For those who wish

For those of you who wish to support a spiritual message during the Lenten Season I recommend looking up theholyfaceproject.com.  As a Catholic Christian I find this project worthy of support.  In fact, I have gone on a limb and have contracted 4 billboards in the Lansing area, with an option to expand to 12 until June 30.  I have found other communities who also have an interest in promoting this message and I am coaching them in setting up their own projects.  These billboards contain no advertising.  They simply have the face of Christ as seen on the Shroud of Turin with theholyfaceproject.com beneath it.

Lansing has its own support page on the website.  As I am not currently charging for my blog, I would appreciate your support of a project dear to my heart that I have committed my own support.  Thank you.

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September 22, 2021

10:05 am

SPX rallied to the 50% Fib retracement level at 4396.49 in the first hour, a bit higher than expected.  The Cycles Model suggests the decline resumes this morning with the largest panic-selling episode just ahead.  While we may see yet another attempt at 4400.00, the worst of the retracement may be over.

ZeroHedge observes, “A dramatic rebound in stocks – off the S&P’s 100DMA – has prompted many commission-rakers and asset-gatherers today to call the end of the Evergrande event and signal the all-clear to new highs.

So what happened? What changed?

Nomura’s Charlie McElligott explains that there is simply no way to overstate the power of the “reflexive vol sellers” into another spike, as this “sell the rip (in vol)” = “buy the dip (in stocks),” particularly as it related Put sellers either directionally shorting “rich” vols yday…and “long sellers” who monetized their downside hedges by the close (a lot of that being 1d SPY Puts from Retail “day traders” which doesn’t show in OI), creating $Delta to buy and again self-fulfilling yet another “turnaround Tuesday”

Critically, that Delta buying in the late day was hugely important then in reducing the absolute $ of systematic deleveraging “accelerant” flows, because only closing down -170bps in SPX then meant a much more manageable -$24.7B of Vol Control de-allocation in coming days, as opposed to what would have been a much more challenging -$62.9B to digest which we estimate would have been triggered off of a “-3% close”…while similarly, Leveraged ETFs only needed to rebalance -$5.9B at EOD, as opposed to a hypothetical -$8.9B assumed at the low of the day.”

(Please read the whole article.)

 

9:45 am

The S&P GSCI Ag Index took a brief pause in its ascent.  The Cycles Model infers a continued rally through mid-December as food prices skyrocket.   There are no bullish formations to speak of, but should Wave [3] be equal to Wave [1], the target would be 670.00.  Wave [3] may be the strongest of the series, so that would be a minimum.  Since this is a Primary Wave [3], it suggests a potential target between 850.00 and 1000.00.

ZeroHedge reports, “Robusta coffee prices continued to soar to record-highs this week as concerns deepen over the outlook from Brazil, the world’s top producer.

“Cheaper robusta-coffee beans, used widely in instant-coffee beverages such as Nestle SA’s Nescafe brands, are sold out in Brazil. After drought and frost ruined crops of the higher-end arabica variety favored by cafes like Starbucks Corp., local roasters are racing for robusta replacements and driving prices to new records each day,” Bloomberg wrote.

Spot prices for Brazil robusta Espirito Santo have nearly doubled this year, up 356 reais per 60-kg bag, or about 87% to 769 reais.”

 

8:20 am

Good Morning!

SPX futures rose to 4406.40 before being repelled by the gap left at 4402.95.  The 50% Fibonacci retracement level is at 4396.39 and futures have slid beneath that level.  The 38.2 Fib level is at 4375.04 which I proposed to be the top of the retracement yesterday.  It may yet open at or beneath that level.  That is why I suggested that no action may be needed to take profits.  The Cycles Model proposes the decline may resume in the first hour of the cash market.

ZeroHedge reports, “Even though China was closed for a second day, and even though the Evergrande drama is nowhere closer to a resolution with a bond default imminent and with Beijing mute on how it will resolve the potential “Lehman moment” even as rating agency S&P chimed in saying a default is likely and it does not expect China’s government “to provide any direct support” to the privately owned developer, overnight the BTFD crew emerged in full force, and ramped futures amid growing speculation that Beijing will rescue the troubled developer…

… pushing spoos almost 100 points higher from their Monday lows, and European stock were solidly in the green – despite Asian stocks hitting a one-month low – as investors tried to shake off fears of contagion from a potential collapse of China’s Evergrande, although gains were capped by concerns the Federal Reserve could set out a timeline to taper its stimulus at its meeting tomorrow. The dollar dropped from a one-month high, Treasury yields rose and cryptos rebounded from yesterday’s rout.”

 

The NYSE Hi-Lo Index closed at -73 yesterday, giving the final confirmation of the sell signal.  The interesting item is that the Hi-Lo is due for a Master Cycle low as early as tomorrow, but no agreement with the SPX and VIX.  This is odd, since there is another Master Cycle low in mid-October which syncs with the SPX.  This suggests to me that there may be some  event that may panic and close the markets, since the SPX and VIX are in mid-Cycle.  The two main events that could possibly affect the markets are a government shutdown, Evergrande and the Canary Island Volcano.

 

VIX futures pulled back to 22.36 this morning before resuming their ascent.  A move back aboe 25.00 may induce hedge funds and CTSs to resume selling, as this is considered gamma negative.

 

TNX is testing Intermediate-term support at 13.02 witht he 50-day Moving Average just beneath it.   Should it break beneath, it may be a signal for more decline to come.  The proposed Master Cycle terminus in mid-October may be the Cycle Bottom support, near 10.00.  Old habits die hard and a panic sell-off in stocks may drive investors into treasuries.

ZeroHedge observes, “In a risky move inviting a showdown with Republican lawmakers, House Democrats are linking a suspension of the US debt ceiling to a must-pass spending bill required to keep the government operating past September.

If it works, the debt ceiling – which GOP leaders have balked at raising – would be suspended through December 2022.

If nothing is done, the federal government will shut down and default on payments as soon as next month – a prospect which already has anxiety through the roof as measured by the spread between Oct and Nov T-bill yields.

 

USD futures are lower this morning, suggesting the anticipated Master Cycle may have ended yesterday, day 257 of the Master Cycle.  This appears to go hand-in-hand with treasury yields.  The USD may take a real beating as it is in a multi-year Orthodox Broadening Top and is targeted to land near 85.00 in the current decline.

 

 

 

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September 20, 2021, Pray for Our Country

2:45 pm

SPX bounced at Nomura’s final support (before oblivion) at 4310.00, having gone past the 100-day at 4328.00.  Whether it holds or not is still in question.  A decline beneath 4300.00 introduces the concept of a running correction, that is, a corection that may not be able to even make the lowest (25%) Fibonacci retracement, currently at  4353.00.  This is no time to take short profits.  There’s much more to come.

ZeroHedge comments, “US equity markets crashed through several technical levels, with S&P finding some support (for now) at its 100DMA…

As the spike in volatility (VIX is back up near 28)…

prompted forced sellers in size, Nomura’s Charlie McElligott – who correctly called this post-opex plunge – notes some remarkable flows going-through earlier this morning in response to the initial “vol squeeze” risk-off, as we witnessed brave vol sellers not waiting for the market purge- or Fed event risk- to clear, and instead, actively attempted to harvest “rich” index vol & skew / shorted it, while others monetized downside hedge gains (because the back-test on vol spikes tells you that you have under 1 day before the rally in spot, LOL)…”

 

12:15 pm

VIX has risen above the neckline and is testing the Cycle Top resistance at 26.95.  While the SPX Master Cycle is scheduled to end on October 15, the VIX Master Cycle is not due to terminate until October 26, 11 days later.  There are other anomalies among the Cycles that suggest that what is happening ths October may not be normal.  This suggests such possibilities as a market closure.

ZeroHedge comments, “The last seven times that the S&P 500 has traded down to its 50-day moving-average, it has rebounded rapidly and aggressively.

This time – for now – is different, as Friday saw the S&P cash close back below the 50DMA and futures indicate a serious move below it at the open…

And things could escalate, as. following the extinction of a serious chunk of options on Friday, we start today with a sharply negative gamma position.

This negative gamma position doesn’t flip positive unless markets recover the 4425 area. For today we look to 4415 as resistance, with support at 4360 and 4310.”

 

8:15 am

SPX futures are down over 80 points as I write, crossing beneath the 50-day Moving Average and approaching the 43-week Moving Average at 4308.00.  The combination run-off from options expiration and Evergrande now at its lowest point ever, soon to be insolvent.

I am highlighting the weekly SPX chart to show the three-year Orthodox Broadening Top with a throw-over lasting a year.  Normally the throw-over of this height and duration may disqualify the Broadening Top, but a decline beneath 3900.00 may re-instate the Broadening Top and result in a quick decline to 2100.00.

ZeroHedge reports, “In retrospect, China, Japan, South Korea and Taiwan picked a great day to take a holiday, which as we noted last night hammered Hong Kong stocks more than 3%, slamming the Hong Kong property sector and sending Evergrande – which is expected to default within hours to a bank loan due Monday while crucial interest payment deadline on its offshore bonds looms on Thursday – to its lowest market cap ever (it closed down 10.2% just off the worst levels of the day) before the rout spread to European bourses and US equity futures as Evergrande’s escalating liquidity – and now solvency – crisis spread beyond the sector.

At 24,099 points, Hong Kong’s broader Hang Seng index has closed at its lowest level since October 2020.

“Evergrande is just the tip of the iceberg,” said Louis Tse, managing director at Wealthy Securities, a Hong Kong-based brokerage. Chinese developers were under substantial repayment pressure on dollar-denominated bonds, he added, while markets had become nervous that Beijing would push listed real estate groups to cut the costs of housing in mainland China and Hong Kong.

“That affects the banks as well — if you have lower property prices what happens to their mortgages?” Tse said. “It has a chain effect.”

But there may be yet another risk that is being summarily dismissed by the mainstream media.  Newsweek reports, “volcano has erupted on the Spanish Canary Island of La Palma, prompting unfounded fears that a so-called mega-tsunami could be headed to the East Coast of the United States.

The Cumbre Vieja volcano began erupting at around 3.12 p.m. local time (10:12 a.m. EDT) on Sunday, according to officials. It forced the evacuation of around 5,000 people from their homes in villages in the area, Canary Islands president, Angel Victor Torres, said in a press conference on Sunday. It marked the volcano’s first eruption since 1971.”

For those living on the East Coast, it may be advisable to monitor www.tsunami.gov for updates.  Should El Cumbre Vieja collapse, the espimated time to landfall in the United States would be 6-9 hours.

 

VIX futures have reached a new high at 26.75, crossing the Head & Shoulders neckline.  VIX has 3-4 weeks left in its Master Cycle, giving it time to go well past the Head & Shoulders target of 36.08.

ZeroHedge notes, “The last seven times that the S&P 500 has traded down to its 50-day moving-average, it has rebounded rapidly and aggressively.

This time – for now – is different, as Friday saw the S&P cash close back below the 50DMA and futures indicate a serious move below it at the open…

And things could escalate, as. following the extinction of a serious chunk of options on Friday, we start today with a sharply negative gamma position.”

 

The NYSE Hi-Lo Index opened at -28.00 and declined from there.  This is the final confirmation of the decline and SPX sell signal.

ZeroHedge remarks, “As futures indicated, the US cash equity open was greeted by an avalanche of selling, breaking the S&P back below its 50DMA…

This was the second largest sell-program in history with TICK crashing to -2067 (record low as -2069 on 5/11/21)…

…which means that we were off by just 2 stocks from the biggest selling-wave in history.

A sea of red in stonks…”

 

TNX appears to have made a Master Cycle high last Friday at 13.86.  This may allow a decline to the next Master Cycle(low) due in three weeks.  Today’s action is indicative on money flows into treasuries and out of stocks.  We may expect the next Master Cycle to reach its low at or near the Cycle Bottom, currently at 9.79.

 

 

 

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September 17, 2021

12:38 pm

SPY may be on the verge of a gamma meltdown as there are 17,000 more put contracs than calls at 446.00.  At 445.00 there are 33,500 more puts than calls.  At 444.00 there are 28,000 more puts than calls.  SPY has already tested the 50-day Moving Average at 441.37.  Once beneath it, there may be no stopping the decline.

QQQ is in a similar position ar 374.50.  Puts begin accumulating at 378.00 and lower.

 

12:05 pm

SPX declined impulsively to the 50-day Moving Average at 431.95 and bounced.  The 38.2% Fib retracement is at 4453.85 while the 50% Fib retracement is at 4459.98.  A quikk bounce to one of these levels may ensue before a resumption of the decline.  Tere is a high probability that the retracement may not make either of these targets.  A decline beneath 4433.99 tells us SPX is in failure mode.

ZeroHedge observes, “That’s the message from the options market as ~30% of SPX gamma will expire at 9:30AM ET (and 60% of SPY, 35% of QQQ, and a very large set of stock options expiring on the close).

SpotGamma warns that 4500SPX/450SPY is still the biggest overhead level, with another heavy concentration of gamma at the 4475 area (and 4450 is the Put Wall)

The visual below on this expiration is well framed by this gamma table wherein light grey depicts the gamma expiring today.

As you can see the “board” will be reset for next week, just ahead of the 9/22 FOMC.”

 

8:00 am

Good Morning!

SPX futures are lower, having reached a low of 4458.20.  This is likely to be the Max Pain zone for SPX options due to the fact that puts have a slight edge over calls at 4460.00 and below.  SPY (close: 447.17) otions are also in the Max Pain zone.  However, open interest in 446.00 put contractss are 25,500 more than calls.  Moreover, 445.00 put contracts are 33,000 more than calls.  You get the picture.

ZeroHedge reports, “Quad-witching opex Friday has arrived, bringing with it the usual drama of gigantic gamma expiration, including $1.5trillion of SPX index,
$310bln of options on ES futs, $220bln of SPY options, $610bln of other index…

… a surge in market volumes, spike in volatility and now expected rebound in risk assetsWith over a third of market gamma set to expire today – specifically some 35% of SPX, 50% SPY, and 35% of QQQ gamma according to SpotGamma – brace for a bump ride as the absolutely gargantuan S&P pin at 4,500 is about to get much smaller, drastically reducing the market’s downside buffer.”

 

VIX futures ranged up to 19.60 this morning as tensions rise going into Quad Witching day.  Should SPY decline bebeath 445.00 we may see the VIX spike to the neckline at 24.50.  While today’s trending strength is neutral, next week appears to be another story.  We may see a breakout above the neckline by Wednesday, at the latest.

 

The NYSE Hi-Lo closed at 45.00, admittedly higher than Wednesday’s close, but in the danger zone nonetheless.  Trending strength (in the decline) is building with a possible Master Cycle low by mid-Week.  That may be followed by another Master Cycle low in mid-October.

 

TNX is rising into its Master Cycle (high) next week.  Thus far the behavior is stunted, since the minimal Wave (A) of [5] should reach 14.00.  Either my analysis is wrong (go figure!) or something dramatic is about to happen in the next few days.

 

Gold futures declined to 1752.05 this morning.  GLD options are hovering just above 163.00 with over 9,000 net put contracts.  Should that level be breached today, GLD may go into a tailspin as it anticipates a Master Cycle low by the end of next week.

 

The GSCI Ag Index rallied above its 50-day Moving Average at 410.15 and may challenge its Intermediate-term resistance at 414.60 in the next few days.  The Cycles Model says that GKX has clear sailing higher through mid-December.  The minimal target may be near 600.00, but could go considerably higher.  The secular uptrend may last another 5 years or longer.

 

 

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September 16, 2021

3:46 pm

SPX appears to have completed its retracement (Wave 2).  Time to sell.  The retracement was comparatively weak, lesss than the 50% expected at 4490.52.  This market is going down.

 

7:30 am

Good Morning!

SPX futures are lower this morning after doing a double tap on the trendline yesterday.  Today may be a down day, as it appears that despite the panic rally from the low, the index is breathing fumes.  As the decline hasn’t quited taken hold this morning, there may be another attempt at the trendline that may fail.  The trendline and the 50% Fibonacci retracement are at 4490.78.  The ensuing decline may challenge the 50-day Moving Average at 4425.00.

Tomorrow’s Quad-Witching Options expiration shows calls are marginally higher at 4500.00 and above, while puts gain the upper hand at 4400.00 and below.  This may allow a wide-ranging day that would affect volatility and allow a possible failure beneath 4400.00.

ZeroHedge reports, “US equity futures slid, fading Wednesday’s torried one-day rally, as investors awaited data on jobless claims and retail sales which are expected to show another decline as US consumers retrench.  European markets were solidly in the green while Asian stocks fell after the ongoing debt crisis at Evergrande – which halted all bond trades for the day – and China’s latest push to rein in private industries hurt sentiment. The dollar gained as Treasuries dipped while Bitcoin was little changed as gold and oil fell. S&P 500 E-minis were down 8.75 points, or 0.19% at 730 am ET, Dow E-minis were down 14 points, or 0.04%, while Nasdaq 100 E-minis were down 34.25 points, or 0.22%.”

 

The NYSE Hi-Lo Index closed at 26 out of over 3300 listings.  New highs show active participation while new lows indicate liquidation.

ZeroHedge reports, “The last time retail participation in the market dried up, was back in May when three months after retail investors took the stock market by storm sparking a series of historic short squeezes in meme stonks such as GME and AMC, the money from various stimmies dried up and retail enthusiasm for stocks suddenly faded.

We discussed this on May 9 when we said “Retail Participation In Stock Trading Has Collapsed“, and pointed to the plunge in call option volumes, which had emerged as the preferred investment vehicle for millions of GenZ and Millennial investors.

Perhaps coincidentally, our warning that day marked the top for the market for the next few weeks, with the S&P sliding some 200 points in just the next four days.

We bring this up because at a time when retail investors have become instrumental in propping up the market and buying each and every dip, this time around retail enthusiasm is once again fading.

 

VIX futures rose off their low, reaching a morning high at 19.09.  The correction appears to be complete, with a near 61.8% retracement.

 

NDX futures declined to 15444.70 after closing very near Short-term support at 15500.09.  The trendline is near 15350.00 this morning, which confirms the sell signal.  The NDX Hi-Lo Index closed at -15.00, adding yet another confirmation to the mix.  The final sell signal confirmation comes beneath the 50-day Moving Average at 15102.29.  Tne NDX may come under the influence of the tech-heavy Shanghai Composite Index.

While the NDX options don’t reveal a lot of information due to the large size, the QQQs (Price:378.05) reveal overwhelming open interest in puts at 378.00 and below, while open interest in calls dominate at 379.00 and higher.  IT may only take a wobble of a decline from yesterday’s close to set off a self-reinforcing decline in QQQs/NDX.

 

The Shanghai Composite Index tumbled to a new daily low as liquidity is withdrawn from the market.  While Evergrande is no a tech company, techs have had their share of troubles as well.   This may force the NDX into a tailspin that it may not recover from.

ZeroHedge reports, “Earlier today we pointed out that in what can (obviously) only be a remarkable coincidence, China’s largest, and most systematically important real estate developer, China Evergrande (and its $300+ billion in debt), collapsed on the 13th anniversary of Lehman’s bankruptcy filing, when Beijing told Evergrande’s creditor banks that the insolvent company, which recently hired Houlihan Lokey as bankruptcy advisor, would not pay interest on its debt next week, nor would it repay principal, in effect blessing the coming default.

And yet there was some trace of hope, because as Forte Securities trader Keith Temperton said “The Asian banks will get hit hard if there’s a default, but then there will be a 10-year recovery process. The market’s getting a hang of it. The way they’ve managed the news flow seems quite clever. They haven’t let a swathe of bad news at once” giving investors and creditors some hope that the money could still miraculously reappear.”

 

TNX soared above the 50-day Moving Average at 12.92 this morning and on a buy signal.  This may be confirmation that the August 4 low at 11.29 could be the terminus for Wave 5 of (C) of [4] as well as the Master Cycle low.  Note that I pointed out that particularly strong trends may have shorter Cycles and possible corrective truncations, or both.

 

Gold futures plumetted to 1758.75 this morning on liquidity issues.  The Retail sales report didn’t help.  The Cycles Model suggests may last until next mid-week, declining in strength.  It appears that the Head & Shoulder neckline may be broken.

 

 

 

 

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September 15, 2021

1:24 pm

SPX  has retraced most of the way to its trendline near 4485.00.  The 50% retracement value is 4490.78.  Currently it has gone to 4479.91, just above the 38.2% Fib retracement at 4477.72 in a Wave [a] of 2.  Wave [b] of 2 may be quite deep, with a floor near 4400.00.  The final surge may be on Friday, where it may revisit the trendline as it rises to +/- 4490.00.  We may see volatility go through the roof should the decline go beneath the 50-day Moving Average.

ZeroHedge comments, “This morning’s chaotic trading in stocks could be indicative of the pull and push that Nomura’s Charlie McElligott sees playing out over the next week or so.

Specifically, Nomura’s SPX sentiment index is cratering and at 38.7%ile, back near lows of the year.

Forward returns backtest to show sideways for the next 1m with negative excess return.

But it is the ultra-short-term which is most interesting…”

 

7:30 am

Good Morning!

SPX futures remained within a 16-point range of yesterday’s cloose.  This afternoon we may see an 8.6-day decline completed near the 50-day Moving Average at 4425.04, followed by a bounce into options expiration.  A 50% retracement of this decline will put SPX back up to 4485.00, near the trendline.

Today’s expiring options are heavily weighted with puts at 4450.00 and beneath.   The maximum pain level is 4465.00, suggesting a possible close in that area.  Friday’s optiosn expiration shows a wide neutral stance with puts dominating at 4400.00 and below, calls domination at 4500.00 and higher.  A gamma-induced sell-off to 4400.00 is possible today, but may still bounce back toward the trendline by Friday.

ZeroHedge reports, “While Microsoft did everything it could to halt the recent market drop which has dragged stocks lower on 6 of the past 7 days with its surprising announcement of a record, $60 billion stock buyback, the latest dismal data from China which missed across the board with retail sales, industrial production, fixed investment, property sales and investment all came in worse than expected, with retail sales growing at the slowest pace since August 2020 while industrial output also rose at a weaker pace from July…

… left a sour taste in the market, and left futures trading just barely in the green, higher by 0.1%, while Asia stocks dropped as weak Chinese economic data reinforced worries about slowing growth globally as well as in the world’s second-biggest economy amid fraught nerves over a still-dominant pandemic and tapering of central banks’ stimulus; European markets lacked direction. S&P 500 E-minis were up 5 points, or 0.11% at 07:20 am ET, Dow E-minis were down 16 points, or 0.04%, while Nasdaq 100 E-minis were up 28 points, or 0.18%. The dollar was steady and oil gained.”

 

VIX futures have remained neutral in the overnight session.  VIX may decline to the 50-day Moving Average in the next couple of days.  Today is monthly options expiration for the VIX and I would expect most of the decline to happen before the close. In today’s options expiration, puts dominate at 21.00 and lower, while calls dominate from 24.00 and higher.  A negative usrprise to the market may spike VIX to 25.00.

 

NDX futures rose to 15438.00 in th eovernight session, but have come down since.  NDX options are very light, but the QQQ (Price: 375.26) options chain shows puts d0minating at 376.00 and lower.  The decline in the NDX is incomplete and negative gamma may induce a further sell-off to the mid-Cycle support at 15259.50 or possibly lower.  The 50-day Moving Average stands at 15086.06.  This may induce a sell off in the SPX as well…an accident waiting to happen.

ZeroHedge observes, “Now that stocks have emerged from their 5-day losing streak, narrowly averting 6 consecutive days of declines which would have been the longest such streak since the February 2020 depths of the covid crisis, attention shifts to the market’s technicals and especially Friday’s upcoming quad-witch which sees some $1.5 trillion in SPX option expirations, as well as $1.4tln in options across underlyings expiring on Friday afternoon, including the 2nd largest expiration for single stocks outside of a January.

Courtesy of Goldman, here Four observations on option positioning ahead of Friday’s quarterly maturity:

1. Option volumes have been continuing to grow relative to delta-one volumes. Both index and single stock option markets have shown volume growth in Q3, while delta-one volumes (futures and shares) have fallen. Having traditionally traded well below 100%, SPX options notional volumes are now double the volume of futures traded.”

 

TNX declined this morning and may be on its way to 11.00 by Monday.  That move may sent UST to 135.00 at the same time.   Friday’s options chains for TLT (Price: 151.11) shows it is heavily dominated by calls and positive gamma may take over with today’s move sending treasuries higher.

 

The GSCI Agricultural Index may have made its Master Cycle low on Friday, September 10 (day 249).  This Master Cycle shows relative strength as it is ready to move to new heights instead of new lows (in stocks), as it bounces off the 43-week Moving Average (not shown).  The new Cycle may last until mid-December.  In the meantime, we may expect food prices to possibly double by the end of the year.

ZeroHedge warns, “An executive of Kroger, one of the largest supermarket chains in the United States, warned grocery prices are about to become even higher this year as inflation sets in.

Inflation is running hotter than previously anticipated, and prices are slated to rise an additional 2 to 3 percent over the second half of 2021, Kroger CFO Gary Millerchip said during a call with reporters.

Kroger will be “passing along higher cost to the customer where it makes sense to do so,” he said on Sept. 10.”

ZeroHedge further notes, “Spot prices for nitrogen fertilizer on the US Gulf Coast skyrocketed to a near-decade high on a report the world’s largest nitrogen manufacturing plant declared force majeure.

CF Industries Holdings Inc. in Donaldsonville, Louisiana, closed its massive complex ahead of Hurricane Ida. The complex has 19 plants, including six ammonia and five urea facilities, producing nitrogen-based products for agricultural and industrial markets.

According to the letter seen by Bloomberg, CF Industries said, “due to these circumstances, CF Industries Sales, LLC has declared an event of force majeure affecting the production and shipment of product from the CF Donaldsonville, LA nitrogen complex.” 

The letter was dated Sept. 3, and at that time, the facility remained closed. This stoked fears of production declines at a time when supplies are already tight.

As a result of the force majeure, US Gulf urea nitrogen fertilizer spot prices spiked 16.5%, according to Green Markets data.”

 

The Shanghai Composite Index plunged beneath the Cycle Top resistance, giving it a sell signal.  The Bank of China has been giving the market ample liquidity to the point of nearly overtaking the previous high at 3731.69, missing by only 9 points on Friday.  Now we know why there appears to be a sudden liquidity drain 12.9 years after Lehman.

ZeroHedge observes, ” Yesterday, when covering the non-stop drama surrounding China’s most insolvent property developer, Evergrande, we said that it would be remarkably ironic if Evergrande were to announce a default – which everyone knows is coming – today, on the 13th anniversary of Lehman’s bankruptcy filing on Sept 15, 2008.

Well, in this delightfully absurd world we live in, that’s just what happened only instead of Evergrande making the announcement, it was the entity that will soon control the massively overlevered property developer that made it for them: the Chinese government.

According to Bloomberg, Chinese authorities told major lenders to China Evergrande Group not to expect interest payments due next week on bank loans, which takes the cash-strapped developer a step closer the nation’s largest modern-day restructurings, and guarantees that China’s “Lehman Moment” is now just a matter of days, if not hours.”

 

 

 

 

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September 14, 2021

1:23 pm

I finally figured that the problem with my charts originated at Google.  However, the new search engine doesn’t work the same.  It will take some getting used to.  As you can see, the SPX is on a chart sell signal.  The VIX supports the SPX sell signal, while the NYSE Hi-Lo Index opened at 13.00 and rose to 76.00.  We may get a better reading after the close.

7:53 am

Good Morning!

My webmaster is tring to find why my charts are being blocked at WordPress.  I hope to have an answer later today.

SPX futures have turned negative this morning after testing the underside of the Ending Diagonal trendline overnight.  We have a sell signal hat is confirmed by the trendline and VIX, but not the NYSE Hi-Lo Index, which closed at 52.00 after ramping to 103.00 earlier in the day.   The 50-day Moving Average is at 4421.93.

Tomorrow’s options expiration is weighted toward calls at 4500.00 and above, while puts dominate at 4450.00 and below.  Tomorrow’s options expiration is not heavily populated, as if speculators are taking a “wait and see” attitude.  Friday’s (monthly) options expiration is an enigma, with equal weighting of puts and calls all the way down to 4350.00.

ZeroHedge reports, “Having come dangerously close to dropping 6 days in a row, the longest streak since Feb 2020, US stock-index futures and European stocks hugged the unchanged line on Tuesday after rebounding furiously in the last hour of trading on Monday ahead of key CPI data that is expected to show a fourth month of U.S. inflation at 5% or more, and which will shape investor expectations about the likely timing of the Fed taper. S&P 500 E-minis were up 2 points, or 0.04%, at 07:15 am ET. Dow E-minis were up 10 points, or 0.03%, while Nasdaq 100 E-minis were down 2.75 points, or 0.02%. Treasury yields and the dollar were steady.”

At 8:37 ZeroHedge observes, “As anxiety over the timing of the taper (not the if but the when) rise, all eyes are anchored on this morning’s CPI (which was expected to rise MoM again but drop marginally on a YoY basis). Both headline (+0.3% MoM vs +0.4% MoM exp) and core (+0.1% MoM vs +0.3% MoM exp) CPI printed below expectations but on a YoY basis headline CPI rose 5.3% – as expected.

Source: Bloomberg

That is the 15th straight monthly rise in consumer prices and the fourth straight month above 5% on a YoY basis. On a side note, this is the first time MoM CPI printed below expectations since November 2020.

Core CPI slowed from +4.3% YoY to +4.0% YoY (well below the +4.2% YoY exp)…”

 

I must rescue a dame in distress (my daughter) this morning.  I hope my webmaster will find a solution to m problem.

 

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September 13, 2021

12:50pm

SPX has dropped to 4453.63, a new low nad beneath the trendline at 4463.58.  This is a chart sell signal, having broken the Ending Diagonal formation to the downside. The 50-daqy Moving Average is at 4421.45 and is the next support level.  Most chartists use the 50-day Mofving Average as their sell signal.  I suggest that the accumulation of indicators tell us we may not wish to wait that long.

VIX is at 20.02, above the mid-Cycle support at 19.836 and on a confirmed buy signal.  Most chartists us the number 25.00 as their buy/sell signal.  There is an inverted Head & Shoulders neckline at 24.74, so be sure to be long above that number.

The NYS HiLo Index opened at 50.00 and rose to 91.00.  It appears that smaller companies are attracting speculators who feel they have a chance for a profit here.  Of course, the Hi-Lo closing number is what counts and, since there is a lag in the counting system, we won’t know the final number until tomorrow.

I am researching the source of my inability to show certain charts.  The problem seems to lie with WordPress.  I may have to change platforms.

 

8:00 am

Good Morning!

I wish to report a troubling situation with WordPress.  It refuses to allow any images of SPX to be presented.  I will use the DJIA as a model despite the fact that there are some differences.  For example, the DJIA topped out on August 16, while the SPX topped on September 2.  It still makes sense, since the point of origin for this Cycle in the Dow  was January 14, 2000, while the point of origin for the SPX was March 23, 2000.  Here we see the all-time highs within just a few weeks of each other.  The NDX ATH was on September 7, 2021.

In any event, we see the DJIA futures in a probable retracement bounce to its 50-day Moving Average at 34992.42.  SPX futures, still dominated by the unwind from options expiration is likely to bounce back to 4500.00 as the short positions are unwound.  Short-term resistance is at 4511.09 as a possible alternate resistance.

ZeroHedge reports, “World stocks ground higher with US futures and European stocks all in the green after a slow start of the week in Asia, amid concerns over accelerating inflation as well as tax and regulatory pressures on the world’s biggest companies. After five straight day of declines in US stocks, as concerns over the delta variant and tapering of the stimulus cooled risk appetite, and which led Wall Street indexes to lose between 1.6% to 2.2% last week as a surge in August producer prices and a sharp drop in jobless claims spurred fears the Federal Reserve could start unwinding stimulus as soon November, futures on major U.S. equity indexes all rose on Monday as traders await tomorrow’s CPI data. S&P 500 E-minis were up 23.50 points, or 0.53% at 730 am ET, Dow E-minis were up 200 points, or 0.58%, while Nasdaq 100 E-minis were up 78.25 points, or 0.51%. Industrial metals rose, with aluminum reaching $3,000 a ton in London for the first time in 13 years amid supply disruptions.”

 

VIX futures declined to 19.10 this morning.  There is critical support at 17.88, just above the 50-day Moving Average.  However, the Wave structure may not allow that deep a correction.  We will know shortly.

 

TNX is another chart that has been cut off by WordPress last Friday.  The Cycles Model suggests a week-long decline into its probable Master Cycle low.

 

 

 

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September 10, 2021

4:00 pm

SPX gave us a probable sell signal, pending results which may not come in until Monday morning.  Most analysts are expecting a 10% decline.  However, we have 43 calendar days (30 market days) of decline as opposed to 22 market days in the March 2020 decline.  The initial target is the 2020 low.  Good luck and good trading!

ZeroHedge observes, “The S&P just suffered its worst week since mid-June…Small Caps were the biggest losers this week. Nasdaq was the least bad horse in the glue factory…

…threatening to make September the first loss-making month since January…”

 

1:10 pm

I adjusted the Ending Diagonal trendline down to 4460.00, which is also the location of the Intermediate-Tern support to serve as the trigger for a sell signal.  While the VIX remains elevated, the Hi-Lo Index is still rich (105.00).  Admittedly the first major group of put contracts is at 447.00 in the SPY, equivalent to 4470.00-4475.00 in the SPX.  However, the panic button may not be pushed until larger losses are made, so 4460.00 is likely where the dealers begin to panic.

Monday is when the dealers unwind their (mostly long) hedges, so it may still be wise to have an aggressive short position, even if the market stabilizes.

 

10:45 am

Still not geting charts.  SPY (448.20) is at the Max Pain level.  However, at 447.00, puts put contracs out number calls 25310 to 2537.  The slippery slope starts here.

ZeroHedge observes, “Equity markets were higher overnight heading into the cash open… but that’s over now…

Bonds are also being sold, yields bouncing higher off payrolls low…”

7:50 am

Good Morning!

I am unable to load charts on to word press this morning.  It appears that SPX futures have completed their retracement to 4514.00, just shy of the 61.8% Fib retracement and may start the decline at the open, if not sooner.  Today’s options espiration is a minefield with puts dominating calls at 4500 and below.  Keep that in mind.   The Trendline at 4475.00 carries the sell signal.

ZeroHedge reports, “Global stocks rose and S&P futures rebounded from a freak selling episode late on Thursday after news that Joe Biden and Chinese leader Xi Jinping held a phone call, prompting speculation of detente between the two superpowers. Additionally, investor concerns eased about central bank stimulus (after the ECB launched a non-taper taper) and China’s regulatory crackdown. At 7:15am ET, S&P futures were up 0.4% or 19.50 points to just above 4,500; Dow futures were up 0.52% and Nasdaq futures were up  0.43%. The 10-year Treasury yield rose 3bps to 1.320%, oil was back over $69 a barrel and gold gained.”

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September 9, 2021

7:45 am

Good Morning!

I am dealing with a sprained wrist in a cast, which may explain possible typos in the text.

The September 2 high at 4545.85 on Day 267 remains the high for this Master Cycle.

SPX futures have weakened overnight, dropping to a low of 4487.30.  Friday’s options expiration shows an open interest in calls at 5052 while the open interest in puts is at 8549 at 4500.00.  The gap grows  larger as you go down the strikes beneath that level, especially starting at 4485.00.  The slippery slope begins there.

ZeroHedge repors, “US index futures fell along with European stocks amid jitters that the ECB could taper its asset purchases today as well as growing concerns over the slowing economic recovery while China’s ongoing regulatory crackdown on the tech sector weighed on sentiment. Nasdaq 100 and S&P 500 futures were each down 0.2%, but off worst levels, hinting at further losses after the underlying indexes dropped on Wednesday. Europe’s equity benchmark headed for a five-week low, while 10Y Treasury yields dropped along with the dollar. The dollar dropped, the euro snapped three days of losses and European bond yields steadied ahead of a European Central Bank policy announcement in which investors will be looking for information about bond buying plans for the fourth quarter. Treasuries advanced.”

 

INDU futures dropped to 34792.10, beneath its 50-day Moving Average at 34998.29.  Note that the high of  35510.70 was made on August 30.  Wave 5 of (5) appears to be truncated.  The probability of a new high lessens the longer the Dow stays beneath its 50-day.  Friday’s options expiration is also day 275 in the Master Cycle, should the attempt be made.  Cycles lasing that long are a rarity, so that option grows dimmer as the day progresses.

 

NDX futures declined to 15547.00 in the early morning session.  Cycle Top support is at 15574.77.  A breach of that level after being above it for a week is an aggressive sell.  The all-time high of 15701.40 was made on Tuesday, Spetember 7.

ZeroHedge comments, “A seesawing overnight session, and stocks within a point or two of record highs, hides the fact that market internals continue to weaken.

As RealInvestmentAdvice.com warnsBob Farrell’s rule #5 states:

The public buys the most at the top and least at the bottom.”

The graph below from Longview Economics speaks volumes for where the equity markets are in the investment cycle based on Bob’s logic.

 

VIX futures made a new high at 19.54 before settling down, still above yesterday’s close.  It is on a buy signal, but SPX is not yet confirmed, as the Hi-Lo closed at 60.00 yesterday.  Today’s options expiration in the VIX is telling.   At yesterday’s close open interest was  167,504 puts, vs 24,261 call contracts.  Open interest in calls doesn’t emerge until 22.00, where 64,667 calls dominate 42,998 puts.  Max Pain appears to be at 20.00.

 

TNX appears to have bounced off the 50-day Moving Averagee at 3.07, but is stalled beneath mid-Cycle resistance at 13.93.  The August 4 low at 11.29 appears to be a truncated Wave 5, but with less than two weeks to go to the Master Cycle terminus, it’s a toss-up on which direction TNX will take.

ZeroHedge reports, “While there was no way today’s 10Y auction could surpass last month’s stunning, blowout, record 10Y auction, today’s sale of $38BN in ten-year paper (down from $41BN last month) was not that much worse.

The auction priced at a remarkable 1.338% – remarkable not only because the yield was a drop from last month’s already stellar 1.34%, making it the lowest 10Y yield since February’s 1.155%, but because the auction stopped through the When Issued 1.352% by a whopping 1.4 bps, making this the fifth consecutive stopping through auction, the longest such stretch in recent history.

While the bid to cover of 2.59 was a modest drop from last month’s blockbuster 2.65, excluding the August blowout auction it was the highest BtC since July 2020. Naturally it was far higher than the six-auction average of 2.47.”

 

USD futures slipped beneath the 50-day Moving Average at 92.60 in the overnight session.  The options chain in UUP favors the puts by 821 to 100 open call contracts.  The Cycles Model suggests a strengthening USD up to the close of the Master cycle in two weeks.

 

 

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September 8, 2021

1:42 pm

Today’s action brings us to a pivot point in the charts.  NDX edged to a new all-time high at 15701.40 yesterday while completing an impulsive pattern.  SPX kept its September 2 high at 4545.85 with a sloppy pattern but both sold off to important pivots in regard to today’s and Friday’s options expirations.  For today,  open interest is 1587 call contracts to 1089 put contracts at 4525.00.  At 4500.00, open interest in puts outweigh calls 5341 to 2486.  Should SPX decline beneath 4500.00, gamma forces may outweigh any liquidity injection.  At 4475.00 open interest in puts outweigh calls by 5500 contracts!

It gets more difficult on Friday, as put and call contracts are almost dead even at 4525.00.  At 4500.00 puts outweigh calls by 3474 contracts, while at 4550.00 calls outweight puts by 7764 contracts!

At this point, SPX must maintain Max Pain status beneath 4525.00 and above 4500.00.  Friday’s Max Pain is at 4525.00.  Any deviation above those levels may incite a throw-over, while beneath thos levels begins the bear market.

ZeroHedge reports, “Morgan Stanley, Bank of America, Deutsche Bank, Citigroup, Credit Suisse And Goldman Sachs.

These are some of the biggest Wall Street banks that have issued “red alert” warnings on the US stock market in just the past few days, with some expecting an imminent correction of 10-20%, while others expect a slow burning drift lower over the next few months. Below we summarize the highlights of their surprisingly downbeat views.”

 

8:20 am

Good Morning!

SPX futures are lower this morning, most likely on their way to Intermediate-term support at 4450.00.  The Next two weeks will be critical, with a potential reversal at any time.  However, it may still have one more surge to the Cycle Top at 4601.80, at a minimum.  It may also “throw over” to as high as 4822.00 in a spectacular show of speculative frenzy as the fear of missing out prevails.

ZeroHedge reports, “World stocks receded from the previous session’s record highs, European stocks were headed for the biggest decline in almost three weeks and US futures were set for a third straight day of losses on Wednesday with the global growth outlook coming under increasing pressure while the dollar hit one-week highs and 10Y yields dipped as investors reduced exposure to riskier assets. S&P futures briefly fell 0.5%, tipping below 4,500 before, recovering losses after the S&P 500 fell 0.34% on Tuesday, while Dow futures were flat and Nasdaq emini futs were fractionally in the red as banks from Morgan Stanley to Citigroup turned cautious on US equities.”

 

VIX futures reached a high of 19.63 before coming back down to 18.24.  We amay see a rising VIX alongside a rising SPX in the final surge.  So, although the VIX is above its 50-day Moving Average, we still need confirmation from the Hi-Lo Index.  Otherwise the top trendline of the Ending Diagonal at 21.00 or the neckline of the Head & Shoulders may act as a trigger for an SPX sell signal.  In the meantime, the VIX itself is on a buy signal.

 

TNX futures pulled back this morning and may tag the 50-day Moving Average at 13.14 before moving higher.  TNX may have a show of strength in the latter half of the week which may continue through options week.

 

 

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