fasting and penance and the city was saved.   Jonah’s warning was conditional:  Unless the people of Nineveh have a change of heart and pray, the city would be destroyed.

Today that corresponds with May 18, 2024.  I am no prophet.  However, anyone with a lick of sense can see that we are on the verge  of destruction.  The worst of it comes from within ourselves.  For example, there are more deaths from abortion than from old age.  Our politicians are too weak to withstand the onslaughts of the Swamp.  Lets face it.  None of us are saints.  However, God extends His mercy to those who call on Him.  May 18 is very pregnant with possibilities.

8:00 am

SPX futures reached an overnight high at 5100.80 before easing back beneath yesterday’s high.  There is a conflict between the Elliott Wave structure, which allow a probe higher and the Cycles Model which suggest that Monday’s high fulfilled the structural pattern.  The matter may be settled shortly.  A final probe to the 50-day Moving Average at 5117.45 may be the outcome should Monday’s high at 5089.40 be exceeded.

Today’s options chain shows Maximum Investor Pain at 5050.00.  Long gamma begins at 5060.00 while short gamma may begin beneath 5045.00.  The options are tightly wound for a big move.

VIX futures are consolidating within yesterday’s trading range.  A probe higher in the SPX may elicit a move to the mid-Cycle support at 14.95 in the VIX.  However, the VIX correction may be considered complete.

The May 1 options chain shows Max Pain at 15.00-16.00.  Short gamma lies beneath 15.00 while long gamma begins above 16.00.  Options are tightly wound here, as well.

TNX appears to be consolidating beneath yesterday’s high.  While minimally completing the Cyclical structure, it may allow another probe higher by Monday.  The Cycle Top is at 48.50, which remains the target of any move higher.  However, that may unleash a liquidity tsunami from the Treasury as it has been rejuvenated by massive capital gains taxes paid on April 15.

ZeroHedge observes, “Following two solid, record-large coupon auctions this week, when first the 2Y auction stopped through and then the 5Y auction tailed, we just got the third possible outcome moments ago, when in the sale of $44 billion in 7Y paper (which was not a record large auction unlike the week’s previous two offerings), the high yield stopped at 4.716%, right on top of the When Issued 4.716%, or “on the screws” in the parlance of our bond times. That means that for 3 consecutive auctions we have not seen a tailing 7Y auction, with the last tail observed during the January sale (when the offering tailed by 0.3bps).”

That said, the auction yield jumped a whopping 53bps from March, and was the second highest ever.

USD futures continue to consolidate instead of declining.  The implication is that the new Master Cycle may rally into the end of May.

Gold futures continue to consolidate above the Cycle Top support at 2303.89.  It is on an aggressive sell signal (subject to volatility) that becomes confirmed beneath the Cycle Top.

3:32 pm

Although SPX began today in a panic decline, it was rescued out of short gamma (beneath 5050.00) by a bounce at the 2-hour Cycle Bottom support at 4994.69.  The close may be near the options neutral zone from 5050.00 to 5070..00.

8:20 am

Good Morning!

SPX futures sank to a morning low at 5032.90 thus far.  The reversal yesterday came right on time, but unrecognized by many due to a (barely) positive close.  While buy-the-dip activity is muted, selling may not gather strength until a decline beneath 4950.00, where panic may set in.

Today’s Maximum Pain level lies at 5070.00.  Long gamma may begin at 5080.00 with short gamma starting at 5050.00.

ZeroHedge reports, “The three-day rebound from last week’s rout ended with a thud after the close yesterday when Meta imploded, plunging as much as 17% and losing $200 billion in market cap, after the company revealed disappointing revenue guidance coupled with higher capex projections. The report sent US futures lower, and as of 7:50am, S&P futures are down 0.6% with Nasdaq futures sliding 1% (Meta accountied for more than half of the decline) dragged by Mag7 names (META -12.6%, AMZN -2.2%, MSFT -1.5%, GOOGL -2.8% but Semis are broadly stronger, buoyed by META’s capex spend (at least $70bn over next 2 years). Bond yields are flattish with the 10Y trading at 4.65% and the curve slightly steeper as the USD is moving lower but not for the yen which continues its historic implosion as the hopeless BOJ sits in shock and watches its currency collapse (there is a BOJ meeting tonight where we expect nothing from the headless chickens). Commodites are rising today with strength in Energy and Metals. In macro, we get Q1 GDP numbers today with an update on March inventories and the normal jobless claims, but tomorrow’s s PCE is the more impactful number. After the close we get earnings from GOOG/MSFT which take on heightened importance given META’s price reaction.”

VIX futures rose to 16.25 this morning thus far, as they consolidate in preparation for the great reversal.  The Cycles Model suggests that VIX may advance in strength over the next 1-2 weeks before the current Master Cycle is complete.  Reported jobless claims continue to ignore reality.  

The May 1 options chain shows Max Pain at 16.00.  Short gamma resides between 12.50 and 15.00.  Long gamma has weakened somewhat, but may begin at 16.00.

TNX futures surged higher today on the report of (lack of) jobless claims, reaching a high thus far at 47.17.  The Cycles Model shows yields strengthening through the end of the week.  The rally target may be the Cycle Top at 48.55.  The administration is being backed into a serious corner.

ZeroHedge reports, “One day after the US sold a record amount of 2 Year paper in a very strong auction, the Treasury has followed that up with a record amount of 5 year paper, this time in a less than impressive sale.

The $70BN in 5Y paper was up $3BN from $67BN last month and was the highest amount on record offered for the tenor. But don’t worry there will be plenty more record auctions in the future: after all, the US has now crossed into the Minsky Moment and it is now issuing debt just to pay the interest on its existing debt.”

ZeroHedge advises, “If the Biden admin was to have any hopes of the Fed cutting rates and monetary easing ahead of the election, the tires would need to start falling off the US economy right… about… now… Which is why we didn’t find it at all surprising that moments ago the Biden Bureau of Economic Analysis reported that in Q1, US GDP unexpectedly collapsed to just 1.6%, down more than 50% from the Q4 print of 3.4% and a huge miss to the 1.6% estimate.”

8:00 am

Good Morning!

NDX futures rose to an overnight high at 17607.90, but then have pulled back .  It closed yesterday just under the 38.2% Fibonacci retracement value at 17489.54.  This morning’s probe may attempt to reach the 50% retracement value at 17651.41, but is running out of time.  Should it continue to rally at the open, it may not last more than an hour or so.  In the meantime, investors anticipate the end of the buyback blackout period, starting this Friday..

Today’s options chain shows Maximum Investor Pain at 17500.00-17510.00.  Long gamma does not emerge until 17700.00, while short gamma appears to be in short supply.  A neutral options market.

SPX futures rose to 5092.00 in the overnight session after closing at the 38.2% Fibonacci retracement value at 5070.16.  The 50% retracement value lies at 5100.19.  A positive cash open may only last another hour or so.  There is a potential new Head & Shoulders structure which targets the right shoulder at 5081.00-5083.00.  Its potential target may be beneath the 200-day Moving Average at 4680.00.

Today’s options chain shows a highly contested Max Pain level at 5050.00.  Long gamma may start at 5075.00, but only gathers strength above 5095.00.  Short gamma becomes strong beneath 5040.00.

ZeroHedge reports, “Equity futures rose for the third day in a row – last week’s brutal drubbing a distant memory –  with tech outperforming as Tesla soars premarket after Elon Musk vowed to launch less-expensive vehicles as soon as late this year while Texas Instruments jumped 7% after it forecast revenue above the average analyst estimate.  The tech rally has kept stocks afloat after disappointing earnings in the European banking and luxury sectors. Technology shares stood out in the US, with contracts on the Nasdaq 100 rising 0.6% compared with a 0.3% gain for S&P 500 futures.  Bond yields are 1-3bps higher, helping to boost the USD. Commodities are lower though base metals are positive. The macro data focus is on Durable/Cap Goods with META headlining today’s earnings releases. Keep an eye on macro read throughs from F, HAS, NSC, ODFL, SYF, WHR earnings, among others. ”

VIX futures made their low this morning at 15.55.  VIX is in a consolidation that allows it to begin its upward journey today.  A breakout may put the VIX in a position to rival the 2020 rally.

Wednesday’s op-ex shows Max Pain at 16.00.  Short gamma dwells between 13.00 and 15.00.  Long gamma starts at 18.00 and may go as high at 50.00.

TNX futures rose to 46.58 this morning and the cash market is not far behind.  As indicated earlier this week, TNX may complete this week in strength, allowing it to reach the Cycle Top resistance at 48.50.

ZeroHedge reports, “Bond traders were paying close attention to today’s 2Y auction not only because at $69 billion in size, it would once again break the record for biggest 2Y auction issuance on record, but also because it comes at a time when yields are trading just shy of 2024 highs. The results, which were announced moments ago, however were solid and helped push yields to session lows, however briefly.

Here are the details: the size of today’s 2Y auction was $69 billion, $3 billion more than the March issuance of $66 billion and the biggest on record.

So considering that the high yield of 4.898% (which was well above last month’s 4.595% but below the record high of 5.085%) stopped through the When Issued 4.904% was a bit of an achievement.”

USD futures continue to consolidate instead of declining.  This suggests there may be more strength in the rally than it has been credited for.  If so, we may look for a resumption of the rally after a shallow decline later this week.

Gold futures may be consolidating after having made an aggressive sell signal beneath 2340.00 on Monday.  Confirmation of the sell signal lies beneath the Cycle Top support at 2292.88.  While gold may be a store of value, it is not an alternate currency.  Its rise in value parallels the rise in market liquidity.  However, it may also fall with the decline in liquidity.

2:20 pm

SPX has exceeded the 38.2% retracement level at 5070.16 and appears to have completed its bounce or nearly so.  I wish yo point out a possible bearish formation that indicates a minimum target that may be reached in a very short time.  A broken double trendline foretells a probable panic decline.

RealInvestmentAdvice muses, “Is this just a correction after a strong bullish advance from November, or is the bull market ending? If you read some of the headlines, you would suspect the latter. As noted by MarketWatch last week:

“For the first time since early November 2023, less than 30% of S&P 500 stocks are trading above their 50-day moving average — a clear indicator of the current poor market’s breadth. This significant drop from the 85% observed in late March and 92% at the beginning of January highlights a dramatic reversal in market dynamics.”

8:00 am

Good Morning!

NDX futures are consolidating this morning, on their way to retest the 100-day Moving Average at 17372.81.  The Cycles Model indicates another day of correction.  Should the NDX break through the 100-day, the next level of resistance stands near 17400.00, with the 38.2% retracement near 17500.00.    The Cycles Model does not indicate any strength, but Long gamma may play a part in boosting this correction.

Today’s options chain shows Maximum Investor Pain at 17260.00.  Long gamma starts at 17270.00 but only has a mediocre run to 17400 (the level to watch).  Short gamma may begin at 17250.00, but the sentiment isn’t short anymore.

ZeroHedge remarks, “On one hand, the technical storm appears to have subsided: as we predicted last night, just days after the biggest CTA shake-out in over a year (thanks to the fake Iran-Israel war, which on Thursday shook out all the sell stops thanks to the latest brutal bear trap, and thus paradoxically removed any residual selling pressure), other systematic funds finally stepped in to buy the dip, with vol control and Risk-Parity strategies both starting to add leverage back after a sharper unwind last week.

SPX futures are also consolidating inside yesterday’s trading range.  The correction appears incomplete.  Another probe higher may be warranted.  The initial resistance lies at 5056.00.  while stronger resistance may be found at 5082.00.  There is no indications of strength in the Cycles Model.  However, the final resistance for this correction may be found near 5100.00.

Today’s options chain shows Max Pain at 5025.00.  Long gamma begins at 5040.00 and runs strongly to 5100.00.  Short gamma may start at 5000.00.

ZeroHedge reports, “US equity futures are higher for the second day, even as small-caps underperform after bond yields rise about +4bps and trade near session highs. As of 7:40am S&P and Nasdaq futures were 0.3% higher after Wall Street’s rebound from a $2 trillion selloff; European stocks also rose on broad-based strength, with only commodity-related sectors in the red; the UK’s FTSE 100 index hit a record high as a rebound that took hold on Monday gathered momentum. Ahead of Tesla’s earnings today, the Mag7 are mixed with semis higher pre-mkt after the recent rout. Commodities are stronger led by Ags and Energy with a flat USD. The macro data focus is on Flash PMIs, Home Sales, Regional Mfg Activity indicators; earnings are skewed towards the Industrials sector with TSLA the first Mag7 stock set to report. We will see if the last few trading sessions sufficiently squared positions and if realized stock moves can match the implied moves, expected to be the largest in 1.5 years.”

VIX futures dipped to 16.05 this morning as the correction nears completion at a 50% retracement of the rally since March 21.  The correction may decline to the mid-Cycle support at 14.92 yet today.  However, once complete, the VIX may rise to a minimum of 30.00.

TNX has risen to 46.50 this morning.  The Cycles combined price and time as two of their elements.  The TNX Cycle may have satisfied the time requirement, but not the price.  The current target for this rally may be the Cycle Top at 48.48.  Should that be the case, the 10-year may continue to rise through the end of the week.  A spike high above 48.00 may shake up stock investors.

Gold futures have declined through the aggressive sell signal at 2340.00 yesterday.  Today it continues the decline, making a low of 2305.00.  The next level of support may be Intermediate support at 2259.00, nearly an 8% decline from the top.  Unfortunately for the longs, this decline may continue until for the next 5-6 weeks.

11:11 am

NDX rose to the Max Pain level, but could not escape short gamma.  A decline beneath 16973.94 puts the NDX into serious short gamma which may accelerate the decline.  Gamma is at the most negative reading year-to-date, but has room to become even more negative.

7:45 am

Good Morning!

NDX futures have risen to 17171.30 this morning.  Having broken through the 100-day Moving Average at17360.00 on Friday, it is likely to bounce back to test resistance there. The Cycles Model suggests a possible 2-day bounce before reversing back to the downside.   Hedge funds and CTAs appear to be buying the dip.

Today’s options chain shows Maximum Investor Pain at 17130.00.  Long gamma begins at 17175.00 while short gamma starts at 17100.00.

ZeroHedge comments, “It’s been a very ugly week for momentum names, but since these days that really means AI and/or mega tech, we can just saw this has been a very ugly week for the Nasdaq. And sure enough, with the QQQs down 0.4%, the Nasdaq is now pacing for its worst week in over a year – and is down 6 of the past 7 weeks…

… on what Goldman trader Peter Callahan calls a complicated technical backdrop (CTAs, lower retail participation, Nasdaq now testing 100-dma, seasonality), sideways earnings revisions thus far (ASML, TSM and even Sheridan’s NFLX EPS revisions were only 1-2% last night), a tense geopolitical backdrop (overnight headlines) and elevated positioning are testing conviction into a busy week of earnings. ”

SPX futures bounced at the 1987 trendline and have risen to a morning high of 4998.40 thus far.  The Cycles Model allows a possible 2-day bounce that may ease the oversold condition.  Overhead resistance lies at 5026.00-5050.00.  While hedge funds may be taking downside profits, the chances of a short squeeze may be limited.

Today’s options chain shows Maximum Investor Pain at 4995.00.  Long gamma may begin at 5005.00 while short gamma starts at 4975.00.  Long gamma may assist the bounce.

ZeroHedge reports, ” US equity futures rose, putting the S&P on pace for its first gain after 6 straight days of losses, as focus shifted from Middle East tensions to a raft of company earnings this week, including four of the Mag7 tech megacaps which got hammered last week. At 7:40am, S&P emini futures gained about 0.5% after the index recorded its worst week since March 2023; Nasdaq futures were 0.6% higher while Europe was green across the board. Demand for havens eased as traders took comfort from the absence of further escalation from Iran following Israel’s retaliatory strike. A Bloomberg dollar index was steady as geopolitical tensions eased and the Fed entered a blackout period before its May 1 policy decision, while the yield on 10-year US Treasury yields rose three basis points. Oil reversed an earlier slide while gold dropped around 1.4% as demand for haven assets fades.”

VIX futures declined to 17.02 this morning.  The Cycles Model suggests another possible day of correction before resuming its rally.  The structure appears to be an expanded flat correction or possibly an irregular correction (requiring a deeper correction).

Wednesday’s op-ex shows Maximum Investor pain at 17.00.  Short gamma resided between 13.00 and 15.00.  Long gamma starts at 19.00 and remains strong to 39.00.

TNX futures have started climbing again.  While the prior high on April 16 occurred on day 256 of the Cycles Model, the structure may not be complete.  A probe to a new high mayb alleviate the situation and complete the current Master Cycle.

USD futures appear to be consolidating beneath the April 16 high.  Should the USD decline beneath 106.50, the USD may have a i-month decline ahead.  However, a rally above 106.32 may produce a month-long extension of the rally.  An interesting conundrum.

Gold futures declined to 2347.10 thus far this morning.  A decline beneath 2340.00 may create an aggressive sell signal.  This signal should not be ignored, as the Cycle Model indicates a potential decline until early June.