The Practical Investor

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.

2:50 pm

The NDX has been down nearly 8% in the past month, 2.25% in the past day.  An ugly week for those who were FOMOed into buying the all-time highs.  The problem is, this may continue for another two weeks or possibly longer.   Take note.  It may get worse before it gets better.

ZeroHedge remarks, “For all the “big tech”, momentum, hype; for all the “all-time highs”; this has not been a great year for tech…

Based on closing prices, the only day since January 19th, that you could have bought the Nasdaq 100 index and be profitable, is January 31st (and unless I type quickly, that might not even be true).

Had you came into the year long the Nasdaq 100, you would be up just over 2%.

Think about how many people got “FOMO’d” into buying markets at levels they weren’t comfortable with?”

1:30 pm

SPX bounced from the 1987 trendline as it tests overhead resistance at 5000.00.  The trendline may not hold on the next decline.  The Cycles Model suggests more bad new may be revealed this weekend, so this is not the time to buy the dip.

8:00 am

Good Morning!

NDX futures tumbled to 17038.70 overnight on news of a battle between Israel and Iran.  A partial recovery brought the NDX back up to test the 100-day Moving Average at 17349.76 where it remains now.  Yesterday afternoon’s call on the Market was prescient as we may not see those levels again for quite a while.  The overnight action may be called an irregular correction, where yesterday’s high at 17590.00 marks the top of a new Cycle.

Today’s options chain has the potential to be a train wreck, as Maximum Investor Pain lies at 17500.00.  Anything beneath that is in short gamma, which  may feed on itself.

ZeroHedge reports, “SUMMARY: 

• Iran says its nuclear facilities remain unharmed: Reuters
• Situation in Iran’s Isfahan is normal, no explosion taken place on ground: PressTV
• CNN: Two US oficials say Israel indicated they would not attack nuclear targets. US didn’t “green light” this attack.”

SPX futures declined to 4927.10 before a bounce ensued.  It has recovered back to 5009.00 thus far, near yesterday’s close.  However, participants are shaken and low liquidity may exacerbate a further decline.  The Cycles Model indicates a strong reaction over the weekend, regardless whether the SPX is stabilized for options expiration or not.

Today’s morning expiration shows options are tilted toward the short side on all strikes beneath 5100.00.

ZeroHedge reports, “While US futures are still modestly in the red, they are not only well off the worst overnight levels, but they are almost unchanged since yesterday’s close following a performative Israeli retaliation. which followed a performative Iranian attack, which appears to be the end of the story. For those who missed it, early on Friday local time, explosions echoed over an Iranian city on Friday in what sources described as an Israeli attack, but Tehran played down the incident and indicated it had no plans for retaliation – a response that appeared gauged towards averting region-wide war. The limited scale of the attack and Iran’s muted response both appeared to signal a successful effort by diplomats who have been working round the clock to avert all-out war since an Iranian drone and missile attack on Israel last Saturday. And so, after a whole lot of nothing overnight, as of 730am, S&P futures are practically unchanged at 5,045, Brent is actually lower compared to Thursday’s close after briefly rising above $90 earlier, gold is unchanged, bonds are modestly firmer though have pared the majority of the overnight advances, and bitcoin is higher after aggressively dumping late on Thursday. There is nothing of significance on today’s calendar.”

VIX futures spiked to 19.73 before ratcheting back down to 17.28.  That move may have completed an expected correction, allowing the VIX to move much higher over the weekend.

Next Wednesday’s op-ex shows Max Pain at 16.00.  Short gamma resided between 13.00 and 15.00.  Long gamma begins at 18.00 and runs to 39.00.

ZeroHedge remarks, “Implied volatility of traditional havens such as the Swiss franc and US Treasuries remains remarkably subdued despite the situation in the Middle East, even as the former has outperformed most other havens, including the dollar. However, vol is beginning to pick up, in a sign risks are beginning to be more fully priced in.

Volatility is typically episodic. Most of the time it is low or falling, but then punctuated by episodes of extreme fear when it spikes, before beginning to trend lower again. It is a good metaphor for human behavior: ignore a potential risk up until the last minute – either believing it’s not really a danger, or pretending it’s not there at all and hoping it will go away, i.e. the ostrich effect – and then panic when said risk does turn out to be major problem (the UK government’s response to the pandemic is a good example).”

TNX futures dipped to 44.94 overnight before recovering back above 46.00.  The Cycles Model suggests a final probe toward the Cycle Top at 48.40 before a reversal in the next few days.

12:45 pm

SPX bumped up against the 2-hour Cycle Bottom resistance and reversed downward.  In the process it may have completed Minor Waves 1 and 2.  If so, Wave 3 may have begun, with serious repercussions.  Wave 3 may take up to 2 weeks and may have a minimum target near 4800.00.  Once beneath the prior low at 5007.00 a panic decline may develop.  Stay alert.

ZeroHedge notes, “The impulse from central-bank reserves in the US, or the change in their change on a monthly basis, points to further short-term resistance for stocks.

The Federal Reserve’s quantitative tightening program is ongoing, but bank reserves still remain almost $400 billion higher than when the Fed began QT in June 2022, even as the total size of the Fed’s balance sheet steadily contracts.”

8:00 am

Good Morning!

NDX futures rose to 17617.60 this morning.  Should it not be able to exceed yesterday afternoon’s high at 17630.00,, it may plunge beneath the 100-day Moving Average at 17335.83.NDX may be in a correction, but in bear markets, corrections may go deeper.  The 100-day offers yet another sell trigger that may have short-term consequences for the NDX.  The next possible support may exist near 17300.00.

This morning’s options chain shows Maximum Investor Pain at 17650.00.  Long gamma may begin at 17680.00 while short gamma may start at 17625.00.  The key to today is to rise above the heaviest short gamma beneath 17600.00.

ZeroHedge remarks, “1 – Triggers were crossed

Looks like the first CTA puke officially started yesterday. Likely that there will be more. UBS trading desk reports:

1. NQ1 sell triggers were crossed at 11:32am and 12:06pm

2. The largest futures volume spike started at 11:30am-11:45am interval at 187% of average ($18bn)

3. After 2 hours of selling, excess flow turned to small buying @ 12:45pm for both Nasdaq and S&P futures – suggests CTA selling pressure is over but next trigger is only -0.5% away”

SPX futures rose to 5045.60 this morning, but may have started a retreat from that level.  A decline beneath yesterday’s low at 5007.25 may ignite selling down to the 1987 trendline at  4950.00, where a bounce may occur.  The Cycles Model suggests a larger bounce may occur toward the weekend.

Today’s op-ex shows Max pain at 5050.00.  Long gamma may start at 5070.00 while short gamma may begin beneath 5035.00.

ZeroHedge reports, “US equity futures are higher after four consecutive days of selling, although that is the same pattern we have seen all week as futures initially rise only to dump later in the day. As of 7:40am, S&P futures are up 0.3% while tech stocks were set to outperform, pushing the Nasdaq 0.4% higher after TSMC delivered a better-than-projected revenue outlook. An index of global chip stocks and AI poster child Nvidia fell into a technical correction amid the recent selloff, with Evercore ISI analyst Julian Emanuel thinking this is only the start, with the downdraft in stocks only starting and set to continue through the rest of 2024. The dollar steadied, while US Treasuries pared an earlier gain to trade flat. In Europe, major markets are higher with Spain/France leading and Germany lagging. Commodities are mixed: oil is falling further; precious and base metals are higher. Reports from Netflix and L’Oreal are due after the close of their respective markets. Investors will also be parsing initial US jobless data, the latest Leading Index and Existing Home Sales data, as well as speakers from a raft of central banks.”

VIX futures declined to 16.83 overnight, then have resumed their climb.  It is possible that last night’s dip was sufficient to complete a 60% retracement of this week’s rally.  A breakout above the October high may be in order.

Next Wednesday’s op-ex shows Maximum Investor Pain at 16.00-17.00.  Short gamma dwells between 13.00 and 15.00.  Long gamma begins at 18.00 and stretches to 39.00.

TNX futures rose to 46.22 this morning, suggesting the cash market may do the same.  The Cycles Model suggests the current Master Cycle may end by this weekend.  However, ti may go out in strength, leaving the Cycle Top at 48.38 as fair game.  Of course, the linear-thinking markets may react strongly to this development, causing a stir in the equities markets.

ZeroHedge notes, “The risk of a squeeze in US funding markets is increasing as the yield curve bear steepens, i.e. longer-term yields rise more than short-term ones. More attractive bill yields and climbing interest-payment costs on government debt are depleting reserves and reducing their velocity, increasing the chance of a disorderly upswing in funding rates, as well as posing a risk to the stock market.

The bond market intimidates everybody, in the oft-cited words of Bill Clinton’s chief strategist James Carville. That description is apt today as rising yields reverberate across the financial system. Funding risks are intensifying again, increasing the chance of a rate-volatility driven correction in stocks.”

USD futures are consolidating after making their Master Cycle high on April 16.  The Cycles Model suggests a month-long sideways-to-lower correction before resuming its rally.

2:15 pm

NDX may be due for a bounce, but overhead resistance may prevail at 17721.15.  NDX may be completing the 5th week of a 9-week decline.  The next segment may be much worse than the first.  Signals abound for the wary.

ZeroHedge remarks, “A technical sell signal for the Nasdaq has hit levels not seen since the tech bubble.

However, it should be taken in the context of a still supportive economic backdrop, with buoyant excess liquidity and low near-term recession risk.

The Hindenburg Omen compares the percentage of stocks in a stock index making new 52-week lows versus 52-week highs.

When both are rising above a certain threshold, and we are near a one-year high in the index, the signal activates.

For the Nasdaq, more omens have triggered so far this year than in any calendar year since the 2000 tech-driven top.”

7:50 am

Good Morning!

NDX futures have risen to a morning high of 17781.40, unable to overcome yesterday’s bounce high at 17817.73.  The 50-day Moving Average is at 17973.58.  This show of weakness suggests another decline in the making.  The next substantial support may be the 100-day Moving Average at  17320.00.

Today’s options chain shows short gamma well entrenched at 17800.00 and below.

ZeroHedge observes, “The stocks selloff is displaying features that were often seen back when shares plunged in 2022, which is a warning for equities now.

The S&P 500 has fallen for seven of the past 11 trading sessions through Monday, leaving its hit ratio — the amount of daily gains as percentage of total trading days — at 36.4%, on pace for its weakest since December 2022.”

SPX futures peaked at 5075.90, short of yesterday’s high.  The path of lease resistance appears to be lower, with the 1987 trendline neat 4950.00 and the 100-day Moving Average at 4921.45 as reasonable targets for the nest decline.

Today’s options chain shows Max pain at 5075.00.  Long gamma starts at 5100.00 while short gamma begins at 5050.00.

ZeroHedge reports, “US equity futures and European markets are higher, reversing several days of losses after positive earnings from some of Europe’s biggest companies lifted the mood as markets were roiled by a more hawkish outlook for interest rates. Futures on the S&P 500 rose by 0.4% reversing three days of losses that saw the S&P drop by 2.9% to close Tuesday near a two-month low. Nasdaq 100 contracts edged higher, while consumer products and services led an advance of 0.7% in the Stoxx Europe 600. Treasury yields retreated from a 2024 peak  helping small-caps outperform pre-market, and a gauge of the dollar snapped five days of gains that took it to a five-month high after Powell said it would likely take longer to have confidence that inflation is headed toward the central bank’s target. Commodities are mixed with metals stronger and oil weaker even as tensions in the Middle East persisted, while Israel weighs a response to Iran’s weekend attack. Macro data is light today with Beige Book, TIC (keep an eye on CB sales), and mortgage apps (which rose 3.3% after rising 0.1% last week).”

VIX futures declined to a morning low at 17.03.  The normal retracement level may be closer to 16.66.

Today is the monthly options expiration for the VIX.  Max Pain resides at 15.50.  Short gamma fills the space between 13.00 and 15.00.  Long gamma may begin at 17.00 and strengthens above 20.00.

TNX has pulled back from its high, but may have another day or two of strength in its rally.  The Cycle Top resistance at 48.37 may still be its target, or something very close.

USD futures spent the last two days testing the high at 106.44.  Today, it appears to be consolidating beneath that high, after spending 273 days in the Master Cycle.  The new Master Cycle appears to run through the month of May.  There is nonew target for this move.

Gold futures appear to be consolidating today, but it has developed a clear aggressive sell zone beneath 2340.00.  Should it fall beneath that level by the week-end, we may expect to see some drama in the decline.

2:31 pm

SPX has been repelled by a lower resistance at 5066.61 and is now poised for the next decline.  The 1987 trend;ine beneath 4950 may be the next support.  A larger bounce may develop there.

ZeroHedge reports, “Update (1330ET): In his most direct comments about The Fed’s expected path for rates, Chair Powell just admitted that “recent data show lack of further progress on inflation” and the market did not like it much…”

7:30 am

Good Morning!

NDX futures dipped to a morning low at 17629.40 before bouncing.  NDX has crossed beneath the 50-day Moving Average at 17962.50, accelerating the decline.  However, it may bounce to a 2-hour resistance at 17810.00, possibly higher, before resuming its decline.

Today’s options chain shows Maximum investor Pain at 17870.00.  Long gamma makes a weak showing at 18000.00.  Short gamma begins at 17810.00.  Dealers may attempt to elevate NDX above the owrst of the short gamma.

ZeroHedge remarks, “Six stats to get you going this morning

1. The Dow closed lower for its 6th straight red day. The index is now down over 2,000 points from its recent all time high.

2. The S&P 500 closed below its 50-day moving average Monday for the first time since last November, ending the 10th longest streak since 1950.

3. The S&P 500 is only down 3.7% from its peak closing price at the end of March. The median intra-year drawdown since 1928 is -13%.

4. Monday was the first time since November 2nd that the S&P 500, Nasdaq, S&P 400 (mid-caps), and Russell 2000 (small-caps) all closed below their 50-day moving averages.

5. The volatility index VIX is now up over 50% in just 3 weeks.

6. The Real 10-Year Yield (adjusted for expected inflation) rose to 2.20%, the highest since last November. We entered the year with the real 10-year yield of 1.72%.

As scary as last Halloween

The number of stocks making 52-week lows Monday outnumbered stocks making 52-week highs by the largest margin since Halloween.”

SPX futures dipped to 5040.20 before bouncing.  It crossed the 50-day Moving Average at 5105.12 yesterday and may attempt a retest of the 50-day today.  Overhead resistance may be at 5100.00.  The Cycles Model indicates today may be a day of strength.  This suggests that strength may return on the downside later in the day.

Today’s options chain shows Maximum Investor Pain at 5100.00.  Long gamma may begin at 5105.00 while short gamma starts at 5100.00.

ZeroHedge reports, “S&P futures traded modestly in the green, erasing earlier losses and signaling a recovery after the S&P 500 fell more than 1% in the past two sessions, following stronger than expected earnings from index heavyweight UnitedHealth Group which soared 6% after reporting first-quarter profit that beat Wall Street’s expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry; other reporters such as Bank of America and Morgan Stanley also gained. of 8:45am, S&P futures gained 0.3%, after trading down 0.2% earlier this morning; Nasdaq futures also reversed an earlier loss and traded about 0.2% higher. Meanwhile, loans continued their ascent, with 10Y yields rising as highas 4.65% before modestly reversing, while 2-year Treasuries approached 5%. The dollar advanced for a fifth day, its longest run since January.’

VIX futures fell to a morning low at 17.68.  It may drop further, to its 61.8% retracement value at 16.66 while SPX bounces.  The rally may strengthen after the monthly op-ex, due tomorrow.

Tomorrow’s monthly options expiration shows Maximum Investor Pain at 15.50.  Short gamma resides between 13.00-15.00.  Long gamma may begin at 16.00 and remains strong to 60.00.

ZeroHedge observes, “SPX vs VIX

The reaction in VIX has been extreme. Last time we had a similar pick up in VIX was in Sep/Oct. The initial move higher in VIX was accompanied with a 5.5% sell off in SPX. The VIX eventually surged even higher during the autumn, and the total SPX sell off reached around 8%.”

USD futures may have made a Master Cycle high yesterday on day 272 of its Cycle.  USD may face a week or so of retracement, then resume its rally to the end of May.  An alternate view indicates only a smal pullback with renewed upward strength later this week.

TNX futures are easing back from a morning high of 46.66 (46.55 cash).  TNX is in the final week of its Master Cycle.  Its target remains at the Cycle Top at 48.33.  The Cycles tell us we are nearing an Intermediate reversal in TNX, which may involve lower rates over a three-month duration approaching 2.4%.

10:15 am

BKX broke beneath its 50-day Moving Average at 98.19 on Friday, but recovered above temporarily.  Today it may make a permanent break beneath the 50-day, confirming its sell signal.

ZeroHedge reports, “Money-market funds saw a small outflow last week (surprisingly small given how close to Tax-Day we are), leaving them still near record highs over $6 Trillion (and the trend of increased deposits at banks has been accelerating)…

Source: Bloomberg

Interestingly, amid all the talk of tapering QT, The Fed balance sheet was basically unchanged last week (-$1.4BN)…”

8:40 am

Good Morning!

SPX futures have risen to 5158.90 thus far this morning.  The likely target may be Intermediate resistance at 5165.68.  The bounce is likely to be over this morning or early afternoon.  Should the SPX decline back toward the 50-deay, it may be poised for a panic decline either this afternoon or tomorrow.

Today’s options chain shows Maximum Investor pain at 5150.00.  Long gamma begins at 5165.00 while short gamma may start at 5140.00.

ZeroHedge reports, “Following the emotional rollercoaster of this weekend geopolitical “straight to DVD” soap opera, in which Iran pretended to retaliate to Israel’s embassy bombing with an attack that was meant to be a dud (and succeeded), which in turn was followed by an even more dramatic de-escalation by Israel in which after much saber rattling Netanyahu did…nothing, futures and yield are predictably higher, while oil is lower. That’s right: after digesting the weekend’s news and realizing that what just happened was one giant farce, global markets are broadly higher (except for Asia which is always a few steps behind), with European stocks ticking higher and US rebounding from Friday’s 1.5% selloff in the S&P 500. As of 7:30am, S&P futures were 0.5% higher with Nasdaq futs rising 0.6%; Treasuries slipped along with the dollar. West Texas Intermediate crude dropped below $85 a barrel, while base metals rallied with Aluminum at one point surging more than 9% after Russian supply was hit by US and UK sanctions. Gold reversed Friday’s losses to rise above $2,350 an ounce and bitcoin – which was the weekend’s only operating market and saw the initial risk-off reaction – reversed all losses and is back to unchanged. Today, the macro focus will be Retail Sales release. Feroli expects headline Retail Sales to print +0.3% vs. +0.4% survey vs. +0.6% prior. China will release key macro data at 10pm ET tonight.”

VIX futures declined to 16.60 this morning, near the 61.8% retracement value at 16.57.  The VIX Cycle may show strength through the rest of the week.  The Current Master Cycle may run into early May.

Wednesday’s monthly options chain shows Max Pain at 15.50.  Short gamma resides from 13.00 to 15.00.  Long gamma starts at 16.00 and may run up to 60.00.  The options market is on a hair trigger.

ZeroHedge observes, “VIX & MOVE have exploded

After months of a low volatility world we finally see some action in both VIX and MOVE. It is safe to say that derivatives markets are seeing more perceived risk than how actual equity markets are trading. Some even say that there is more upside to VIX from here. Our belief is that there is “catch-down” potential for equities from here, but that especially VIX probably has gone a little too far too fast.

What goes down must come up

Bond volatility has put in the biggest up move since September last year. Just when everybody agreed bond volatility was dead…

TNX has risen above 46.00 this morning as it journey’s toward the Cycle Top at 48.30.  The Cycles Model indicates that strength may persist through the week.

I have family matter to care for today.  Regular reports may resume tomorrow.

3:05 pm

SPX appears to be declining through the 50-day Moving Average at 5102.22 today. There is still an opportunity for a bounce above that level.  However, a decline beneath that support may bring a waterfall event on Monday.

2:15 pm

Gold futures may have made their Master Cycle high this morning at 2448.75.  Since then it has fallen back to 2363.25.  This appears to be a Key Reversal, known to indicate a change in a major trend.  The blow-off top is known to to attract even the staunchest of investors, but seldom last forever.  Sell-side banks are all predicting higher gold prices.  

ZeroHedge remarks, “In investing, “Buy low, sell high” is among the most well-known sayings, and generally, it’s good advice. But with gold still holding near its historic all-time highs, central banks led by China are bucking the classic adage and smash-buying more, buying the top to fortify themselves against a global monetary and financial blow-up.

Last month marked the 17th in a row that the People’s Bank of China (PBOC) continued stacking gold. Notably, the bank typically reports lower numbers than its actual buying volume and is now also introducing a digital yuan to facilitate cross-border gold settlements.”

9:39 am

BKX has been on a sell signal for the past week after is crossed beneath the trendline at 100.50.  Today it sits above the 50-day Moving Average at 98.18, the final support before the dam bursts.  A bad report from a smaller bank would have been expected.  However, a miss by JPM does not set a happy tone for banks across the board.

ZeroHedge comments, “Q1 earnings season officially opened moments ago when JPM became the first mega bank to reports results, and even though JPM beat on across the board – and even unexpectedly released reserves instead of setting money aside for yet another quarter – the stock is lower by ~3% after Jamie Dimon had some gloomy words about the bank’s net interest income (which dropped in Q1) and the bank’s NII outlook for 2024 missed estimates. But before we get to all that, let’s start with the Q1 historicals which were solid across the board:”

9:10 am

Good Morning!

SPX futures have plummeted to a morning low of 5149.60 and threaten to go lower.  Remember that Intermediate support has been violated and SPX is on a selol signal, so this should be no surprise.  The next week should bring on an intensified decline with a possible waterfall panic.  This may be your last chance to exits longs, as the ensuing decline may be more than investors have been bargaining for.

Today’s options chain shows Maximum Investor Pain at 5200.00.  Long gamma starts at 5200.00 and intensifies at 5225.00.  Short gamma starts at 5175.00.

ZeroHedge reports, “Futures are tumbling this morning, hit by disappointing earnings and outllook from the largest US bank, JPMorgan whose stock is down around 3% in a soggy launch to Q1 earnings season, while growing fears of an imminent conflict between Israel and Iran have sent oil surging and futures sliding. As of 8:45am, S&P futures are down 0.7%, at session lows with Nasdaq also dumping after reports China has asked its telecom carriers to start phasing out foreign chips. The drop comes as we see safe having flows move capital into TSYs with bond yields sliding up to 10bps this morning. That said, the USD is higher again with the euro and cable sliding sharply. Commodities are mixed: oil and gold rally amid Middle East tension; base metals are lower amid lower-than-expected China exports (-7.5% vs. -1.9% survey vs. 5.6% prior), while the gold explosion documented last night continues, with gold futures trading just above $2,400 and spot trading just below. Today, the main focus will be banks earnings (C, JPM, WFC). We will also receive Univ. of Mich. Sentiment data.”

VIX futures have risen to a morning high at 16.28 and threatens to go much higher, as yesterday’s low began a new minor Cycle.  Particular Cyclical strength may show today and extend through the next week.

There is a battle going on in the options chain as 15.50 shows Maximum Pain for investors.  Short gamma is heavy beneath 15.00 while long gamma is gaining strength above 16.00.

TNX is making a slight correction as it surges toward its Cycle Top at 48.28.  Today may bring a supercharged surge of strength to yields as its nears the end of its Master Cycle.

ZeroHedge reports, “After two consecutive ugly auctions (and in the case of yesterday’s 10Y reopening, very ugly), moments ago the Treasury completed the week’s coupon issuance when, on the day when the BLS published a doctored PPI report to boost market sentiment, it sold $22 billion in 30Y paper in what was yet another ugly auction.

The high yield on today’s sale stopped at 4.671%, higher than last month’s 4.331% by 34 bps and also tailing the When Issued 4.661% by 1 basis point, the first tail for the 30Y tenor since last November.”

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8:00 am

Good Morning!

NDX futures have fallen to 17939.50 thus far this morning.  It has been on a confirmed sell signal since April 5 and may be poised to decline beneath its 50-day Moving Average at 17933.15 today.  Alternatively, should the 50-day Moving Average hold, NDX may bounce toward its Intermediate resistance at 18099.20, or possibly the trendline at 18500.0, since the Cycles Model pinpoints today as a day of strength.

Today’s options chain shows Maximum investor Pain at 18020.00-18125.00.  Long gamma may start at 18150.00 while short gamma is massively positioned at 18100.00.

Zerohedge reminisces, “‘Sell Mortimer, Sell!’

That is the message (our translation) from Goldman Sachs Asset Management (GSAM), who told Bloomberg today that they are taking profits from high-flying technology shares and putting the money into cheaper companies.”

SPX futures have dipped beneath Intermediate support at 5161.37.  Should they remain beneath that level, the next support is the 50-day Moving Average at 5092.80.  Beyond that, the 1987 trendline may be key support.  As with the NDX, today may be a day of trending strength, suggesting that, if SPX remains above Intermediate support, it may rally above 5200.00.

Today’s options chain shows Max Pain at 5175.00.  Long gamma starts at 52500.00, while short gamma may begin beneath 5150.00.

ZeroHedge reports, “Futures are weaker signaling further losses on Wall Street as stubborn inflation forces investors to reduce their expectations for Federal Reserve interest-rate cuts; tech stocks are underperforming following the significant surge in Treasuries yields which has continued today. As of 8:00am ET, S&P futures are down 0.5% and back to yesterday’s post-CPI session lows while Nasdaq futures are down 0.4%. Pre-mkt, Mag7 names are mixed, and small-caps set to underperform as yields move higher. Europe’s Stoxx 600 index also retreated, with most sectors in the red, as did Asian stocks. Treasury yields ticked higher again after the previous day’s surge, with the rate on the 10-year at 4.57%. Bonds in Europe dropped as traders trimmed their wagers on easing, with attention focused on the ECB’s policy announcement later; the USD is flat following its 1% surge yesterday, the strongest move since Mar 2023. Commodities are flattish with outperformance in base metals and crude.  Today’s macro focus is on PPI and the ECB.”

VIX futures declined to 15.50 this morning, as it must complete a retracement before moving higher.  As an example, s 61.8% retracement may take the VIX down to its 50-day Moving Average at 14.06

Next Wednesday’s options chain shows Max Pain at 15.50.00.  Short gamma resides beneath 15.00 while long gamma starts at 16.00.

TNX futures declined from its high at 46.04 to a morning low at 45.19.The Cycles Model informs us that three of the six indicators of strength may be firing during the next week, suggesting that the Cycle Top may be within reach for the current Master Cycle.

ZeroHedge remarks, “The fourth hotter-than-expected core inflation report in a row got investors reevaluating expectations around the Fed’s first rate cut…

Source: Bloomberg

Goldman’s Diana Asatryan noted that their Research group pushed its first rate cut forecast to July from June, expecting two cuts this year.

The market is now pricing in just 38bps (1.5 rate-cuts) in 2024…”