Morning Notes – 5/2/2022

Good Morning:

• Nothing in last month’s or last week’s performance would encourage us to abandon our cash position or risk our year-to-date winnings.
• All that can be said is that investors are finally killing the Generals – Amazon, Apple, and the like. On a positive note, that could signify that we are closer to the end of the bear than the beginning. The broad market has already been taken to the woodshed over the past year.
• But the negative part of it is that bleeding investors and hedge funds might be selling their liquid, quality names to cover other losses.
• The monthly/weekly forecast will be out later today.
• For now, the market is at make-or-break levels. The index is on the 89-week line, with the lower boundary for option support at 4050.
• Today, the 4200 level will be key resistance, with 4120 serving as the make/break level before a quick trip to 4000. Liquidity is poor, so the moves are likely to be exaggerated
• The index closed on its expected move low Friday – but at least the low held. And while the NASDAQ 100 breached the February / March lows, the S&P 500 hung on to its February/March lows by a thread.
• The WEM this week is plus or minus 125 points, for a 250-point range between 4000 and 4250.
• Volatility and Gamma remain high this week, and I expect a daily move today of at least 52 points in each direction for a 104-point daily range. The Volatility Trigger sits at 4400, a long way up from where we are today – so expect big swings with a mostly bearish bias.
• The best hope for the bulls is that traders run the stops under the March / Feb lows and bring the market back up into the three-month range.
• We are coming into a 20-week cycle trough coincident with Wednesday’s Fed announcement on interest rates. The statement should be interesting now that we already have one-quarter of negative GDP.
• Global tensions continue to deteriorate – World War III is creeping closer and closer, and I am deadpan serious about this.
• And if we are in a bear market, here is what it would look like from here if we overlay the last two bears from 2001-2003 and 2008-2009.