The Practical Investor

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.”

The Shanghai Composite Index declined to a low of 3187.99, triggering a confirmed sell signal by declining beneath the Cycle Top support at 3225.07.  The Cycles Model suggests a continued decline to the Cycle Bottom at 2712.42 in a little over a week’s time.  Should this occur, it may snuff out all urges to speculate in Chinese stocks for a long time.

SPX futures declined to a morning low at 5764.70.  Note the Master Cycle high may have been made on September 26, but is not the all-time high.  The final high appears to be targeted for the Cycle Top at 5821.04 with a possible overshoot.  Should the ATH be made today, we may also see a Key Reversal by the close.

Today’s options chain shows Max Pain at a highly contested 5750.00.  Long gamma may begin at 5775.00 while short gamma may start below 5735.00.

ZeroHedge reports, “Futures are lower ahead of the last trading day of the week, but well off session lows as JPM earnings were solid enough to push the stock higher and reverse some of the market’s losses as Q3 earnings season was officially launched. As of 8:45am, S&P futures are down fractionally, while Nasdaq futures dropped 0.2%, hammered by TSLA which is down -5.8% pre-market as the Robotaxi event failed to meet market expectations. Bond yields are higher with the 10Y rising 3bps to 4.09%, while the Bloomberg Dollar index reversed earlier losses. Commodities are mixed with Oil fractionally lower, base metals higher, and pPrecious metals mixed. Today’s macro focus will be banks earnings and PPI, which came in fractionally light MoM (headline 0.0% MoM, Exp. 0.1%; core 0.2%, exp. 0.2%), but hotter on a YoY basis (core 2.8% YoY, Exp. 2.6%). Over the weekend, key macro catalysts will be China finance minister’s press conference on stimulus package.”

VIX futures have declined to 20.64 this morning.  Should there be a final rally in the SPX, VIX may decline to the 50-day Moving Average at 18.88.  However, it may resume its rally by the weekend.

The October 16 options chain shows Max Pain at 20.00.  Short gamma inhabits the space between 14.00 and 19.00.  Long gamma may begin at 21.00 and rises to 50.00.

TNX is consolidating at the trendline.  The current Master Cycle may have only a week to go, but the Cycles Model suggests maximum trending strength over that period.  The Cycle Top at 47.25 may be the intended target.

The Japanese Yen may be consolidating after yesterday’s potential Master Cycle low at 66.86 on day 261.  Traders have been given the all-clear to reenter the Yen carry trade.  However, the uptrend may receive a new burst of energy this weekend.

BKX may be poised for its final probe toward its Cycle Top at 117.56.  JPM, Wells Fargo and Citigroup are scheduled to report earnings today.  While these early reports may, on balance, be positive, there is danger lurking in the regional banks, especially in the southeast, as victims scramble to raise cash to rebuild after hurricanes Helene and Milton.  In addition, having survived the quarter-end repo surge, banks may be approaching another repo crisis as the demand for liquidity spikes.

9:52 am

BKX may have reached its Master Cycle high at 116.27 yesterday, on day 265.  Should that be the case,  a sell signal may be obtained beneath Intermediate support at 113.05.  Further confirmation lies beneath the 50-day Moving Average at 111.57.  The double hurricane season and associated stressors may bring the demand for cash far beyond the bank’s capabilities to supply through loans or withdrawals.  In addition, insurance companies will also be coming under stress.  This event may be the economic equivalent of the Great San Francisco Earthquake.

ZeroHedge observes, “Hurricane Milton moved off Florida’s east coast early this AM, downgraded to a Cat. 1 storm. Milton made landfall around 2030 ET on Wednseday near Siesta Key, Florida, a barrier island next to Sarasota. The storm’s destructive winds and torrential rains sparked widespread power outages to over 3 million customers in the state.”

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 remained flat overnight, but have started to decline at the release of the CPI report.

The rally may be complete as of yesterday’s close at 5796.80.  The chances of reaching the Cycle Top at 5818.00 may diminish with the passing of time.  The nearest support lies at 5726.67, offering an aggressive sell signal beneath it.  A confirmed sell signal may be obtained beneath Intermediate support at 5641.59.  Should the reversal take place today, it may do so with elevated volatility.

Today’s options chain shows Max Pain at 5755.00.  Long gamma may start at 5790.00 while short gamma begins beneath 5745.00.

ZeroHedge reports, “US equity futures are lower as traders awaited the latest inflation data that will determine if the Fed opts for a slower pace of interest-rate cuts. As of 8:00am, S&P 500 futures are down 0.2% after hitting a record high on Wednesday; Nasdaq futures are down by the same amount with most Mag7 stocks flat; TSLA is leading with a +1.1% pre-market move ahead of its Robotaxi unveil event tonight. Delta Air Lines Inc. kicked off the third-quarter earnings season, with profit and sales forecasts falling short of expectations. JPMorgan Chase & Co. and Wells Fargo & Co. are scheduled to report on Friday. Ten-year Treasury yields held above 4%, near the highest levels since end-July. Bloomberg’s dollar index was steady after an eight-day streak of gains, its longest since April 2022. Commodities are mixed with Oil higher, Base Metals lower, and Precious Metals higher. Today, key macro focus will be CPI, along with AMD (Advancing AI) and TSLA (Robotaxi) events.

The Shanghai Composite fell to 3228.12, finding support at the Cycle Top at 3216.66.  It is on an aggressive sell signal with a confirmed sell signal pending a decline beneath the Cycle Top.  The Cycles Model gives the Shanghai another week of decline in which the Cycle Bottom at 2717.08 may be challenged.  A decline beneath that level may induce an even greater decline.  Often when stimuli fail, short sales are banned with an increases probability of a market closure.

VIX futures are tentatively rising again.  The Cycles Model suggests trending strength reappears by the weekend.  However, should the SPX attempt a rally, the VIX may briefly visit the 50-day Moving Average at 18.79.

TNX tested the upper trendline of its former trading channel at 41.12.  Futures rose as high at 41.39, suggesting the cash market may do the same today.  There may be a brief pullback.  However, the Cycles Model offers a triple dose of strength over the weekend and the following week.  Volatility is on the rise as well.

ZeroHedge reports, “After yesterday’s ugly, tailing 3Y auction, which saw a plunge in foreign demand as a result of the recent spike in yields as faith in the Fed’s easing plans has been deeply shaken in recent weeks, moments ago the Treasury sold $39BN in 10Y paper (in the form of reopening of 9Y-10M cusip LF6), in a sale that was substandard at best.

The auction stopped at a high yield of 4.066%, up sharply from last month’s 3.648% (which was the lowest since May 2023), and tailed the When Issued 4.062% by 0.4bps, a big reversal from last month’s 1.4bps through auction (but nowhere near as bad as the 3.1bps tail in August).”

Japanese Yen futures may have bottomed out its Master Cycle at 6690.00 this morning,  on day 261 of its Master Cycle.  Shold that be the case, a reversal may be imminent.  The Cycles Model suggests trending strength may return by the weekend.  The window for exiting the Yen carry trade may be closing.  A buy signal for the Yen may occur at the 50-day Moving Average at 68.78.

12:30 pm

SPX may be taking aim for either its daily Cycle Top at 5817.52 or its 2-hour Cycle Top at 5829.87.  The Master Cycle has extended to 278 days, a very unusual event.  Despite the extension, the structure makes perfect sense.

12:21 pm

BKX may be attempting to reach the Cycle Top at 117.48 before reversing.  There has been a valiant attempt at keeping prices high as the internals deteriorate.  It is likely that there may be a bank failure or two about to hit the fan.  No wonder Warren Buffett is getting out.  Hurricane Milton may cause a demand for cash that simply cannot be met after the last hurricane.

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!

The Shanghai Composite Index fell to 3262.26 this morning, beneath the weekly Cycle Top at 3400.00.  That action offers an aggressive sell signal.  The Daily Cycle Top is at 3211.42, offering a confirmed sell signal.  The Shanghai Composite has made a 42% retracement of the entire 9-day rally in just two days, causing many speculators to “swear off” investing in China.   Chinese stocks have always been a hotbed of speculation, including the use of margin.  The current Master Cycle may be over in the next week.  Take this however you want, but either we hit a very low Cycle Bottom (below 2718.59) or the Chinese markets may be closed.

SPX futures dipped to 5732.00 this morning, but bounced back to the flat line.  There is a certain desperation to keep the SPX above 5700.00.  However, margin calls abound in those dipping into China stocks.  The Cycles Model suggests the ability to make a new ATH is fast approaching zero.  It warns that, should the SPX fall beneath  5700.00 a panic decline may set in.

Today’s options chain shows Max Pain at 5735.00.  Long gamma may begin above 5750.00 while short gamma resides beneath 5715.00.

ZeroHedge reports, “US equity futures are lower on news that the DOJ is considering a breakup of Alphabet’s Google search engine, in what would be a historic antitrust crackdown on Big Tech; Europe was flat while Asian markets slumped after Chinese A-shares suffered their biggest one-day plunge since February 2020 as investors are getting restless and demand stimulus actions from Beijing instead of just more words. ”

VIX futures are consolidating around the Cycle Top at 21.88 this morning.  The Cycles Model calls for an increase in trending strength through the end of the month.  However, the VIX may resume its climb through the end of November.

The October 16 options chain shows Max Pain at 20.00.  Short gamma is heavily populated between 14.00 and 19.00.  Long gamma begins at 21.00 and may extend to 45.00.

TNX is consolidating this morning after yesterday’s new high.  The consolidation may not last, as trending strength may be on the rise by this weekend.  Today is day 251, giving TNX a week or so of additional gains.  Should it break out above the mid-Cycle resistance at 44.85, the Cycle Top at 47.25 may be next week’s target.  Talk of further interest rate cuts are being squelched by this rally.

ZeroHedge reports, “One would think that the first coupon auction after the Fed’s rate cut would have passed better; one would be wrong.

Moments ago the Treasury sold $58 billion in 3Y paper, matching the all time high issuance for the tenor, in an auction that was unexpectedly ugly. The sale stopped at a high yield of 3.878%, the highest since July, and tailing the When Issued 3.871% by 0.7bps, the first and biggest tail since June and followed the biggest stop through since August 2023.”

 Japanese Yen futures are consolidating this morning as the market digests its gains from the Master Cycle low.  The Cycles Model shows growing strength into the weekend with the rally continuing through the end of the month.  The window for closure of the Yen carry trade is closing fast while the consensus is that its time to jump back in to the Yen carry with expectations that the decline may continue.

USD futures are also consolidating this morning after a searing rally from the Master Cycle low on September 18  The Cycles Model suggests the consolidation may be short-lives, as a burst of trending strength may be due today and extend to the weekend.  What people may not understand is, as chaotic as the financial situation is here, it may be even worse in ?Europe and China, driving liquidity toward the USD.

Crude Oil futures fell to a morning low at 71.84, beneath the 50-day Moving Average at 72.76.  The signal is changed from an aggressive sell signal to a confirmed sell one day after its Master Cycle high.  There is a possibility of a bounce off the neckline of the Head & Shoulders formation, but the longer view may be that crude may continue its decline to the year-end.  Should that occur, those that believe that the 2023 low may hold may want to hedge their bets.

Gold futures declined to 2625.40 this morning, leaving the September 26 high intact.  Should gold pass through Intermediate support at 2599.00 and the 50-day Moving Average at 2556.00, we may see the Cycles Model continue its decline into late November.  Latecomers to the rally are already feeling some pain, but that may palle as gold declines beneath the 50-day.

3:48 pm

SPX has met both time and price elements for this micro-Cycle.  Prepare for a rapid decline.

9:54 am

BKX, our liquidity proxy, may have made its Master Cycle high on Monday, day 263, at 115.20.  For the third consecutive time since its July high it has made lower highs at each peak.  It now faces a possible 6-week decline.

ZeroHedge comments, “94-year-old Warren Buffett’s Berkshire Hathaway has been on a multi-month dump-a-thon of Bank of America shares. The reason for the abrupt selling, which began in mid-July, has yet to be officially disclosed but should be viewed as an ominous sign that the ‘Oracle of Omaha’ foresees economic trouble ahead.

The latest Bloomberg data shows that Berkshire’s total proceeds from selling BofA shares have now topped a whopping $10bln.”

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!

After a more-than-week-long hiatus, the Shanghai Composite opened with a bang, then puked the better part of its gains.  However, it remains above its weekly Cycle Top at 3390.25.  This process may have created a top on day 264 of its Master Cycle.  The Cycles Model suggests a brief, but savage decline back to the origin of this short squeeze over the next two weeks.  Once the liquidity injection is over, there is likely to be only sellers.  Based on this chart, an aggressive sell signal lies beneath 3390.00 while the sell signal on the daily chart lies beneath3197.00.

ZeroHedge remarks, “There is some good news and some bad news for China bulls this morning (local time).

First the good news: since mainland China (aka A-shares) were closed for the past week, mainland Indexes such as the Shanghai Shenzhen CSI 300 are up – just barely – because after opening up almost 11% to catch up with the frenzied rally in offshore markets and ETFs, the index has erased almost all gains since it closed for trading on Sept 30.”

SPX futures rose to 5722.10 overnight, but eased back somewhat.  Short-term support lies at 5710.00 where an aggressive sell signal may be found.  The Cycles Model suggests that the support beneath SPX is getting very shaky.  However, stimulus leaking from China may boost the SPX temporarily.  Resistance lies near 5750.00.   Should it decline beneath 5700.00, we may see a panic decline lasting the rest of the week.  The sell signal may last up to 6 weeks.

Today’s options chain shows Max Pain at 5710.00.  Long gamma may begin above 5730.00 while short gamma may start at 5700.00.

ZeroHedge reports, “US equity futures are higher, even as Europe and Asia stumble after a horror show in Hong Kong as China’s record rally hit a brick wall. As of 8:00am ET, S&P futures are 0.4% higher, recovering about half of Monday’s drop which was the worst day since early September, while Nasdaq futures rise 0.5% led by the Mag 7 (NVDA +1.4%, MSFT +0.8% and GOOG +0.6%). Both indexes slid Monday after traders faded bets on rate rate cuts, pushing 10Y bond yields above 4.0% for the first time in 2 months. Taking a step back, US stocks remain unchanged since the Fed’s jumbo rate cut.”

VIX futures have pulled back from yesterday’s new high, but remained above the Cycle Top support at 21.78.  Trending strength appears later this week and may extend to the end of October.  VIX is stressed and needs to catch up to market conditions.  Or possibly, the market needs to react appropriately to the stress building up in the VIX.

Tomorrow’s options chain shows Max Pain at 22.00.  Short gamma inhabits the zone from 15.00 to 20.00.  Long gamma starts at 23 and may go as far as 45.00.  However, the consensus is on the short side.  In conditions such as these, it does not pay to follow the consensus.

TNX continues its rising pattern with a new morning high at 40.51.  Trending strength is building into the weekend and may persist through next week.  Should the mid-Cycle resistance be overcome, the ultimate target may be the Cycle Top at 47.25.

ZeroHedge observes, “Last month, we – and many others – were stunned when after several months of progressively declining revolving credit growth, in July credit card debt unexpectedly soared by the most since January, sending total consumer credit growth surging by just under $27 billion, the single biggest monthly increase since 2022. We called it a “Last Hurrah” moment (literally “In “Last Hurrah”, Credit Card Debt Unexpectedly Soars Despite Record High APRs As Savings Rate Hits Record Low“) and said that “with consumers ever more strapped for actual cash and equity, as the personal savings rate in the US collapses from over 5% to 2.9% – the lowest since the Lehman bankruptcy – in just one year, as all the excess savings from covid are long gone there is only so much more credit card maxing out that can take place before reality finally sets in.“”

Japanese Yen futures continue their advance to 67.84 thus far.  Should the rally persist, it may last to the end of November.  The window for exiting the Yen carry trade is almost over, despite calls for jumping back in.  Prospects for the carry trade don’t look good should the Yen rise over the 50-day Moving Average at 68.69.

Crude oil futures rose to a high of 78.46 after the close, then plummeted to a low of  74.52 before a bounce, creating a possible Master Cycle high..  In doing so, it may have created an aggressive sell signal beneath the mid-Cycle support at 77.58.  Confirmation may lie beneath the 50-day Moving Average at 72.85.  A lot may transpire until then.

7:30 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!

NDX futures have declined over the weekend ot a low at 19861.50.  The first support level is the Short-term line at 19810.58, beneath which an aggressive sell signal may be provided.  Addiionl supports are given at the Intermediate, level at 19528.22 and the 50-day Moving Average at 19264.69 where confirmed sell signals may be obtained.  The current administration wants these levels as high as possible, knowing that their party may lose their majority should there be losses in equities by the end of October.  On the other hand, the Cycles Model indicates a declining equities market until the third week of November.  Whether there is a sufficient decline by the end of October to indicate a possible change in the administration is yet to be seen.

Today’s options chain shows Max Pain at 19830.00.  Long Gamma may begin at 19840.00 while short gamma may lie beneath 19800.00.  The conviction lies on the long side of the equation.

SPX futures declined to a morning low at 5713.80 thus far.  The ATH remains at September 26.  Should the SPX decline beneath 5700.00, a panic sell-off may begin by Wednesday, according to the Cycles Model.

Today’s options chain shows Max Pain at 5735.00.  Long gamma may begin above 5750.00 while short gamma starts beneath 5715.00.

ZeroHedge reports, “US equity futures are lower as the selling in Treasuries accelerates after strong US jobs data slashed bets on a big interest-rate reduction next month from the Federal Reserve and an overnight surge in oil pushed Brent to $80 (see last night’s “A Historic Short Squeeze In Oil Has Only Begun“), which sent both the 2Y and 10Y above 4.00%.”

VIX futures reached a morning high at 21.45 before easing, making a new high, but not yet breaking out above the Cycle Top at 21.64.  VIX may be gathering strength to break out this week.  The Cycles Model suggests a new high by the end of October.  Panic rallies may occur during the weeks of October 14 and 21.

The October 9 options chain shows Max Pain at 21.00-22.00.  Short gamma resided from 15.00 to 20.00.  Long gamma may begin at 23.00, but contains little enthusiasm above that level.

TNX futures made a morning high at 40.22 (cash at 40.18 thus far).  While the Cycles Model suggests the possible end of this rally by the end of next week, it also indicated a strong uptick in strength of this probe higher.  The objective of this rally appears to be the upper trendline and mid-Cycle resistance at 41.85.  Should it break through, the next resistance may be the Cycle Top at 41.85.

TheEpochTimes reports, “Mortgage rates jumped by more than 0.25 percent on Friday after a government report showed that the labor market continued to remain strong.

The average 30-year fixed-rate mortgage rate jumped 27 points from 6.26 percent to 6.53 percent on Friday, according to data from the Mortgage News Daily (MND) mortgage rate index that is updated on a daily basis. This is one of the biggest single-day rate increases MND has ever tracked.”

USD futures paused this morning after a week of trending strength vaulted it above all nearby resistances.  The next level of resistance lies at the mid-Cycle at 103.67.   The Cycles Model shows a double burst of strength this week that may propel it above the next resistance.  Foreign money is being attracted to the USD due to the continued strength of the US economy and the relative safety of its currency thus far.

Japanese Yen futures rose to a morning high at 67.61 after making its Master Cycle low on Sunday, day 257.  A buy signal may be obtained as the Yen rallies above its 50-day Moving Average at 68.64.  Trending strength may return by the weekend.  This event may cause a double whammy on  the equities and real estate markets, as viable alternatives for low interest loans are disappearing.

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!

SPX futures rose to 5718.60 this morning,   With the port strike settled, it is not hard to see why investors view the September jobs report to be a non-event.  We will soon find out.  The Cycles Model suggests a brief reaction sending SPX to 5732.00.

Today’s options chain shows a highly contested Max Pain at 5700.00.  Long gamma may begin at 5725.00 while short gamma starts beneath 5720.00.

ZeroHedge reports, “US futures and European stocks fluctuated ahead of today’s jobs report that will help determine the path for interest rates.  As of 8:00am, S&P futures are 0.3% higher, reversing earlier losses, with small-caps leading. Nasdaq futures rise 0.4% with AMZN and TSLA notable movers in MegaCap Tech (AMZN +1.4%; TSLA +1.2%). Bond yields are higher, extending Thursday’s treasury selloff, 10-yr yields rise 3bps higher. The Bloomberg Dollar Index was slightly lower, but still set for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Commodities are mixed with oil higher, base metals lower, and precious metals slightly higher. Oil prices extended their gains after Israel carried out huge bombing raids on Hezbollah targets near Beirut airport alongside ground attacks in southern Lebanon; this followed the biggest one-day jump in oil prices in almost a year amid spiraling Middle East tensions.  Today, the key macro focus will be NFP release: Wall Street consensus expect a 150k print, with the unemployment rate unchanged at 4.2% (see our preview here).”

VIX futures pulled back to 18.88 as it prepared to challenge the Cycle Top resistance at 21.59.  Once accomplished, it may pull back to the 50-day Moving ?Average at 18.49.  The Cycles Model suggests the rally may resume in strength next week.  Analysts believe that both the VIX and the SPX may rise in unison as they did in the 1990’s.

The October 9 options chain shows Max Pain moving up to 23.00.  Short gamma rules between 15.00 and 20.00.  Long gamma may exist above 25.00, but with little strength of conviction.

TNX Vaulted above the 50-day Moving Average at 38.47.  Yesterday and today are days of trending strength that was pointed out earlier this week.  The next target is the upper trendline alongside the 200-day Moving Average at 41.64.  This may become Powell’s worst nightmare.

ZeroHedge comments, “It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed.

Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…”

9:45 am

BKX has declined beneath the combined Intermediate/50-day supports at 111.42-111.46.  The sell signal may now be confirmed.  A weak Master Cycle high was made last Friday, September 27.  A cross beneath the 50-day confirms the Cycle Pivot.  The Cycles Model suggests the decline may last a total of 55-60 days.  The next support may lie at the lower trendline at 104.50.  Should the decline last as long as the Cycles Model implies, the Head & Shoulders neckline at 72.50 may be the ultimate target.

ZeroHedge remarks, “Bank of America customers on Wednesday reported having problems accessing their bank accounts or that their account balances currently show $0.

The outage started at around 12:30 p.m. E.T. on Wednesday, according to the tracking website Downdetector.”

Note:  Bank of America Headquarters is in Charlotte, North Carolina

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!

NDX futures declined to 19652.30, then bounced.  It did not take out the weekly low at 19622. 29.   Should the NDX break down, the next level of support is the Intermediate level at 19503.82.  The 50-day Moving Average lies at 19259.26.  A confirmed sell signal may lie beneath either of the two prior supports.  There is a deluge of information to be reported in the next 24-36 hors that may alter the course of the markets.

Today’s options chain shows Max Pain at 19825.00.  Long gamma may begin at 19850.00 while short gamma may begin beneath 19800.00.A substantial “collar” may mature tomorrow that could allow the options to move more freely.

SPX futures declined to 5676.40 before a bounce this morning.  It has not exceeded Monday’s low at 5674.00.  Today may be the last day the SPX may remain above 5700.00.  An expanded flat correction has the capability to rise to 5732.00.  Once accomplished, the wheels may fall off.  SPX has made an aggressive sell signal that remains in force, especially beneath 5700.00.  Here are some definitions:

• An aggressive sell signal may be found after a Cycle top (all-time high) is made).  It suggests that longs should be reduced or eliminated.  Shorts may be “layered in” beneath this level.  Expect rising volatility.  This move takes patience.
• A confirmed sell signal  may be found beneath Intermediate support and/or the 50-day Moving Average.  While no signal carries an absolute guarantee, each successive signal carries a higher degree of certainty.
• Trading channel (red rising) trendlines, when broken, offer the potential that the trend may be broken with the potential of a complete retracement.
• Super-Cycle trendlines, such as the 1987 trendline, offer the insight of a much greater decline that may take multiple years.

Today’s options chain shows Max Pain at 5715.00.  Long gamma may stat at 5745.00 while short gamma may lie beneath 5700.00.  This options market is also tightly collared until tomorrow’s expiration.

ZeroHedge reports, “US stock futures are lower, but off session lows, in line with declines seen across Europe and Asia, while yields, the dollar and oil rise as the risk of escalating conflict in the Middle East damps risk appetite. As of 8:00am ET, S&P futures are down 0.1% after closing up 0.01% on Wednesday; Nasdaq futures slide 0.3% with MegaCap Tech mixed: NVDA is up +0.7%, while TSLA extends yesterday selloff and is down -1.6% pre-market. Bloomberg’s dollar index gained for a fourth day, bolstered by a rise in Treasury yields; market snapshot: RTY -70bps // UST10yr +2.5bps @ 3.80bps // WTI +2% @ $71.50 // Bitcoin unch @ $60,900 as global equities trade mixed with escalating geopolitical tensions/ the awaiting of the size/scale Israel’s response to Iran weighs on markets, which has pushed oil prices up another 1.9% this morning; elsewhere in commodities base metals are also higher, while precious metals and ags are lower: Jobless claims, factory orders and the ISM services reading (est 51.7, Last 51.5) are all on the slate as traders prepare for Friday’s jobs report, while the Federal Reserve’s Jeff Schmid, Neel Kashkari and Raphael Bostic are all scheduled to speak.”

VIX futures are positive this morning, rising to 20.32.    It may be due for a pullback, should the SPX remain above 5700.00.  However, once the pullback is complete< the upward trend may continue on a secular rise.  Note that the VIX is now above the levels that occurred prior to the August 5 debacle.  A breakout may elevate the VIX to levels above the August 5 high.

A look at the October 9 options chain shows Max Pain at 20.00.  Short gamma inhabits 16.00 to 19.00.  Long gamma is very scarce.  Very larrge moves may occur when investors are wrong-sided.

TNX futures rose to 38.27 this morning, breaking out above the trading channel lower trendline.  TNX is on a buy signal, UST (10-year treasuries are on a sell signal).  The Cycles Model calls this a day of strength, which may carry over into next week after a brief pullback.  The 50-day Moving Average lies at 38.52.  The Fed easing may be backfiring, as the excess liquidity appears to be going nowhere.  The point is, the excess cash may be hoarded, rather than deployed to the markets.

Japanese Yen futures hit a morning low at 68.00, creating a possible Master Cycle pivot.  The 50-day Moving Average lies at 68.50.  A move above that level creates a probable buy signal.  Today is day 254 of the Master Cycle, so there is a possibility of a marginally new low in the next few days.  Time is running out to unwind the Yen carry trade, contrary to popular opinion..

ZeroHedge remarks, “In the past two months, reports of the yen carry trade death have been greatly exaggerated, largely as a result of market whiplash to Japan’s schizophrenic approach toward the currency.”

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!

NDX futures have declined to 19677.90 this morning despite excess liquidity near all-time 50-year highs.  The Nasdaq Hi-Lo Index dipped to -23 yesterday for the first time since September 11, suggesting that it is not responding to all of the excess liquidity in the system.  NDX is currently on an aggressive sell signal.  However, a confirmed sell signal lies beneath Intermediate support at 19480.88.  Whispers of an impending crisis are in circulation, while our leaders remain tight-lipped.

Today’s options chain shows Max Pain at 19770.00.  Long gamma may start at 19800.00 while short gamma may begin beneath 19725.00.

SPX futures dropped to 5684.10 this morning, currently giving an aggressive sell signal.  Intermediate support lies at 5611.57, beneath this we may find a confirmed sell signal.  The 50-day Moving Average lies at 5538.22, commonly recognized as a confirmed sell signal.  The decline may become more pronounced as the week progresses.  Trending strength begins to appear next week, indicating possible panic conditions.

Today’s options chain shows Max Pain at 5705.00.  Long gamma may begin above 5715.00 while short gamma resides beneath 5700.00.

ZeroHedge reports, “US equity futures are weaker with small caps underperforming while Treasuries erased some of the previous day’s gains as escalating tensions in the Middle East spooked traders and sent oil sharply higher for a second day after Iran fired about 200 ballistic missiles at Israel, drawing a vow of retaliation from Prime Minister Benjamin Netanyahu and further raising the risks to crude supplies from the region. As of 8:00am ET S&P futures were down 0.2% but off the worst levels of the session following yesterday’s flight to safety; as shown in the chart below the cash index has been largely flat for the past 2 weeks. ”

VIX futures are consolidating after the last two days of upside moves.  VIX has awakened and on a buy signal above the 50-day Moving Average at 18.36.  The next couple of days may experience a sideways consolidation as it acclimates to its newfound strength.  The Cycles Model suggests a possible breakout above the Cycle Top in the next week.

Today is options expiration for the VIX.  Next Wednesday’s op-ex shows the Shorts regaining some of their courage beneath 18.00 while the longs appear to have fallen asleep.  This may lend itself to a possible explosive situation as investors’ and dealers’ guard is down.

TNX futures have risen to 38.26 this morning, while the cash market has risen to 38.00.  A breakout may occur, as Friday’s high may be exceeded.  This may be followed by a newfound trending strength through the rest of this week.

Japanese Yen futures have fallen to 68.89 this morning, breaking beneath Intermediate support at 69.41 and possibly targeting the 50-day Moving Average at 68.41.  The average retracement (50%) may lie near 66.68.  The retracement could easily be complete by the end of this week, according to the Cycles Model.  Time is running out to unwind the Yen carry trade.

Crude oil futures may be completing its retracement at the 50-day Moving Average at 73.16 today, as it has risen this morning to 72.48 thus far.  The reversal to a new low may take about three weeks.  The neckline of the Head & Shoulders formation warns that, once beneath it, there are no visible supports until the H&S target may be reached.  Hedge funds and speculators are short oil.  Do they know something we don’t?

11:25 am

BKX bounced rom its 50-day Moving Average at 111.50.  Beneath that level is a confirmed sell signal.  The Cycles Model suggests an alarming development.  There may be a Master Cycle low by the end of the week.  The possibilities are staggering, given the increased volatility in the VIX and in the Banking Model itself.

The perfect storm may be brewing.  With liquidity conditions already favorable, the central banks have unleashed a torrent of…more liquidity.  Most analysts welcome the gushing increase in money supply, thinking only of the prospects of a rising equities and real estate market.  The more sober view is, that with the PE of most equities indices over 20, what rot lies beneath the surface that causes the authorities to boost liquidity?  The Cycles Model suggests we may know the answer shortly.

10:30 am

SPX has declined beneath 5700.00, our demarcation line.  It is now on an aggressive sell signal.  One should not be long here.

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!

SPX futures rose to 5767.20 this morning, short of the all-time high at 5767.37.  Thursday’s high remains intact after yesterday’s closing stick-save.  Volatility may now rise to break the SPX  out of its range.  5700.00 is where an aggressive sell may take place.  Once underway, the declining Master Cycle may last to late November.  One may deduce the reason for this decline.

Today’s options chain shows Max Pain at 5730.00 Long gamma may begin at 5745.00 while short gamma may start beneath 5700.00.

ZeroHedge reports, “US equity futures are down a touch as we enter Q4 after trading overnight in a narrow range, with NDX leading and RTY lagging, a familiar pattern from the first half of the year. So far in 2024, S&P is +20.8%, NDX +19.2%, and RTY +10.0% (a full YTS performance return in a latter post). As of 8:00am ET,. S&P futures are down 0.1% after the index notched a fresh record Monday, the 43rd of the year,  following a third-quarter rally that capped the longest such winning stretch since 2021; Nasdaq futs are unchanged with Mag7 names mixed as Semis hold a slight bid. FTSE +35bps, CAC -20bps, DAX +30bps, Nikkei +1.93%, the record China market juggernaut (Hang Seng/Shanghai) is closed for the next week due to holidays. Bond yields are lower as the yield curve bull steepens, and USD is higher. Commodities are mixed with Ags/Energy under pressure and Precious Metals are leading Base metals. Overnight news focused on Israel “targeted ground raids” into Lebanon (Israeli security official said a wider operation into Beirut is not on the table) and the US Dockworkers strike starting on the East Coast with economic costs estimated to be up to $5bn/day; hurricane recovery continues in the Southeast. Today’s macro data focus is on ISM-Mfg, JOLTS, Construction Spending, and Vehicle Sales. There are five Fed speakers today.”

VIX futures consolidated this morning, but may be waiting for a burst of energy to kickstart the new Master Cycle.  Both the Cycle and the structure appear complete, or nearly so.  The Cycles Model shows the new Master Cycle going higher through the end of October.  However, a resurgence of a new Cycle may carry the VIX higher into December.  The entire 4th quarter may be chaotic.

Tomorrow’s op-ex shows Max Pain at 16.00.  Short gamma resides at 14.50-15.00 wile long gamma may begin at 17.00 and remains strong to 35.00.

TNX is pulling back, gathering strength for th enext probe higher.  Trending strength may be rising through the end of the week, as well.  With it may come the realization that yields are going higher..  Investors have become complacent, expecting the wind (yields) at their back.  Stormy weather ahead.

ZeroHedge remarks, “Stocks and bonds took a hit today around 1400ET when Powell said that he “doesn’t feel like The Fed is in a hurry to cut quickly.”

Additionally, Powell said “sometimes people pay too much attention to The Fed’s SEP [Dot Plot],” noting that the SEP shows two more 25bps cuts this year (less than the market).

That sent rate-cut expectations lower (hawkishly), with less than 3 cuts now priced in for 2024…”

The Shanghai Composite futures stopped going higher for the first time in nearly two weeks after carrying out the shorts on stretchers.  The message from the PBOC is clear.  Speculating on the short side is not allowed.  In doing so, the SSEC has become extremely overbought just as liquidity from short covering runs out.  What becomes more evident is that the only liquidity to propel the Shanghai higher may have come from short covering.  Monday’s high at 3358.59 may have become the end of the Master Cycle.  The new Master Cycle now suggests all of the short-covering gains may disappear, as the move was artificially induced.  Beneath this year’s low is a potential neckline of a Head & Shoulders structure with a minimum target of 15000.00.  The Cycles Model suggests the SSEC may be testing that neckline by the end of October.

2:38 pm

SPX has broken its short-term trendline, putting us on high alert that the reversal may have been made.  It bounced off round number support at 5700.00 and that level may serve to demark an aggressive sell signal.  The SPX high was already a week later than average, so a decline beneath 5700.00 may serve to guide us to reduce longs and begin layering in short positions.

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!  We are back again as hurricane Helene took down a critical internet relay in Atlanta on Friday morning.  My blog was cut off before being able to save my work.

SPX futures chopped lower to 5719.20 this morning on day 269 of its old Master Cycle (day 4 of the new Master Cycle), leaving Thursday’s high at 5767.37 as its all-time high.  An aggressive sell signal lies beneath round number support at 5700.00.   Intermediate support lies at 5591.20, beneath which the sell signal becomes confirmed.  To most market watchers, the uptrend is still intact.  The 50-day Moving Average at 5531.72 may be the final arbiter for the uptrend.

Today’s options chain shows Max Pain at 5735.00-5740.00.  Long gamma may begin at 5750.00 while short gamma may start at 5725.00.

ZeroHedge reports, “US equity futures reversed earlier gains and are now down at session lows, tracking European market weakness as we close the quarter even as Chinese stocks have their best day since Sept 19, 2008. As of 8:00am, S&P futures are down 0.2% after last week’s record highs on Wall Street, while both Nasdaq (-0.4%) and Russell (-0.6%) underperform pre-market with Mag7 names lower ex-AAPL and TSLA, and semis weaker with NVDA -1.8% as traders look forward to Friday’s jobs data and its impact on Federal Reserve interest-rate cuts. Treasury yields climbed 2-4bps, led by the policy-sensitive two-year note, the USD is weaker though. Commodities are mixed with base metals the standout, moving higher on the China trade while oil tumbles as the usual (record) shorters emerge in force despite epic chaos in the Middle East. This heavy data week kicks off with regional indicators and 2x Fed speakers. As JPM notes, economic strength with a Fed tailwind pushed markets to shrug off both negative seasonality and JPY carry unwind. But given the reflationary China growth reboot, can positive US data push this trend into Oct/Nov, or do we see Election uncertainty/vol spike create another downdraft before rallying into year-end as concerns emerge about the Fed’s easing cycle when overlaid on China’s historic stimulus bazooka? This week’s data may help answer those questions, but the medium-term trend appears to be higher.”

VIX futures are edging higher to a morning high at 17.37 after making its Master Cycle low on Thursday.  The Cycles Model calls for a new high by the end of October.  This may afford the last chance to hedge the equities market.

Wednesday’s options chain shows Max Pain at 16.00.  Long gamma begins strongly at 17.00 and is well populated to 35.00.  Short gamma resides at 14.50-15.00 but tapers off quickly.

The Shanghai Composite rocketed to a morning high at 3358.59, above its Cycle Top at 3188.83.  It is also day 257 of its Master Cycle, suggesting a top in the making may be today.  This 24.8% rally in 8 market days is one for the records.  However, the Cycle Top has been exceeded and the current Master Cycle is about to end.  Should the reversal occur in the next couple of days, the ramifications may be world-wide.

ZeroHedge observes, ““We need to establish a strong benchmark for selecting and employing people, conscientiously implement the ‘three exemptions,’ and support those who take responsibility and get things done.” This statement from the extraordinary Politburo meeting left no doubt about the leadership’s intentions.”

TNX has reversed after reaching its trendline at 38.21 last week.   The trendline defines the throw-under that marks its oversold condition for the past month.  A rally above the trendline at 38.00 or the 50-day Mocving Average at 38.77 may give a confirmed buy signal for TNX.   The Cycles Model suggests the rally may continue through mid-October.  Volatility may pick up this Wednesday and Thursday.

The Japanese Yen rose to a morning high at 70.71 before reversing.  The Cycles Model gives the Yen about one more week of decline, with the mid-Cycle support at 66.19 as the potential target.