SPX futures declined to 6752.60 in the overnight session, then bounced back. The consolidations may not last much longer. The ceasefire euphoria is fading, leaving investors with a wait-and-see attitude. It may spend a final probe higher that may begin the reversal. Levels to watch for are 6740.00, beneath which an aggressive sell signal may be offered and 6710.00 beneath which the sell signal may be confirmed.
Today’s options chain shows Max Pain at a highly contested 6700.00. Long gamma is entrenched above 6740.00 while short gamma becomes activated beneath 6675.00.
ZeroHedge reports, “Stocks resumed their drop and oil erased about a third of its Wednesday drop as traders watched the fragile US-Iran ceasefire shatter by the hour, with both sides accusing the other of breaches while the Strait of Hormuz is still effectively closed and Israel intensified strikes on Lebanon.”
Premarket volatility remains beneath the 52-day Moving Average at 22.01 this morning. A break above the 52-day may reiterate the buy signal for those taken out by yesterday’s plunge.
The April 15 options chain shows Short gamma dominating the range from 14.50 to 22.50. Long gamma begins above 23.00 and remains strong to 100.00.
TNX may have made its retracement low yesterday and may be due for a rally through the weekend. The next phase may be more powerful than the first. Should the Head & Shoulders neckline be broken, TNX may be due for a new all-time high not seen for 20 years.
ZeroHedge observes, “After yesterday’s impressive 3Y auction, moments ago the Treasury sold $39 billion in benchmark, 10Y paper, in what was a mediocre auction.
The auction, a 9-Year 10-Month reopening of cusip CPX8, stopped at a high yield of 4.282%, up from 4.217% last month and the highest since last August. It also tailed the When Issued 4.280% by 0.2bps, the third consecutive tail in a row.”
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