Market Analysis - Friday, May 29

SPX futures have marched higher, to 7580.30 thus far this morning.  It is now in throw-over mode, suggesting a final push above trendline resistance. It has reached day 60, a Trading Cycle, from the March 30 low. This is equivalent to the 61-day decline from the January 28 high to the March 30 low. Trading Cycles have their own timing that often corresponds more to the calendar year than the larger Master Cycles. However, when they match, they may provide more accurate guidance. In this case, the Trading Cycle may have overridden the Master Cycle and may not match in June. Investors are now in full panic mode, trying not to miss out on the rally. Can anything go wrong?

Today’s options chain shows Max pain at 7545.00. Long gamma dwells above 7550.00 while short gamma strengthens beneath 7500.00. Investors are walking away from protective puts in favor of long calls.

ZeroHedge remarks, “Nearly two months of the national average gasoline price exceeding the politically sensitive $4-per-gallon level have left corporate America increasingly worried about consumer health this earnings season. Kraft Heinz’s CEO warned that some households are “literally running out of money,” while UBS analysts caution that even as the AI-linked chip and memory bubble inflates markets to new highs, there are growing “consumer cracks beneath the surface.””

ZeroHedge reports, “US equity futures are higher, continuing their slow motion-gamma squeeze into record territory, as traders waited to see whether America and Iran could finally get the peace deal they have already priced in every single day for the past month.”

The premarket VIX is holding its own as it consolidates above yesterday’s proposed Master Cycle low. This final extension is running out of time. Investors are selling protection where it may be needed the most.

The June 2 options chain shows virtually no short gamma. Long gamma runs from 17.00 to 30.00, suggesting that speculators are not very afraid.

The 10-year Bond Yield may be on its final approach to a Cycle Bottom near the 52-day Moving Average at 43.83. The breakout last week may have changed the outlook for TNX. Before the breakout, the probable downside target would have been the mid-cycle support at 41.94. While that is still possible, the more likely Master Cycle low may be higher, as the strength is more attuned to the upside. A breakout of the new Head & Shoulders formation may occur by mid-June.

ZeroHedge observes, “In the week’s final coupon auction, the US Treasury sold $44 billion in 7 Year notes to stellar demand.

Extending on the strength yesterday’s solid (if tailing) 5 Year auction, today’s 7 Year sale printed at a high yield of 4.290%, up from 4.175% and the highest since Jan 2025. It also stopped through the When Issued 4.291% by 0.1bps, the first stop through since December 2025.”