The Long View

It’s times like these, when the markets are near all-time highs, that Wall Street loves to trot out the idea that “You Can’t Time the Market.”  In addition, we have seen that bull markets may run for seriously long periods of time while bear markets are rather short in comparison.  But you won’t see articles or books touting “Buy for the long haul.”  at market bottoms.  Sentiment “goes with the flow.”  That is why it takes so much time and study to master the market.  This chart is not attempting to predict anything.  However, if you believe Mark Twain, “History doesn’t repeat, but it rhymes.”  Then you may understand that everything runs in Cycles.

 

Posted in Published | 13 Comments

November 11, 2024

7:00 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures are nominally higher this morning to 6018.40 thus far.  Today is day 248 in the current Master Cycle.  The SPX is struggling against the 3-month trendline near 6025.00.  Despite the resistance, animal spirits abound.  Should it remain above it, the next resistance is the year-long trendline at 6100.00.  Today is a high volatility day, which may be translated into either strength to go higher or a reversal.  A swift rally such as the one experienced in the SPX last week, may be fragile and may lack staying power.  An aggressive sell signal may be made beneath the Cycle Top support at 5933.00.

Today’s options chain shows Max Pain at 5980.00.  Long gamma becomes strong above 6000.00 while short gamma may prevail beneath 5950.00.

 

VIX futures rose to 15.35 this morning after Friday’s (Master Cycle) low was made at 14.66.  A rising VIX and rising equities market is an unstable combination and should be carefully monitored.  The Cycles Model suggests that volatility may spike today and again by mid-week, possibly jump-starting the next move higher.

The November 20 options chain shows Max Pain at 18.00-19.00.  Short gamma prevails between 13.00 and 17.00.  Long gamma becomes established at 20.00 and remains strong to 55.00.

 

TNX futures have risen to 43.57 thus far this morning.  It may be emerging from a shallow correction.  If so, growing strength may propel it to a new high this week.  The Cycles Model suggests rising yields through the end of the year.

 

 

 

Posted in Published | Comments Off on November 11, 2024

November 8, 2024

7:45 am   2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures came down to 5961.90 from yesterday’s all-time high at 5983.84.  The SPX is pulling back from the three-month trendline defining the successive new highs since mid-August.  While the final fractal appears complete, confirmation may be needed.  The Cycles Model tells us that today is day 245 of the  current Master Cycle.  While it may be early, the reversal window is open.  In addition, today may be a high volatility day, followed by a high strength day on Monday.  This suggests either another spike higher or a possible strong reversal.

Today’s options chain shows Max Pain at 5950.00.  Long gamma may begin above 5980.00.  Short gamma is in short supply.

ZeroHedge reports, “The record election rally has finally fizzled and futs are slightly lower after China’s stimulus package revealed this morning disappointed investors. As of 8:00am ET, S&P futures were trading at exactly 6,000, down 0.1% from the first ever closing high above 6,000 but still on track for its best week in a year on the prospect of tax cuts and deregulation under Trump. Nasdaq futures are down 0.3%. Bond yields are 3bp lower after the Federal Reserve delivered a quarter-point interest-rate cut and left the door open for further easing next month; the dollar reversed some of yesterday’s sharp losses when markets fretted they had taken Trump trades too far (they haven’t). Oil is down but base metals are higher. Overnight, Chinese stock futures and the yuan are lower having extended declines after authorities announced a total 10 trillion yuan ($1.4 trillion) program to refinance local government debt, which was disappointing as (1) There was no lift to the Central Govt debt ceiling, and (2) There was no direct support for consumption or the property market, (3) The only announced a debt swap, not incremental stimulus. Today, the macro focus will be on Univ. of Michigan survey, where consensus expects an increase to 71.0 from 70.5 in October, although the rebound in mortgage rates could weight on sentiment. Later tonight, we will receive China PPI and CPI releases at 8.30pm ET.”

 

 

The Shanghai Composite probed above the 61.8% retracement value at 3486.96, then slipped beneath that level to 3454.00 today.  This action may have ended the extended Master Cycle.  What follows may be a very sharp decline to the Cycle Bottom at 2697.80 by early December.

 

VIX futures made a new Master Cycle low at 14.92 this morning on day 269 of the extended Master Cycle.  The Cycles Model suggests today may be a high volatility/reversal day with strength in the new trend developing next week.  The “tail” of the Triangle formation may be complete.

The November 13 options chain shows virtually no short gamma.  Long gamma may begin at 20.00 and currently runs strong to 25.00.

 

TNX futures pulled back to 42.94 in the overnight session before easing higher.  Should TNX continue to behave in a phase-shift, it may resume its trek higher and in strength over the next several weeks.  The Cycles Model suggests that rates may rise through the end of the year.

 

Gold futures slipped to 2687.50 this morning after challenging Intermediate support/resistance at 2703.11.  It is on a Cyclical sell signal that becomes confirmed beneath the 50-day Moving Average and trendline at 2655.22.  The next level of support lies at 2600.00.  The 50-day and trendline are a potent combination, signifying a loss of the uptrend since February.  Ending Diagonals tend to make complete retracements.

 

 

 

Posted in Published | Comments Off on November 8, 2024

November 7, 2024

3:38 pm

SPX has hit the upper trendline of its trading channel near 6000.00.  The top  may be complete.

 

8:30 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures rose to a new all-time high this morning at 5947.20.  It has surpassed the Cycle Top resistance at 5915.00 and appears poised to reach the upper trendline of the 3-month trading channel at 6000.00 as it nears the terminus of its current Master Cycle. Today is day 245 in the Master Cycle, leaving less than 2 weeks to complete the uptrend.   Should the SPX reverse in that time, an aggressive sell signal may be had beneath the Cycle Top at 5915.00.

Today’s options chain shows Max Pain at 5915.00.  Long gamma may begin above 5950.00 while short gamma lies beneath 5885.00.

ZeroHedge  reports, “US equity futures extended their post-election gains, as S&P futures traded near session high with both Tech and small caps outperforming as the dollar eased and yields were flat, as traders continued to map out Trump’s return to the White House and what it holds for the Fed’s interest-rate path. As of 8:00am ET, S&P 500 futs traded 0.2% higher after surging in the previous session on bets that the newly elected President will boost corporates through pro-growth policies; Nasdaq futures rose 0.4% after hitting a new all time high on Wednesday; Mag7 names were mixed premarket with semis bid despite NVDA dipping -21bps. An index of the dollar retreated 0.3% following its best day since Sept 2022. Moves in US Treasury yields were muted after Wednesday’s seismic selloff; bond yields are 1-2bps lower as the curve steepens. The commodity complex is mixed with Ags higher, Energy lower, and Base metals outperforming Precious. Today’s macro data focus is on the Fed’s decision (2pm ET) and the BOE (7am ET); both CBs are expected to cut by 25bps.”

 

 

VIX futures are lingering near yesterday’s proposed Master Cycle low at 15.44.  The Fractal may not be complete and the Cycles Model suggests a high volatility presence on Friday.  Thus, the Master Cycle may terminate with a final low and a possible reversal on Friday.

Short VIX positions may disappear today as the November 13 options chain only shows a meager 1047.00 contracts at 16.00 while long gamma may begin at 20.00 and remains strong to 30.00.

 

TNX futures are consolidating in the overnight session after yesterday’s ramp.  There may be yet another surge above 45.00 before pulling back.  The bond market anticipates another .25 rate cut with a 99.8% certainty.  What may move the markets is the commentary after the announcement.  There is the real possibility of another policy error as the Fed attempts to moderate interest rates in the face of rising inflation.

ZeroHedge observes, “With global markets in chaos in the aftermath of the Trump victory – and what appears to be a Republican sweep – and bond yields soaring by the most since the covid crisis, some were worried that today’s 30Y auction would be a historic disaster and may even fail, as technically improbable as that may be. In the end, with 30Y yields blowing out by more than 20bps, the biggest rout since 2020, such fair proved to be groundless because today’s sale of $25BN in 30Y paper ended up being very solid for the most part.”

 

Japanese Yen futures may have reached their Master Cycle low yesterday, day 267 of its Master Cycle. This morning’s futures show a rise to 65.195 in early signs of a reversal.  Overhead resistance lies at 66.00, above which a buy signal may be found.  The initial rally may take the  Yen back to its Cycle Top at 70.56 by the end of the month.  A rally above 71.55 may set off the Head & Shoulders formation.  No one is expecting a reversal of that magnitude, yet the Cycle Model trending strength for that period.

 

USD futures have pulled back to 104.39 this morning, as it may be consolidating or correcting its recent ramp higher.  The current Master Cycle may be complete in the next two weeks.  Normally the contraction would continue for the duration of the Master Cycle.  However, a Fed policy error may cause the USD to surge even higher.

 

Gold futures have bounced from the 50-day Moving Average and Diagonal trendline at 2652.32 to test Intermediate resistance at 2701.25.  The bounce may not last as it may resume the decline beneath the above-mentioned supports.  The next support beneath that is the mid-Cycle at 2416.76.

 

Crude oil has declined to 70.69, beneath its 50-day Moving Average at 71.04.  The may create a confirmed sell signal for oil.  Be aware that the Cycles Model indicates a possible decline to the end of the year.  The Head & Shoulders target may be the appropriate target for this move.

 

 

 

Posted in Published | Comments Off on November 7, 2024

November 6, 2024

8:15 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

US 30 futures rocketed to 43630.50 in the post-election market, making a new all-time high.  This is a highly unusual formation which has multiple outcomes due to its complexity.  The first of two possibilities suggests a final peak being made this morning with a reversal this afternoon.  That leaves a 2-3 week decline into the last week of November.  The second potential outcome implies a continued rally until the last week of November.  In that case, the final top may be as high as 45000.00.  Both scenarios have issues that may be resolved later today.

ZeroHedge remarks, “Trump won in 2016, he also won in 2020 (but it was stolen from him thanks to 20 million “vapor” votes which magically failed to make a re-appearance in 2024), and he just won again in a landslide, not just the electoral but the popular vote as well… and boy are markets rocking!”

 

SPX futures have risen to 5924.70 in the post-election market.  The same scenario as the Industrials occurs in the SPX.  Either the surge ends today (between 5900.00-6000.00) or the inversion continues until later this month (above 6000.00).  Inversions are unstable, so due care is needed to defend against a sudden outcome.

Today’s options chain shows SPX clearly in long gamma above 5800.00.  Short gamma resides beneath 5700.00.

 

NDX futures have risen to 20630.90 in the post-election market.  It has not made a new all-time high.  NDX is interest sensitive, so the TNX may have the key to the non-performance in the NDX.  This behavior favors a prompt reversal, bringing down the Blue Chips along with the NDX.

 

VIX futures plummeted to 15.44 this morning, creating a potential Master Cycle low.  Last week I had introduced the idea, but withdrew it when the VIX challenged the upper trendline of the Triangle formation.  My error was not taking into account the potential move created by the election outcome.  Sometimes formations (especially Triangles) take more patience than most people allow.  The tail to the Triangle appears complete, or nearly so.  Today is day 267 in the current Master Cycle, which doesn’t allow more time for the formation to develop.  The VIX may begin its new (upward) Cycle momentarily.

Today’s options chain shows the puts (under 20) have grabbed the brass ring.

 

TNX  futures surged to a morning high at 44.89, then eased back.  The Phase Transition is working as explained in prior blogs.  The Cycles Model suggests the trend may continue into January.  This does not bode well for interest sensitive stocks and home mortgages.

 

The Japanese Yen has fallen to a morning low of 64.74.  It may be making its Master Cycle low today, on day 267.  A reversal in the Yen may begin to put pressure on the Yen carry trade.  This may eliminate a major source of liquidity.

 

Gold futures tumbled to 2330.75 this morning, testing the 50-day Moving Average and Diagonal Trendline at 2649.82.  It has declined beneath Intermediate support at 2699.54, creating a possible sell signal.  Should it break through the 50-day, the Cycles Model suggests a three-week decline that may challenge the mid-Cycle support at 2413.14.  A potential series of panic down days threaten to bring gold down even further to its Cycle Bottom at 2033.23.

 

 

 

 

 

Posted in Published | Comments Off on November 6, 2024

November 5, 2024

1:30 pm

SPX challenged Intermediate-term resistance (now at 5772.68) and reversed back beneath it, fulfilling both time and price for the retracement.  The market has now become fragile.

ZeroHedge remarks, “In yesterday’s Global Daily we speculated that the rapid tightening in prediction markets for the US presidential race might have been a head fake. Over the course of yesterday, we saw momentum shift in those markets with probability on a Trump win again building. As of this morning President Trump leads by 18pts on PolyMarket, 8pts on Kalshi and 1pt on PredictIt. The PredictIt figure is especially interesting, given that it awarded a lead to Vice President Harris this time yesterday.”

 

8:00 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures made an overnight high at 5730.20.  The Cycles Model suggests a possible bounce to Intermediate resistance at  5768.21, as the need for retracement in the market corresponds with the need for calm during the election.  The 50-day Moving Average lies at 5699.43 and is the line in the sand for traders.  Beneath that lies a confirmed sell signal.  Today’s bounce may be the last chance to lighten the longs.

Today’s options chain shows Max Pain at 5750.00.  Long gamma may begin above 5800.00 while short gamma lies beneath 5700.00.

ZeroHedge reports, “Futures are higher led by tech as voting gets underway in a very tight presidential race between Donald Trump and Kamala Harris (full election day guide here). As of 8:00am S&P futures are up 0.1%, off session highs; Nasdaq futures are 0.3% higher with Mag7 names mostly higher as Semis also have a bid. DJT is +6% pre-mkt; BA is +2% after the company secured a labor deal ending an 8 week strike. Palantir surged 13% on record profit and high demand for its artificial intelligence software. The dollar was steady, while 10-year Treasury yields advanced four basis points to 4.32%. The commodity complex is stronger today led by Energy and Base Metals; brent trades aroun $75.50. The macro data focus is on ISM Services and the Election, although we may have to wait for the results: in 2016, Trump was declared winner early Weds but in 2020, Biden was declared winner on Sat.”

 

The Shanghai Composite Index rose to 3385.92 today.  By its action, one might say, the whole world is watching the US markets.  However, The Cycles Model suggests the retracement bounce may soon be over near 3430.00-3450.00, igniting Chinese speculative fever.   Following the short squeeze, the decline may resume.  The Cycles Model suggests the current Master Cycle may last until early December, where it may land near the Cycle Bottom at 2705.37.  The neckline of a massive Head & Shoulders structure also lies at the Cycle Bottom.  Should the decline exceed that low, the H&S formation may be triggered.

 

VIX futures are consolidating inside yesterday’s trading range, waiting for some resolution of today’s election.  Implied volatility going into the election is one of the lowest on record.  Usually volatility is high prior to the election and calms down afterwards.  The Cycles Model anticipates the exact opposite of market expectations.  What makes this election different?

Tomorrow’s options chain shows there is no Max Pain.  Short gamma resides from 15.00 to18.00.  Long gamma lies between 23.00 and 25.00.  There is little anticipation of a large move in either direction.

 

TNX is edging higher, but hasn’t yet broken out.  Once it does, it may go on a rampage higher through the end of the year.  The current activity may be called a “phase shift,” where the trend suddenly ramps into high gear rather than pausing for a consolidation/correction.  This action will certainly change the outlook for bonds and the Fed’s ability to manage or control them.  Since 1949, the Fed has carefully cultivated the image of being “in control” of the bond market.  However, a close examination has shown that the Fed has never anticipated changes, only reacted to them.  The September rate reduction was a major blunder that now has implications that the Fed is no longer in charge.

ZeroHedge observes, “Why so many go so wrong on public debt.

I have been involved in the study of economics for about 30 years. What spurred my interest was the discovery of a major blunder in the field of Public Finance that has caused centuries of misery, poverty and tyranny. The strange thing is that we all know of this blunder in various ways, but inexplicably refuse to incorporate the information into reasoning on this most important subject. It is beyond me why the learned and lettered people of Finance and economics allow this fundamental and dubious premise, passively accepted for millennia, to persist.”

 

The Japanese Yen is edging higher, toward the mid-Cycle resistance at 66.02.  However, the Master Cycle may not be complete.  The Cycles Model calls for another 2-3 weeks of decline before a major reversal.

 

 

 

 

 

 

 

 

Posted in Published | Comments Off on November 5, 2024

November 4, 2024

9:35 am

BKX, our liquidity proxy, has declined beneath its Cycle Top support at 121.78, creating an aggressive sell signal.  The Cycles Model points to a three week decline, with possible targets at the Cycle Bottom at 92.15.  Should a panic develop, a possible target may be the neckline of a very potent Head & Shoulders formation.  This has implications for both banking and non-banking institutions.

ZeroHedge observes, “The transformation of banking and financial services away from traditional public markets and the banking system itself has been dramatic since the Global Financial Crisis (GFC) of 2008.

This shift has reshaped the financial landscape, as more activities that were once dominated by banks and public markets have moved into private and non-bank financial sectors.

In 2008, when the GFC struck, the financial world experienced a severe breakdown. Banks, which had been the backbone of lending and liquidity, stopped trusting one another, ceasing to lend in overnight markets, which are crucial for short-term liquidity. Simultaneously, public markets suffered immense losses, with the S&P 500 plunging by roughly 50%.

As a result, both the banking system and public markets effectively froze, becoming illiquid and dysfunctional almost overnight. What had once been highly liquid, smoothly functioning financial ecosystems ground to a halt.

ZeroHedge reports, “Money market funds saw yet another week of inflows (+$40BN), taking the total AUM to a new record high of $6.508 TN…

Source: Bloomberg

The inflow into MM comes as bank deposits (on a seasonally adjusted basis) dropped a modest $13BN to the week-ending 10/23…

Source: Bloomberg

But, on a non-seasonally-adjusted basis, total deposits plunged $133BN (the biggest weekly decline since April)…”

Source: Bloomberg

 

 

8:00 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

SPX futures are probing lower over the weekend, but still above the 50-day Moving Average at 5697.67.  The 50-day Moving Average is recognized by most traders as a major support and violating it may create a sell signal.  Last Thursday we recognized an early confirmed sell signal at Intermediate term support/resistance at  5765.91,, which may be briefly tested a final time this morning.  Should the 50-day Moving Average be broken, the Cycles Model claims a three week decline may lie ahead.  Should the red trendline at 5550.00 be broken, the initial target may be the Cycle Bottom at 4889.25.  Keep in mind, however, that a larger Cycle may be at play with its target at 4103.00, the October 23, 2023 low.

Today’s options chain shows Max Pain at 5750.00.  Long gamma becomes strong above 5800.00, while sort gamma is strong beneath 5700.00.

ZeroHedge reports, “US equity futures are higher with Mag7 names mixed but NVDA higher on its Dow inclusion with semis also ticking higher; the dollar and yields are lower as the Trump reflation trade took a hit after several polls over the weekend showed a rebound for Kamala Harris. As of 8:00am ET, S&P futures are up 0.1%, while Nasdaq futures are flat; small caps are underperforming as the yield curve bull flattens with the USD weaker on a reversal in the Trumpflation trade. Commodities are catching a bid, led by Energy as OPEC+ decided to delay its production increase again. Today’s macro data is likely to be ignored but given the weaker than expected NFP, investors may want to know the state of the economy as we get past the Election and the Thursday’s Fed mtg. ISM-Services tomorrow is the most important print this week with Sentiment updates on Friday.”

 

 

VIX futures appear to be consolidating over the weekend after breaking through the Cycle Top at 23.08.  The Cycles Model shows rising volatility this week, with a virtual explosion of strength in the following week.  Peak values may occur in early December, although the current SPX Master Cycle is due to mature earlier.  There may be a couple of fractal variations that may accommodate that pattern.

While there is an accumulation of puts at 15.00 and 18.00, the calls are beginning to dominate above 20.00-23.00.

 

TNX slid down to 42.81 this morning, but that may be short-lived as the Cycles Model proclaims a day of strength.  The action of the last week shows a possible phase-shift in which normal retracements are suspended due to unusual strength in the Cycle.  The Cycles Model supports that observation.  The new Master Cycle may las up to 2 months, with serious implications.

ZeroHedge remarks, “TLT.US, the long-dated US treasury ETF, is back trading below its 200-day moving average, and on current form is looking at its fourth year running of negative price returns.

Not that this sell-off reflects any lack of retail investor enthusiasm for US bonds. Quite the contrary.

As US treasuries pulled back, flows into TLT.US went parabolic – and the ETF’s market cap rose from US$10bn in 2019 to US$60bn today.

But long-dated bonds continue to sell off. And like successes, sell-offs usually have many fathers.”

 

USD futures declined from Friday’s high at 103.89 to a morning low at 103.49.  However, the Cycles Model shows today having a double dose of strength, suggesting a possible breakout above the USD previous high.  The current Master Cycle has about three weeks left as the USD forges higher.

 

Japanese Yen futures are continuing to climb, having reached 66.08 over the weekend.  The advance is showing growing strength, with a possible Cycle high by the end of November.  Should a panic develop, the Yen may target its September high.  The neckline of a potent Head & Shoulders formation lies at 71.55.

 

 

Crude oil futures are coming off a period of strength, having reached a retracement high at 71.81 this weekend.  Should crude fall back beneath the Head & Shoulders neckline at 66.72, that formation may be triggered with consequences shown on the chart.  The Cycles Model suggests that a decline may resume through the end of December.

 

 

Posted in Published | Comments Off on November 4, 2024

November 1, 2024

7:45 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures have risen to 5732.50 thus far, but has not exceeded Intermediate support/resistance at 5763.10.  This action suggests a possible resumption of the decline beneath the 50-day Moving Average at 5695.13, due to a likely negative payrolls print.  The next support may be the 100-day Moving Average at 5589.03.  Beneath that is the year-long Ending Diagonal trendline near 5550.00.

Today’s options chain shows Max Pain at 5770.00.  Long gamma may begin above 5800.00.  Short gamma lies beneath 5750.00.

ZeroHedge reports, “Futures are higher on the first day of the month and ahead of what may be a very poor jobs report, with MegaCap tech leading. As of 8:00am ET, S&P futures were 0.4% with the benchmark on track for its worst weekly performance in more than a year amid unease over the outlook for artificial intelligence and cloud computing following results from Microsoft and Meta;  Nasdaq futures gained 0.5%, as AMZN and INTC surged 5.8% and 5.7%, respectively, after strong earnings while AAPL is down -1% after its guidance disappointed; NVDA is rebounding and is up +2.0% this morning. Bond yields are flat, and the USD is fractionally higher. Commodities are mixed, with oil higher (WTI +2.9%) amid renewed tension in the Middle East, base metals lower, and precious metals modestly higher. The main event today is the jobs report, but we also get the Mfg ISM, US Mfg PMI, and Construction Spending.”

 

NDX futures rose to 20009.00 this morning, short of Intermediate term resistance at 20051.32.  Last night’s earnings reports were a mixed bag.  Apple slid after guiding beneath consensus.  Intel shares jumped after upbeat guidance.  AMZN jumped on record profit report and solid guidance.  The problem is, everyone is all in, yet NDX is not making a new ATH.

Today’s options chain shows Max Pain at 19880.00.  Long gamma may begin above 19900.00 while short gamma resides beneath 19850.00.

 

VIX futures pulled back to 22..17 thus far, after breaking out above the Cycle Top resistance at 22.87.  The Cycles Model suggests a likely resumption of the rally should the VIX rise back above its Cycle Top.    The key to a huge volatility swing may be the upcoming payrolls report.  Pundits advise that VIX should fade after the elections.  The Cycles model suggests otherwise.  VIX intensity may increase during elections week and trending strength remains strong through the end of the month.

The November 6 options chain shows Max Pain at 19.00.  Short gamma resides between 15.00 and 18.00.  Long gamma begins at 23.00, but doesn’t have a lot of follow-through.  This may possibly be in anticipation of “calm” seasonality through the end of the year.  It may be anything but calm.

 

TNX reacted to the payrolls report by declining to 42.34 thus far.  There is support at the mid-Cycle level at 41.92.  Should it breach that support, it may continue its decline to the trendline near 40.00.  The alternate view is that, should support hold, TNX may launce a possible panic rally starting over the weekend.

ZeroHedge comments, “In our nonfarm payrolls preview last night, we said that the October payrolls report may show the first negative print since 2020. Well, moments ago the BLS reported the highly anticipated number and… it was close: the monthly print was only 12K, a huge drop from the pre-revision 254K in October (revised naturally lower to 223K), and just 13K away from a negative print.

The print was so low it was only above the two lowest estimates (those of Bloomberg Econ for -10K and ABN Amr0 for a 0 print). That means it was a 3 sigma miss to estimates.”

 

Japanese Yen futures climbed to 65.98 this morning as it emerges from a Master Cycle low.  A buy signal may be found above the mid-Cycle resistance at 66.03.

 

 

 

 

 

 

Posted in Published | Comments Off on November 1, 2024

October 31, 2024

12:39 pm

SPX declined beneath the 3-month median at 5770.53 to a low of  5718.18, near the 50-day Moving Average at 5697.95.  It has triggered a confirmed sell signal at 5770.00.  Should it bounce, there may be a 2-day attempt to take back losses.  However, if SPX  cannot rebound past the median, then a resumption beneath the 50-day may be in order.

 

8:00 am     2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

NDX futures declined this morning to 20154.70, just above the diagonal trendline and Intermediate support at 20040.28.  A casual observer would conclude that recently the NDX was making a new all-time high.  A closer look, however, tells us otherwise, since the ATH was made on July 11 at 20672.10.  In other words, the NDX has been struggling to re-take a high made over 3 months ago!  While individual stocks may have made new all-time highs, the big picture shows a loss of strength in the index.  So, 20040.00 is the line in the sand.  As I have been warning that it is unwise to be long, crossing this line (20040.00) creates a confirmed sell signal.  

Today’s options chain shows Max Pain at 20425.00.  Long gamma may begin above 20450.00 while short gamma resided beneath 20400.00.

ZeroHedge reports, “Futures fell ahead of the busiest day of the earnings season, dragged down by META and MSFT which are both down about 4% following last night’s earnings releases. As of 8:00am ET S&P futures are down 0.6%, but off session lows; Nasdaq futures retreat about 0.7% after Microsoft and Meta growth outlooks fail to impress investors, with the pair together representing half of the losses in Nasdaq futures. The rest of Mag7 is also lower: AMZN, GOOG, NVDA are all down 1% – 1.4%. AAPL, which had been used as a funding source is -33bps. Bond yields are flat to down 1bps; the USD is flat. Cmdtys are getting hit with the global risk-off tone, but WTI is higher while Brent is lower. The macro data focus today is on ECI, Income/Spending, jobless claims, and the monthly PCE numbers. Mag7 earnings conclude (ex-NVDA which is Nov 20) with AAPL and AMZN.”

 

 

This morning the Industrials futures made a new low at 41916.20.  In doing so, it also may have triggered a confirmed sell signal beneath Intermediate support at 42320.00  The Dow Jones Industrials have made their all-time high on October 18 at 43325.00.  Commentators have been ignoring the DJIA simply because the NDX and SPX had resumed their advances.

Note that the SPX made its ATH on October 17.  The SPX sell signal may be confirmed beneath Intermediate support at 5760.76.  Thus far, its low was made at 5767.00.

Today’s SPX options chain shows Max Pain near 5820.00.  Long gamma may begin above 5835.00 while short gamma lies beneath 5800.00.

 

VIX futures ramped up to a morning high at 21.85, possibly confirming the Master Cycle low on October 18.  The VIX has been making higher lows since the August 5 spike high, establishing its new trend.  A breakout above the Cycle Top at 22.75 would be the icing on the cake.  Don’t buy the seasonality story.  This is a famous meme that has a mixed history.

The November 6 options chain shows Max Pain at 19.00.  Short gamma hovers between 15.00 and 18.00.  Long gamma becomes established above 20.00 with growing interest at 35.00.  An explosion in the VIX may catch the majority of options traders off guard, as there is little hedging.

 

Yen futures made a new high this morning at 65.94, confirming the Master Cycle low made this Tuesday.  The Cycles Model shows trending strength which may assist the Yen’s advance.Those in the Yen carry trade may find themselves falling behind as the advance in the Yen may cause higher repayments of loans originally taken out due to a low interest rate (.10%).

 

TNX futures rose to 43.10 this morning.  Should TNX advance beyond its prior high at 43.39, it may be considered to be in a phase transition, where the fractals overlap higher.  The Cycles Model shows a possible explosion of strength beginning over the weekend which may confirm that observation.  Lax attitudes about debt and increasing debt levels affect volatility, while major investors become increasingly wary about their investments in sovereign debts.  The Cycles Model suggests increasing rates through the end of the year.  here are two possible targets indicated.   The first is near 5.3%, a likely near-term target.  The longer-term (2025) target may be 8.2%.

Zerohedge comments, “Meditations In An Emergency

It’s now less than a week to go until the USA decides who is going to be their next President. The state of the political discourse recalls the ‘dramatic crossroads’ meme, where the respective labels attached to the sunny uplands and the grim castle of doom is a Rorschach test to confirm our political priors.

I’ve chosen my words deliberately to say that the USA will be deciding on their next President – rather than the next ‘leader of the free world’ – because one of the options on the table is a more isolationist approach to trade and foreign policy where the USA may decline to perform the leadership role, instead prodding oftentimes recalcitrant allies into shouldering more of the global security burden.

That could draw the curtain on the ‘Team America World Police’ neocon phase, or even Woodrow Wilson’s “making the world safe for democracy” idyll, if you prefer to cast your view further back. What’s now clear is that the bond market and the DXY is becoming sensitized to the potential implications of another Trump win.”

 

 

 

 

 

 

 

 

Posted in Published | Comments Off on October 31, 2024

October 30, 2024

8:45 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

 

Good Morning!

SPX futures made an attempt at a new ATH, but stopped short at 5857.30.  The .5% rate cut in September has flooded the market with cash looking for a home.  However, smart money knows that it is temporary.  The normal Cycle may be inverted, but it is skating on thin ice.  A nominal new high near 5900.00 is possible

Today’s options chain shows Max pain at 5825.00.  Long gamma may begin at 5835.00 while short gamma lingers beneath 5810.00.

ZeroHedge reports, “US equity futures are flat, reversing modest overnight gains ahead of the next batch of earnings. As of 8:00am ET, S&P futures were flat while Nasdaq 100 futures are up 0.1%; GOOG was the second of the Mag7 to beat earnings, and the stock is +5.4% pre-mkt after beating across the board on strong cloud growth. AMZN, META, MSFT are all trading up at least 1.7% pre-market. Semis are lower with AMD -8.5% and NVDA -80bps. Bond yields are lower as the curve bull steepens ahead of ADP numbers and US Q3 GDP/Price releases. A Bloomberg gauge of the dollar snapped a three-day advance, and the commodity bid returned led by Energy. META and MSFT are the next Mag7 earnings today. Today’s macro US economic data calendar includes October ADP employment change (8:15am), 3Q advance GDP (8:30am) and September pending home sales (10am).”

 

 

VIX futures continue to consolidate at a higher level.  The Triangle in the VIX may be a continuation formation, but may not be complete without a rogue Wave (E) breaking beneath the lower Triangle trendline in the next few days.   This would be a perfect fake-out to bring longs back into equities.

The November 6 options chain shows Max Pain at 19.00   Short gamma lies from 15.00 to 18.00.  Long gamma may start above 20.00, but does not have conviction above 23.00.

 

TNX has pulled back from yesterday’s Cycle Inversion high.  It now has two options to complete the correction.  The first is to decline to the mid-Cycle support at 41.990 in a flat correction.  The alternate is to decline as far as the trendline at 40.50 in a strong push-back in conjunction with the VIX.  This sets up a maximum confusion for traders as they try to make sense out of the whip-saw.

 

The Japanese Yen rose to 65.60 this morning as it emerges from its Master Cycle low at 64.99.  A buy signal may be found above mid-Cycle resistance at 66.04.  The Cycles Model shows potential strength in the Yen today and again in the first week of November.  Those in the Yen carry trade got a 3% bonus by staying in the trade the past three weeks.  That may disappear quickly at the turn of the month, beneath critical support at 3286..

 

The Shanghai Composite fell today to 3244.91, beneath critical support at 3286.28.  It is now on a confirmed sell signal.  The Cycles Model suggests a decline to early December with a possible target at or beneath the Cycle Bottom at 2700.44.   Should it decline beneath it, the Head & Shoulders formation may be triggered, with consequences listed on the chart.

 

Crude oil futures tested its Head & Shoulders neckline at 68.50, then retreated beneath it this morning.  The formation has been triggered, with potential consequences listed on the chart.  The Cycles Model implies that the decline may last until the end of December.

 

 

 

 

 

 

Posted in Published | Comments Off on October 30, 2024

October 29, 2024

7:45 am

Good Morning!

SPX futures declined to a morning low at 5814.50 thus far.  SPX is now beneath the Ending Diagonal trendline and Short-term support at 5820.00, reinforcing the aggressive sell signal in the past week.  An aggressive sell implies a lightening of the long exposure and a seeking hedges while they are inexpensive.  The Cycles Model suggests that the decline may intensify over the next few days, leading into a month-long rout for stocks.

Today’s options chain shows Max Pain at 5835.00.  Long gamma may begin above 5850.00 while short gamma dwells beneath 5820.00

ZeroHedge reports, “Futures are down small, reversing a modest overnight gain with small-caps underperforming. As of 8:00am ET, S&P futures are down 0.1%, near session lows, while Nasdaq futures are fractionally higher on the session with Mag7 names mixed while GOOG is higher ahead of earnings and semis are seeing a slight bid despite NVDA -60bps. The yield curve is bear steepening with the 10Y yield at 4.30%; the USD is flat. In commodities, oil prices climb along with industrial and precious metals after Reuters reported China is weighing approving over 10 trillion yuan ($1.4 trillion) in additional borrowing in the coming years to shore up the economy and address local governments’ debt risks. WTI is up 1% near $68 a barrel while copper rises 0.9%. Today’s macro data focus will be on JOLTS, Consumer Confidence, and Housing prices. GOOG is the first of 5 of the Mag7 that report this week which may present an inflection point for the group given the reduction in exposure since the summer which has not yet been offset by recent purchases.”

 

 

VIX futures have risen to a morning high at 20.10.  A potential breakout from the recent trading range lies above 20.50.  Note the potential Triangle formation, which offers a potential continuation signal.  It remains above the 50-day Moving Average, which is recognized as a confirmed buy signal.  However, few investors, with the exception of professional traders, have taken advantage of the rising VIX.  While the SPX has not made a new high since October 17, it is still perceived to be rising, leaving investors asleep at the wheel.  Commentators don’t know what to make of it.  That may be about to change today.

The October 30 options chain shows Max Pain at 19.00.  Short gamma resides at 17.00-18.00.  Long gamma begins at 20.00 and is populated to 30.00 with a couple outliers above.

 

The Shanghai Composite Index has declined today, resting on its Cycle Top support at 3281.44.  A breakdown beneath that support gives a confirmed sell signal, with a projected decline to early December.  The implied target may be the Cycle Bottom at 2700.38.  However, there is a substantial probability of declining beneath that level, triggering a massive Head & Shoulders formation.  H&S formations are very reliable, especially in the position shown in the chart.

 

TNX futures reached a morning high at 43.14, suggesting the cash market may be going higher today.  This correction is called an “expanded” formation, implying that the trend is too powerful for a normal pullback.  The Cycles Model suggests another possible week of expanded correction.  An alternate view suggests a possible “phase transition” which implies that a corrective pullback may be skipped altogether as TNX explodes higher.  Trouble is brewing in bonds and may begin to affect interest-sensitive stocks.  In the meantime, the Treasury is putting lipstick on the pig by trimming debt issuance in the fourth quarter and deferring it to the 1Q 2025.

ZeroHedge reports, “Back in July and exactly one quarter ago, when the US Treasury published its debt issuance forecast for the balance of 2024, we said that the “anticipated numbers came close to our estimates for Q3, but well above our forecast for Q4” with the highlight being the Q4 debt issuance number which the Treasury estimated at $565 billion, $115 billion above our estimate of $450 billion (in part due to the Treasury higher TGA estimate of $700 billion vs our assumption of $650 billion).”

Meanwhile, ZeroHedge comments, “90 minutes an ugly 2Y auction this morning, moments ago the Treasury sold its second coupon offering for the day, this one $70BN in 5Y paper in an auction that was even uglier.”

 

The Japanese Yen declined to 65.18 thus far this morning, on day 259 of the Master Cycle.  A normal Master Cycle would have ended at the mid-Cycle support at 66.06, but in times of high volatility, that support may be exceeded.  A potential rate hike may send the Yen soaring, with negative consequences for the Yen carry trade.

(Reuters) – The loss of Japan’s ruling bloc’s parliamentary majority has heightened prospects that a new government will need to ramp up spending and of potential complications for further central bank interest rates hikes.
Prime Minister Shigeru Ishiba’s ruling Liberal Democratic Party (LDP) and its longtime partner Komeito failed to retain a majority in lower house elections on the weekend, casting doubts over how long the 67-year-old premier can keep his job.
USD futures rose to 104.51 this morning as it continues to ramp higher.  The Cycles Model suggests a continued rally, in strength, until late November.  The nearest resistance is the Cycle Top at 106.76.  
Crude Oil bounced from yesterday’s low at 66.92 to challenge the Cycle Bottom resistance at  67.78 and the Head & Shoulders neckline at 68.20.  Crossing the neckline yesterday may have set off the Head & Shoulders formatin, wit consequential results.  The Cycles MOdel implies a continued decline in crude until the end of the year.,

 

 

 

 

Posted in Published | Comments Off on October 29, 2024