Market Analysis - Friday, June 5

SPX futures are consolidating inside yesterday’s trading range thus far, anticipating the BLS Employment Situation Survey for May. The current fractal may be a zig-zag, suggesting a further decline may be anticipated. The minimum target appears to be Intermediate support at 7351.00.  Lower targets present themselves, all valid in this formation. The Cycles Model allows a possible week of decline.

Today’s options chain shows Max Pain at 7570.00. Long gamma strengthens above 7600.00 while shor gamma resides beneath 7550.00.

ZeroHedge reports, “Futures are lower amid fresh underperformance of tech. If the premarket weakness persists, the S&P 500 is set to break a historic weekly run of gains as the AI trade takes another leg lower this time driven by the cartoonish Kospi index, with investors also expecting payrolls data to affirm that interest rates will stay higher for longer.”

The premarket VIX is consolidating in place, also awaiting the BLS report. A likely scenario is that the VIX may rise to the 52-day Moving Average at 19.57 before resuming its decline to the lower Triangle trendline. It is possible to see an extended “tail” beneath the trendline as the formation and Master Cycle continue to the end of the month.

The June 10 VIX options chain shows a solitary nest of short gamma at 15.00. Long gamma may begin above 16.00 but only extends to 28.00.

USD may be at the end of its consolidation. The Cycles Model suggests a probable breakdown starting today and lasting to the end of the month. A possible target for this decline may be the Cycle Bottom at 96.95. Some fireworks may be anticipated over the weekend.

The US 10-year Bond Yield is moving aggressively higher after the BLS news release. The Cycles Model indicates we may expect more strength in this move early next week. The Head & Shoulders neckline may be the next level for a major outbreak with knock-on results.

ZeroHedge remarks, “With Wall Street expecting a strong – not great – number, and a modest decline from April’s 115K, moments ago the BLS reported a shocker: in May the US added 172K jobs…

… not only a 4-sigma beat to the median estimate of 88K, but also above the highest estimate of 125K.”

Bitcoin made a new low this morning as it prepares to challenge the Cycle Bottom at 59410.00. The Cycles Model shows no sign of an immediate breakdown as trending strength may not return until mid-month. Once the February low is broken, the next level of support lies near 50000.00.

Crude oil resumes its descent to the lower Triangle trendline, possibly beneath it. The final probe in a Triangle often leaves a “tail” beneath the boundary of the formation. Considering the presence of trending strength next week, the ultimate target may be the mid-Cycle support at 73.45. This may be the final shakeout of weaker hands in oil.

Gold is threatening the May 28 low this morning, suggesting another probe that may approach 4200.00 in the next few days as speculators abandon their holdings. Gold may resume its rally thereafter, as the prospect of increases.