The Practical Investor

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

2:38 pm

SPX has declined to 6705.67 after making another all-time high at 6750.00.  The final hour of the day will tell us whether the reversal today is the one.  A Key Reversal may be made by declining and closing beneath 6693.00.  While not a guarantee, Key Reversals have a high propensity to signal a change in trend.  Good luck and good trading!

8:00 am

Good Morning!

SPX futures are hovering beneath yesterday’s high.  AI fever is jumping off the charts as shutdown fears and overbought conditions are being overridden by the Fear of Missing Out.  There is no NFP report today, leaving the state of the economy in a fog.  The current Master Cycle has extended about a week and is due for a reversal.  Fractal resistance lies at 6750.00 while the Cycle Top has risen to 6790.37.  There is no assurance that either possible target may be met.  The trendline and Intermediate support lie at 6648.55 where a possible sell signal may be obtained.

Today’s options chain shows a heavy population of puts and calls at 6700.00.  Long gamma may dominate above 6725.00 while short gamma strengthens beneath 6675.00.

ZeroHedge reports, “US equity futures are heading into Day 3 of the US government shutdown on pace for what is now another daily all time high. S&P 500 and Nasdaq 100 futures rose 0.1% as of 8:15 am in New York, on course for the longest winning streak since July.”

VIX futures declined beneath the 50-day Moving Average to 16.43 this morning.  Should the downtrend continue, there is a possibility of a further decline to the lower trendline near 12.50 in the next week.  Caution is being tossed to the wind as hedges may be abandoned.

The October 8 options chain shows speculators are playing cards close to the vest as the largest number of put contracts is at 16.00 and the largest call swarm is at 17.00.

The 10-year Treasury yield is hovering near yesterday’s close as investors await further developments.  The Cycles Model suggests steady-to-lower rates over the next several weeks.  The downside target may be the Cycle Bottom, currently at 40.28.

Bitcoin has pulled back from yesterday’s high at 121187.00, making a Master Cycle high or very nearly so.  The fractal target for this probe is near 122000.00, so we remain neutral on BTC.

USD continues to hover beneath the 50-day Moving Average at 98.05..  The Cycles Model shows weakness for the next week or so, suggesting the USD may decline to the lower trendline near 95.00.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

10:09 am

BKX has crossed beneath its Ending Diagonal trendline and Intermediate support/resistance at 150.01.  This place BKX on a sell signal.  Further confirmation may be made beneath the 50-day Moving Average at 147.68.  This may be the canary i the coal mine telling us that liquidity is getting thin at the top.  The initial target may be the mid-Cycle support at 134.06.  However, should a panic develop, the April 7 low may be noted.

8:30 am

Good Morning!

SPX futures rose to a new all-time-high at 6731.40 as it surges to its final destination.  There is a high probability that resistance between 6750.00 and the Cycle Top is at 6779.70, the final bastion of resistance in the context of the Master Cycle.  There are no assurances that any of the targets may be met.

Today’s options chain shows Max Pain at 6690.00.  Long gamma begins at 6700.00 and is especially strong above 6750.00 while short gamma resides beneath 6680.00.

ZeroHedge reports, “US equity futures are higher with tech and small caps both outperforming as the screaming AI euphoria drove global indexes to fresh highs after an OpenAI share sale valued the company at an eye-popping $500 billion, catapulting the firm to become the world’s most valuable startup…”

VIX futures have declined to 15.95 this morning, being supported above the 50-day Moving Average at 15.78.   Should an effort to suppress the VIX in the next few days, it may produce a Master Cycle low near 12.70.  This would give the VIX free rein to rally through late December.  There is a mismatch between the SPX and the VIX Cycles, which portends a chaotic market through the end of the year.  An alternate view is a possible Cycle Top in the next week or so, as investors panic during the next week or so..

The October 8 options chain shows declining short gamma at 16.00.  Long gamma begins at 17.00 and building a presence up to 55.00.

The US Treasury Note Yield is consolidating beneath the trendline.  The Cycles Model allows approximately three more weeks of decline with a potential target near the Cycle Bottom support at 40.30.

USD futures remain beneath Intermediate resistance at 97.83 this morning. The Cycles Model allows an approximate week of decline with a possible target near 95.00-96.00.  USD shorts may note: Once the USD reaches its mark, a possible rally may take the USD higher through early December.

Bitcoin may be in its final surge to its proposed target at 122000.00 today, with the potential of reaching it in the next few days.  Should it exceed that reference point, Cycle Top resistance is at 128823.41 in an extended Cycle.

Gold futures rose another 25 points in the after-hours to 3922.80, then made a sudden and sharp reversal.  There is an approximate 35 point mismatch between the futures and the CME.  Watch for a possible decline beneath the Cycle Top support at 3780.04 (3814.00 in the futures), offering a possible sell signal.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00 am

Good Morning!

SPX futures declined to 6629.10 this morning as the government shutdown becomes reality.    Markets are based on confidence.  A shutdown destroys confidence in government, as if it wasn’t already lost.  Since government spending affects so much of our economy, confidence declines in the markets’ ability to perform as usual, as well.  Critical support lies at the Ending Diagonal trendline and Intermediate support at 6532.10.

This morning’s options chain shows Max Pain at 6665.00.  Long gamma rules above 6700.00, while short gamma dominates beneath 6650.00.

ZeroHedge reports, “US stock futures are weaker to start the new quarter but have cut overnight losses by more than a third, as the first US government shutdown in nearly seven years begins. The first shutdown during Trump 1.0 lasted 3 days and the second shutdown 35 days: how long will this one last? As of 8:00am ET, S&P futures are down 0.4%, but well off session lows while Nasdaq futures drop 0.5%.”

VIX futures rose to 17.28 this morning as instability sets in.  The Cycles Model infers a potential spike in volatility during the next two weeks as investors/speculators assess the impact of the shutdown.  As the crowd was obliged to follow the market higher, the cost of protection has risen, forcing the dealers to short the downside.  Should the market fail, dealer covering could magnify the downside move in equities.

Today’s options expire at the close.  The October 8 options chain shows short gamma at 16.00.  Long gamma starts at 17.00 and is building to 30.00.

10-year Treasury Note yields declined to a morning low at 40.93 before a minor bounce.  It is on a sell signal with a potential target near the Cycle Bottom at 40.32.

ZeroHedge observes, “Ahead of today’s ADP print we said that traders will be especially focused on the otherwise unreliable number, since the government shutdown which hit at midnight means that this Friday’s payrolls report will likely not happen. Well, if that is the case, the market – and Fed – may well be expecting a jumbo 50bps rate cut again in 3 weeks, because moments ago ADP reported that in September, the US private sector shed 32,000 jobs, the worst print since March 2023…”

USD futures declined to 97.14 this morning, not yet showing in the forex market. The Cycles Model suggests the USD may go lower over the next two weeks.  A potential target may be the lower trendline near 95.00, possibly extending Wave [4] even lower.

Gold futures rocketed to 3922.10 this morning as government uncertainty incentivizes investors to seek a safe haven.  Gold has “thrown over” its Cycle Top at 3771.64, putting it in an unstable position.  A reversal beneath the Cycle Top may incur a sell signal.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00 am

Good Morning!

SPX futures reached a low of 6642.40 this morning and is lingering near the low.  The Trendline and Intermediate support lie at 6525.00, where a sell signal awaits.  While no accepted technical signal is given yet, the Master Cycle has turned.  The  Cycles Model offers a potential decline that may last until early November, giving it time to potentially match the April 7 low.  Traders await updates on the potential government shutdown, looming as early as tomorrow.

Today’s options chain shows a very large contingent of puts and calls at 6650.00.  Long gamma gains mastery above 6675 while short gamma dominates beneath 6620.00.

ZeroHedge reports, “Futures are lower as we close out the quarter/month, ahead of what is a most likely (80% odds on Polymarket) government shutdown. As of 8:00am ET, S&P and Nasdaq futures are down 0.2% as sentiment sours after Monday’s optimism. Still, on the final trading day of the month, the S&P 500 is on track for its best September since 2010. ”

VIX futures rose to 16.70 in the overnight session.  It is on a buy signal above 15.73.  Overhead resistance lies at the upper trendline and Intermediate resistance at 19.39.  The Cycles Model suggests a potential breakout in the next two weeks.  The fractal structure suggests the next possible move may be to challenge the impeding trendline.  While hedging is yet tentative, the rush to hedging may explode as the trendline is broken.

Tomorrow’s options chain shows short gamma at 15.00-16.00.  Long gamma gains dominance at 17.00 and is beginning to fill the space between 20.00 and 25.00.

TNX has nudged beneath the trendline, with the next support at 41.00.  However, the government shutdown may temporarily strengthen bonds, causing yields to drop to the Cycle Bottom near 40.34.  Should that be the case, the current Master Cycle may run to mid-October.

While Bitcoin rose above the 50-day Moving Average at 113815.00 yesterday, it fell beneath it this morning on a potential reversal day in the Master Cycle.  It made a 61.8% Fibonacci retracement at 114493.00 yesterday, fulfilling one of the standards for a retracement.   That being said, we may wait for further clarity which may arrive in the next few days.

USD futures are consolidating beneath the 50-day Moving Average at 98.03.  This suggests a possible decline over the next two weeks to the trendline near 95.00.  Should that be so, dollar shorts may get a temporary reprieve from their pain as the bounce may be over.

Gold futures made a reversal this morning after having potentially completed its final fractal in the series.  Should gold decline beneath its Cycle Top at 3762.97, it may offer an aggressive sell signal.  The Model suggests a potential decline may last to mid-November.  Calls for higher prices may persist until the 50-day Moving Average at 3479.18 is broken.

ZeroHedge comments, “Gold at $7,000, silver at $100—Frank Holmes isn’t pulling punches. The U.S. Global Investors CEO, who called $4,000 gold back in 2020, warns that the world teeters on the edge of monetary and geopolitical chaos. Exploding global debt, record military spending, and a Fed trapped between inflation and recession are fueling the perfect storm for precious metals.”

Crude oil has taken a nosedive at the prospect of a government shutdown.  After all, the US Government may be the largest customer of oil-based fuels.  A Master Cycle low is pending until clarification is made about what is being paid and what is being deferred.  The Cycles Model suggests that confusion about the government consumption of oil may be resolved in the next week.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00am

Good Morning!

SPX futures rose to 6683.40, taking the high road on Friday to complete its first declining fractal.  NDX is leading the decline and may reverse in the first market hour while the SPX may linger another hour or two.  No one is particularly alarmed.  What few that have recognized the reversal have concluded that the decline may be shallow.  They are correct thus far.  However, the Cycles Model anticipated 5-6 weeks of decline ahead.  While this week’s calendar shows few domestic issues, flight tracking data shows a wave of U.S. tankers being deployed to Europe.

Today’s options chain shows Max Pain at 6640.00.  Long gamma may begin above 6670.00 while short gamma becomes very strong beneath 6610.00.

ZeroHedge reports, “Last week’s small market swoon is a distant memory with US equity futures up sharply on Monday, led by tech and small caps as the S&P looks to set a new ATH. As of 8:00am ET, S&P futures are up 0.5% (and off session highs) keeping the benchmark on track for its best September since at least 2013, even as the month is typically difficult for stocks.”

VIX futures rose to 16.00 over the weekend.  It is back above the 50-day Moving Average at 15.80.  Some of the discounts in the options market have disappeared over the weekend.  There is an anomaly in the Cycles Model, showing VIX peaking in about 2 weeks, while the SPX may continue its decline to early November.  Making things more interesting, market internals agree with the VIX, giving it credence as a possible leading indicator.

The October 1 options chain shows Max Pain at 17.00.  Short gamma still resides at 15.00-16.00.  Long gamma becomes very strong above 20.00 with institutional participation every 5 points above 20.00 to 55.00.

TNX has pulled back over the weekend, consolidating above the trendline.  The most likely path may be a test of the 50-day Moving Average at 43.32 as the Cycles Model indicates a further probe higher may be building.  Analysts claim that the prospect of a government shutdown on Wednesday may already be figured into their calculations.

Bitcoin has bounced to test Intermediate resistance at 112.610.00.  Should it go higher, a plausible target may be near 122000.00.  The Cycles Model may be winding up its final corrective probe higher.  The EU is considering capital controls to keep money from fleeing the continent.  In that case, bitcoin owned by Europeans may be cashed into US dollars to insulate them from seizure.

US dollar futures are testing Intermediate support at 97.84.  Should it break down, a new low may be made.  The Alternate view calls for a possible breakout of the declining trend channel.  The answer may reveal itself in the next two weeks.  Seasonality experts say that “Now is the time to buy the dollar.”

Gold futures are continuing to climb to new heights as it has broken out above the Cycle top at 3755.02.  The Cycles Model suggests that gold may continue its uptrend to mid-November.

ZeroHedge notes, “On the back of a 45% surge in the price of gold this year, the US Treasury’s hoard of the barbarous relic has surpassed $1 trillion in value for the first time in history.”

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

9:50 am

BKX is testing the upper trendline of its Ending Diagonal formation.  The Cycles Model anticipates a spike in volatility today and lasting into early next week.  A break of the Ending Diagonal is possible.  Should that take place, a decline to the April 7 low may be indicated.  The collapse of Tricolor and the bankruptcy of First Brands Group have taken the shine off asset-backed securities.  Banks are beginning to struggle to assess the impact on their own balance sheets.

8:00 am

Good Morning!

SPX futures made an overnight high at 6620.80 as it attempted to continue the bounce from yesterday’s low.  Intermediate support and the 4-month trendline lie at 6609.92, beneath which lurks a sell signal.  Further confirmation of the sell signal lies at 6446.79, marking the 50-day Moving Average.  The Cycles Model suggests a brief probe higher in an attempt to close the gap at 6635.84.  Should it fail, the trendline may be at risk of being broken.  Successfully closing the gap may extend the bounce.  Once the decision is made, the Cycles Model infers a very strong reaction.

Today’s options chain shows Max Pain at 6610.00.  Long gamma may begin at 6620.00.  Short gamma offers a put wall of 8,828 contracts at 6600.00, telling a cautionary tale should the SPX decline.

ZeroHedge reports, “US equity futures are flat as the market struggled for traction ahead of today’s core PCE report and as investors ponder the Fed’s next policy move following a raft of much stronger than expected US data.”

VIX futures are consolidating above the 50-day Moving Average at 15.84.  The Cycles Model shows trending strength returning today.  A breakout of the mid-Cycle resistance and channel trendline at 19.41 is possible.

TNX is consolidating between the trendline and Intermediate resistance after having broken through it yesterday.  This has further confirmed the buy signal.  The Cycles Model suggests another month of rally for TNX.

ZeroHedge reports, “After a poor 2Y auction, a subpar 5Y yesterday, it only makes sense that the week’s final coupon auction – today’s sale of 7Y paper – was the ugliest yet.

Stopping at a high yield of 3.953%, this was a slight pick up from last month’s 3.925%. It also tailed the When Issued 3.947 by 0.6bps, the biggest tail since August 2024.”

Bitcoin futures are flat after yesterday’s 4.3% rout.  The Cycles Model tagged today as a high volatility day, so the questions is, “Did the volatility come early?  Or, was yesterday a leading indicator of what is to come?”  A partial  explanation suggests the latter, as there may be another surge over the weekend and early next week.  The final low of the current Master Cycle may not arrive until the week of October 6.

USD futures are pulling back after yesterday’s surge above the 50-day Moving Average, confirming a buy signal.  The USD shorts are in pain as I write.  The next resistance is the upper channel trendline near 99.00.  The Cycles Model suggests the USD may linger beneath the trendline over the next week.  Indications are that a breakout may be possible during the week of October 6.  Subsequently, a pullback may emerge in mid-October.

The Ag Index is on a short-term bounce within a decline that may last to mid-October.  The target may be the declining trendline near 345.00.  Th edecline offers an opportunity to accumulate shares as a substantial rally may be about to resume afterwards.

ZeroHedge remarks, “President Donald Trump on Thursday announced that he would use tariff revenue to provide aid to American farmers until his import levies start to benefit them – which he says is only a matter of time.”

1. The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

2:40 pm

SPX plunged deeper than the morning futures had indicated, changing the conditions for the bounce and subsequent sell-off.  Sellers have abandoned the “down” escalator in favor of the elevator as the next decline is about to become steeper and faster.  Pensions and institutions had already been primed for an orderly rebalancing, taking profits and reducing risk.  However, a certain disorder has been revealed, leading sellers to react sooner and more emphatically.    The next support is the trendline at 6511.00.  The bottom of this decline may be closer to the 50-day Moving Average at 6451.00.

Good Morning!

SPX futures declined to 6607.40 and may be due for a bounce.  The retracement may reach 6650.00 to 6690.00, depending on current events.  Fear of missing out is still strong, despite deteriorating conditions.  The Cycles Model suggests a strong bounce today.  However, it also infers a possible panic decline starting Friday as quarter-end rebalancing kicks in.  Earnings season does not look promising as initial reports may increase downside momentum in October.

Today’s options chain shows Max Pain at 6655.00.  Long gamma may strengthen above 6675.00 while short gamma dominates beneath 6625.00.

ZeroHedge reports, “US equity futures are lower after giving up overnight gains with bond yields reversing earlier losses and rising by 1-2bp and the USD is at session highs; yesterday was the best USD performance since Sep 2. As of 8:10am ET, S&P futures are down 0.4% after concerns over stretched valuations and the pace of interest-rate cuts dragged the main gauge back from a record high. Nasdaq futures are down 0.6% with Mag7 and TMT stocks weaker pre-market, with Oracle falling more than 2%. Intel is higher on reports that it is seeking an investment from AAPL. Defensives are leading Cyclicals pre-market. Commodities are mixed with silver +2% and coffee +1.5% the standouts. US launches a Section 232 (sectoral tariffs) probe on Machinery, Med Devices, and Robotics. Today’s macro data focus is on Q2 GDP data, Durable / Cap Goods, Jobless data, Existing Home Sales, Adv. Goods Net-Exports, and Inventories. While none of these macro releases is expected to be market-moving, they may provide a holistic view of a stable / resilient economy that may be inflecting higher.”

VIX futures rose to 17.44 this morning.  It is on a buy signal above the 50-day Moving Average at 15.85, but may come back down to test it in a correction, offering a possible discount on hedges.  The Cycles Model suggests a possible rally into early October.

The October 1 weekly options chain shows Max Pain at 17.00.  Short gamma resides at 15.00-16.00.  Long gamma becomes strong at 20.00 with increasing favor in calls.

ZeroHedge comments, “The White House budget office has instructed federal agencies to prepare to fire a ton of people (aka ‘reduction-in-force’ plans) that could permanently eliminate jobs in the event of a government shutdown – the latest twist in the latest shutdown groundhog day – effectively challenging Democrats to a game of chicken.”

10-Year Treasury Yield futures rose to 41.97 this morning, testing intermediate resistance at 41.88 as TNX probes higher.  Resistance at the 50-day Moving Average lies at 42.44.  The rally may continue to the week of October 20 with a breakout possible. Q2 GDP has been revised sharply higher to 3.8%, damping the fear of an impending recession.

ZeroHedge reports, “After a rather forgettable 2Y auction yesterday, moments ago the Treasury sold $70BN in yet another subpar coupon auction.

The auction stopped at a high yield of 3.710%, down from 3.724% in August and the lowest since last September. It also tailed then When Issued 3.709% by 0.1bps, the 4th consecutive tailing 5Y auction in a row.”

USD futures rose sharply above the 50-day Moving Average, creating a buy signal.  Dollar shorts are panicking as the Cycles Model calls for a strong trending day.  The trend may continue to mid-October as overseas money, especially from Europe, flees to the US>

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

9:45 am

The Ag Index is correcting after its rally from its Cycle low in August.  It may continue to decline to mid-October, but may provide an opportunity to “buy the dip.”  The price of foodstuffs may rally dramatically due to global unrest and weather-related shortages.

ZeroHedge observes, “American farmers and ranchers who have sold or exchanged livestock due to drought conditions are eligible for tax relief, the IRS said in a Sept. 22 statement.

Generally, livestock sold due to drought must be replaced within four years. Under the latest extension, farmers and ranchers who had sold livestock due to drought, with replacement periods scheduled to expire by the end of 2025, will now have until the end of the 2026 tax year to make replacements.”

TheEpochTimes comments, “You have doubtless seen the price of beef at the store. It is shocking, outrageous really, ticking up higher and higher each week. When all this began four years ago, many people assumed that prices would settle back down after the crisis ended. That has not happened. The problem is getting worse, not better.

Checking in on the CPI for ground beef, we were shocked to see double-digit rates of inflation. The price of beef steaks in five years has gone up fully 50 percent and keeps rising.

8:00 am

Good Morning!

SPX futures made a 50% retracement of yesterday’s decline thus far.  The absence of a new high may be an early sign that the uptrend may be over.    Rejection at the Cycle Top resistance currently at 6720.21 was anticipated at this late stage in the Master Cycle.  The trendline supporting the uptrend lies near 6500.00.  It may be too early to call the top, but the conditions are there for a strong reversal.  The Cycles Model calls for growing strength of trend for the balance of the month.  Should the reversal take place, the Model  infers a decline into early October.  The conditions are right for a serious decline with the corporate buyback blackout and end of quarter rebalancing either selling or abstaining from new purchases during the earnings reports.  Retail investors have been steadily losing confidence witnessed by the record-breaking use of call options instead of direct participation in the market.  Markets thrive on confidence and decline on the fading belief that markets can be trusted.

Today’s options chain reveals Max Pain at 6670.00.  Long gamma comes in above 6685.00 while short gamma rules beneath 6650.00.

ZeroHedge reports, “US futures are once again higher after taking a brief pause yesterday, led by Tech, with all of Mag7 higher pointing to a stronger open as Alibaba’s spending promise and Micron’s upbeat outlook lift sentiment on AI. Global stocks resumed their rally after a pledge by China’s Alibaba for more spending (now the mere promise of more capex is sufficient to send your stock ripping) and Micron’s upbeat forecast lifted sentiment on AI (even higher… if that’s possible). As of 8:00am ET, S&P and Nasdaq futures rose 0.2% after big tech’s slide in the prior session broke a streak of records; Mag 7 are all green led by AMZN, +1.6% while TMT is boosted by Micron rising +1.5% after strong earnings underscored the boom’s ongoing momentum. Semis were bid after Alibaba jumped 9% in typhoon-hit Hong Kong on plans to boost AI spending beyond an initial $50 billion target. According to JPM, the AI-theme should perform well today (when does it not), including Critical Metals. Cyclicals are leading Defensives. The curve is steepening as 2Y yields are -2bps and the 10Y rises 3bps to 4.13% as the USD is bid up for first time this week. Trump said that Ukraine, with NATO help, has the tools to win back all of its Russian-occupied territory, included continued US weapons sales to NATO, and should shoot down Russian planes that enter its airspace. Gold held near all-time highs. Today’s macro data focus is on Home Sales, Building Permits and Mortgage Apps.”

VIX futures consolidated within yesterday’s trading range, remaining above the 50-day Moving Average at 15.86.  VIX gave an early buy signal which should not be ignored.  Trending strength may be due for a pickup this week, which may be accompanied by a breakout above the trading channel and more substantial recognition of the new trend.  The Cycles Model suggests a possible rally into early-mid October.

Today is (weekly) options expiration for the VIX, so this report is on the October 1 expiration.  Max Pain resides at 17.00.  Short gamma is strong at 15.00-16.00 while long gamma ig gaining adherence above 20.00 with conviction fading above 25.00.

TNX has stalled near the Triangle trendline at 41.25.  It may be due for a burst of energy that allows it to test the 50-day Moving Average at 42.48 in the next few days.  Subsequently, it may be due for a correction lasting about 3 weeks.  The recent plunge in rate volatility has been painful for institutions that have purchase hedges against rising rates.  This may cause them to drop their hedges (at a loss) in time for rates to start rising again.

ZeroHedge observes, “At the start of a new week of coupon issuance, the market (the bond market at least) has been remarkably stable, with yields today barely budging and trading where they closed last Friday, just around 4.13%. Which is why the market barely moved after today’s 2Y auction passed without a glitch.”

Bitcoin is consolidating beneath its 50-day Moving Average at 114254.00.  The Cycles Model offers a triple dose of trending strength through the weekend, suggesting a strong decline ahead, lasting to early-to-mid-October.

Gold futures are consolidating above the Cycle Top support/resistance at 3737.00.  A decline beneath that level may precipitate a sell signal as the rally completes its final probe to an all-time high.  The Cycles Model suggests that, once the reversal is made, a decline may follow to mid-November.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:15 am

Good Morning!

SPX futures reached 6697.80,  hovering just beneath yesterday’s high.   The Cycles Model infers that, while there may be up to another 2 weeks left to the current Master Cycle, the fractal may be inverted and due for a reversal at any time.  In addition, This week offers multiple days of strength that may accentuate a move in either direction.  Today is day 253 of an average 258 days in a Master Cycle.  Prepare for a reversal.

Today’s options chain shows Max Pain at 6+675.00.  Long gamma rules above 6700.00 while short gamma comes into play beneath 6650.00.

ZeroHedge reports, “US equity futures are flat after Monday’s latest dose of AI excitement (where nobody seems to know where the funds will come from, but then again nobody seems to care) drove indexes to fresh highs. S&P futures are unchnaged, with Nasdaq 100 futures fractionally in the red, with Mag7 names mixed in premarket trading as Semis have a slight bid. BA is +2.3% on a potential order stemming from the US/China trade talks. There’s a lot going on – from a looming government shutdown to surging Chinese exports – but no clear way to play it. Bond yields 1-2bps lower as the yield curve shifts lower; USD is flat. Cmdtys are mixed with crude and precious leading; gold +90bp as China moves to custody gold similar to NY Fed. OECD hikes global growth estimate for FY25 from 2.9% to 3.2% with US growth est. moving from 1.6% to 1.8% and 1.5% for FY26. OECD also predicts that the full impacts from tariffs have yet to be felt. The macro data focus is on Flash PMIs and regional Fed activity measures. Today’s main event is Fed Chair Powell’s economic outlook.”

VIX futures are hovering above the 50-day Moving Average and on a buy signal.  The next resistance level is the mid-cycle resistance at 19.39.  A breakout of that level may be universally recognized as a buy signal and a confirmation of the Cyclical buy signal.  The Cycles Model suggests growing strength of trend to the week of September 6.

The 10-year treasury yield remains above the lower Triangle trendline.  The Cycles Model infers a potentially strong move in the next couple of days that may bring TNX up to the 50-day Moving Average as high as 42.54 before a three week correction.

USD futures are consolidating beneath the 50-day Moving Average at 98.07 this morning.  While not on a (recognized) buy signal above the 50-day, the Cycles Model infers a rally in progress until mid October.  A breakout may not be universally recognized until it overcomes the declining trendline currently at 99.00.

Gold futures are experiencing multiple days of strength this week as it throws over its Cycle Top.  This condition may linger to mid-November as the drumbeat of war in Europe and the Middle East grows louder.  While most associate the rise in gold to inflation, that is a secondary effect.  Historically, it has been shown that war is the primary driver for the price of gold.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:15 am

Good Morning!

SPX futures are hovering beneath yesterday’s all-time high.  On the menu today is the largest position of maturing/expiring call options in history.  Should the majority of calls mature above Max Pain, the dealers will be scrambling to fulfill those maturing options, causing a spike higher.  The Cycles Model suggests resistance may occur near the Cycle Top at  6688.85.  Once expiration is passed, there may be a “let-down” as dealers sell shares held long to fulfill their obligations to the call options holders.  There is no free lunch.  The Cycles Model shows a possible burst of volatility on Monday following options expiration.

Today’s afternoon expiry shows Max Pain at 6580.00.  Long gamma becomes strong above 6600.00.

ZeroHedge reports, “US stocks are set for a quiet finish to a busy week in which the Fed’s first step in what will be a series of rapid interest rate cuts propelled markets to fresh highs. After all four major indexes – DJIA, SPX, Nasdaq and Russel – closed at a record high for the first time since November 2021, futures are flat this morning, with the S&P unchanged and Nasdaq up 0.1%, as Mag 7 stocks are mostly higher led by the +1.1% and +0.7% in TSLA and AAPL. Overnight the BOJ spooked risk assets when it kept rates as expected but surprised markets by announced a 330BN yen annual sale of its massive ETF holdings. The yield on 10-year Treasuries climbed three basis point to 4.13% after yesterday’s sharp move higher, which helped the dollar rise for a third day. Commodities are mixed: oil is lower, while previous metals/ags are both higher this morning. Today sees a much-anticipated call between Xi and Trump at 9am New York, with TikTok and trade likely on the agenda.”

VIX futures may be consolidating beneath the 50-day Moving Average at 15.86 this morning.  There may be efforts to suppress the VIX today to keep the markets calm.  The Cycles Model shows a possible burst of market strength on Monday following options expiration.  The declining trend channel may be broken out.

The September 24 options chain shows Max Pain at 16.00.  Short gamma still resides at 14.00-15.00.  Long gamma may begin in force above 16.00 and strengthens through 20.00.

TNX rose to 41.41, rising above the year-long Triangle trendline and offering a possible buy signal.  The reversal is about 1 week early, so there may be a back-test of the reversal in the next week.  The Bank of Japan and the Bank of England are showing stress, which may strengthen yields in the UST.

USD futures continue to climb toward the 50-day Moving Average, above which lies a potential buy signal.  The Cycles Model shows growing strength in the rally that may continue to mid-October.  Further advancement may not only overcome the 50-day, but also break out of the 5-month declining trend channel.

BKX made a new all-time high yesterday and may be pulling back today.  The Cycles Model shows the Master Cycle is fully extended and due for a reversal.  In addition, volatility may appears on Monday, strengthening the reversal.  The Model shows a decline is in the offing that may last to late October.

ZeroHedge observes, “Did a medium-sized canary just croak in the coalmine of consumer credit?

While the world and his pet rabbit was avidly glued to the screens, hanging on every word from Fed Chair Powell, something happened in a name that few have likely heard of that could have a much greater impact on markets.”