The Long View

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


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September 12, 2023

Please note:  This may be may last newsletter for the month of September.  

12:23 pm

BKX may be completing a small retracement (short squeeze).  Overhead resistance is at 83.9, if needed.  The Cycles Model suggests a decline may resume to mid-October.  Be aware of the Head & Shoulders formation and its minimum target.

ZeroHedge notes, “The panic that gripped financial markets in March over the regional bank bailout, which was in large part due to exposure to the foundering commercial real estate space in general and the office sector in particular, is all but forgotten even though in the six months since underlying fundamentals have only gotten worse, underlying cash flows in the CRE space have slowed further, and . In fact, the only thing that has changed is the record amount of “papering over” the Fed has enabled with the central bank’s BTFP facility hitting an all time high every week. Meanwhile, if one eliminates the impact of the BTFP program, which is scheduled to sunset in around 6 months, regional banks are effectively insolvent as the following chart showing large and small banks’ cash/assets with and without BTFP makes clear.

But not everyone has decided to just ignore the elephant in the room, which represents a staggering $2.5 trillion in debt maturities and rollovers at much higher rates, over the next five years:”


8:10 am

Good Morning!

NDX futures have fallen to 15404.00 thus far.  A sell signal is generated beneath the 50-day Moving Average at 15282.50.  The September 1 high remains the top of the last Master Cycle, leaving the decline in place through mid-October.Warning:  Bear markets are where the strongest up-days are.  However, they are book-ended by even stronger down days.  It is often best for the average investor to remain at the sidelines until the Cycle plays itself out.

Today’s op-ex shows Maximum investor Pain at 15430.00.  Long gamma begins at 15450.00 while short gamma starts at 15425.00.  Sentiment has levelled out, making it difficult who has the upper hand.

ZeroHedge remarks, “Heading into Triple Witching week (which only happens four times a year), the market has been struggling in a neutral position as it dipped into negative gamma territory for the second time this year. What we learned from the recent stretch of negative gamma in August is that context of structure and flow have become proportionately more important. This is partially because 0DTE flows have been supplementing the diminished liquidity from net negative market gamma.

When we exited the first round of negative gamma that we were in for the majority of August, we saw 0DTE flows tip the scales here by moving with the trend rather than against it (as it usually does).

If 0DTE flows begins to do this when in negative gamma, and chases a downtrend, then this could become quite dangerous for the market.”


ZeroHedge observes,”The risk premium investors demand from technology stocks is now the lowest since the dotcom bubble, underscoring the extent to which valuations have run up this year — and sending a warning.

The prospective earnings yield on the Nasdaq 100 adjusted for the Federal Reserve’s benchmark rate turned negative late last year, with this year’s stunning rally taking it further south:

The magnitude of inversion was on a similar scale but less pronounced in the run-up to the financial crisis, and clearly both prior episodes didn’t end well for investors.”



SPX futures have declined to test the 50-day Moving Average at 4476.51 thus far.  Should it open beneath it, a sell signal may be generated.  We may see an effort to keep the SPX above its Head & Shoulders neckline at 4335.00 prior to options expiration.  0DTE traders may quickly jump on any trend, including short, so the market is at a delicate juncture.

Today’s op-ex shows Max Pain at 4475.00.  Long gamma starts at 4500.00 while dhor gamma begins at 4450.00.

ZeroHedge reports, “US futures are slightly lower, but holding on to much of yesterday’s tech-driven gains, with European bourses and Asian markets mixed ahead of tomorrow’s CPI print. At 7:30am ET, both emini S&P500 and Nasdaq 100 futures slipped 0.3%, reversing yesterday’s rally. Tech stocks retreated as Oracle dropped 10% after posting slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation. Tech will also be the center of attention on Tuesday, with Apple set to unveil a new product lineup including the new iPhone 15, and SoftBank-owned chip designer Arm gearing is set to price the biggest IPO of the year. US Treasuries edged lower, commodities are higher led by base metals with oil trading near its highest level this year before the OPEC monthly report. Gold fell while bitcoin redovered much of yesterday’s losses.”



VIX futures are consolidating inside yesterday’s trading range.  The Cycles Model suggests (up)trending strength may build into the end of the week.  A breakout may be imminent.  The Cycles Model suggests the new trend may last to mid-October.

Tomorrow’s op-ex shows Max Pain at 14.50.  There is a small contingent of puts at 14.00.  Long gamma begins at 17.00 and currently runs to 29.00.   Not much conviction here.

The September 20 op-ex shows Max Pain at 18.00.  Short gamma reigns between 14.00 and 17.00.  Long gamma begins at 20.00 and runs to 60.00.

ZeroHedge observes, “Never forget VIX seasonality

Will it strike again?

Source: Equity Clock

GS: VIX upside

GS: “We see upside to the VIX based on our Economists’ forecasts”. Chart shows actual vs predicted VIX levels based on the GS economic model of volatility.”



TNX may be consolidating above the Cycle Top support at 42.75.  The Cycles Model calls for a rally with strength into the end of the week.  Then we may see a retracement, just as traders switch to longs.  Ms market can be fickle at times.

ZeroHedge reports, “The Treasury’s first coupon auction came a day earlier, and instead of the usual Tuesday offering, moments ago Janet Yellen’s department sold $44BN in 3 Year paper at a yield of 4.660%, higher than last month’s 4.398%, and the highest since Feb 2007. The auction also tailed the 4.650% When Issued by 1 basis point, the first tail since June.

The Bid to Cover of 2.751 was below last month’s 2.901 – in fact, it was the lowest since June – and just below the six-auction average of 2.788.”


USD futures are consolidating beneath the Cycle Top resistance at 105.30.  The Cycles Model suggests rising strength this week, possibly extending the Master Cycle.  However, that may be followed by a pullback to the trendline at 103.25.  An alternate target may be the mid-Cycle suport at 102.75.


WTIC is running a strong uptrend that may bring in more investors.  The unfortunate part of this equation is that The Current Master Cycle is due to end next week.  The likely target is the trendline at 90.00.  The normal pullback may be to the mid-Cycle support at 76.31, but it may go lower.

ZeroHedge remarks, “Oil prices had been coiling for a few days ahead of this data and are breaking out now after OPEC reports that global oil markets face a supply shortfall of more than 3 million barrels a day next quarter – potentially the biggest deficit in more than a decade.

If realized, it could be the biggest inventory drawdown since at least 2007, according to a Bloomberg analysis of figures published by OPEC’s Vienna-based secretariat.

OPEC’s 13 members have pumped an average of 27.4 million barrels a day so far this quarter, or roughly 1.8 million less than it believes consumers needed, according to the report.”







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September 11, 2023

7:45 am

Good Morning!

I am preparing for a month-long trip which may take me away from this newsletter.  Today’s report may be shortened.

SPX futures are positive this morning, having risen to 4480.00, above the 50-day Moving Average at 4474.41 and Friday’s high at 4473.53.  Intermediate resistance at 4479.51 may be the pivot point.  The Master Cycle may have completed on Friday, but the futures have their own timing that may differ.  Should SPX open beneath Friday’s high, the decline may resume.  Otherwise the next Cycle Pivot may occur Tuesday morning due to a burst of strength over the weekend.

Today’s op-ex shows Maximum investor Pain at 4455.00.  Long gamma starts at 4480.00, while short gamma begins at 4450.00.  This is a very tightly-wound options market.

ZeroHedge reports, “US futures and global stocks were broadly higher to start the week, helped by the biggest drop in the US dollar in two weeks following hawkish commentary from the BOJ, with trader sentiment also lifted amid improving Chinese data (the latest monthly credit data solidly beat estimates) and comments from Treasury Secretary Janet Yellen suggesting a soft landing is likely (this coming from the person who 6 years ago said no financial crisis in her lifetime).

As of 7:45am ET, S&P 500 futures which rolled to the Sept contract, were higher by 0.4%, while Nasdaq 100 futures rose 0.7% boosted by a surge in Tesla which got a major upgrade by Morgan Stanley. US gains were paced by Estoxx 50 where real estate sector leads gains day while Asian stocks were mixed. The dollar’s record 8-week hot streak was under threat as the yen and yuan rose about 1% after comments from the Bank of Japan and the People’s Bank of China boosted those currencies, respectively. Bank of Japan Governor Kazuo Ueda aired the possibility of ending the developed world’s last key negative interest rate. US Treasury yields climbed, gold was up 0.48%, the most in two weeks, and oil dipped.

ZeroHedge remarks, “Short selling alert

Hedge fund cumulative short flows in US has shot up dramatically higher…almost largest in 6 months (93rd percentile vs. the past five years), as per GS prime brokerage data. JPM Position Intelligence team also notes that the level of shorts added in past 4 weeks is again getting elevated. Time for Miss Market to give short sellers a little un-friendly squeeze?



VIX futures are consolidating inside Friday’s trading range.  While a new low may not be in the cards, it may resume its sideways action.  Remember, VIX has made a buy signal.  That is not to be dismissed.

ZeroHedge observes, “Caught in sentiment no man’s land

Investor sentiment, momentum indicators appear to be settling around neutral level.

Source: Macrobond

Sentiment not stretched

Not perfectly neutral but absolutely not stretched either.



TNX futures rose to 43.07, poised to break out above Friday’s high due to a burst of trending strength.  While the current Master Cycle may be over by the end of the week, it is causing consternation among bond traders who are still short.  A short squeeze this week may cause considerable damage.


USD futures have sunk to 104.13, a new low that may trend lower through the end of the week.  USD is now due for a correction that may last up to three weeks.  Possible downside targets may be the trendline and Intermediate support at 103.42.



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September 8, 2023

12:43 pm

SPX has met the 50-day Moving Average target in the allotted time required.  The decline may resume shortly.


7:30 am

I am leaving early for a half-day event and may return for commentary this afternoon.

Good Morning!

SPX futures are positive and may lead to another attempt at the 50-day Moving Average at 4471.54 this morning.  The first hourly Cycle may be complete by mid-day, leaving the possibility of a resumption of the decline.

Today’s op-ex shows Maximum investor pain at 4455.00.  Long gamma starts at 4470.00 while short gamma begins ar 4450.00.  This is a very tight scenario.


VIX futures are consolidating this morning.  The Buy signal has been made.  Time to get busy.

ZeroHedge remarks, “The canary in the calm water…

Lou Mannheim and experienced seafarers know, calm waters never last forever. It has been the best of times from a volatility perspective over the past few months cross-assets and especially so in FX and equities. Astute readers of TME know that we now are leaning to being long equity volatility. Let’s have a look at some “best of times” charts and the canaries showing that it might be coming to an end.

Tight volatility regime

G10 volatility hit bottom in June; volatility regime prevailing since February 2022 is still in place, says Soc Gen.”




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September 7, 2023

8:00 am

Good Morning!

SPX futures have made a morning low at 4445.70 thus far, testing short-term support at 4444.00 (not shown on the daily chart).  It is on a sell signal with the next nearest visible support being the 100-day Moving Average at 4340.00 and the Head & Shoulders neckline at 4330.00.   A break of short-term support is likely to cascade down to the neckline.

Today’s op-ex reveals Maximum investor Pain at 4470.00.  Long gamma starts at 4480.00, while short gamma begins at 4440.00-4450.00.  While long gamma becomes less viable above 4500.00, Short gamma remains strong down to 4300.00 and possibly below.

ZeroHedge reports, “US stocks futures slumped, led by tech shares as Apple tumbled another 3% in premarket trading after Bloomberg reported that China – Apple’s biggest foreign market and global production base -seeks to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies. As of 730am ET, S&P futures were down 0.4%, while Nasdaq futures tumbled 0.7% as a 2% drop in Nvidia added to Apple’s woes. The dollar climbed to a six-month high and the yuan tumbled to the lowest level since 2007 as investors ramped up bets on further Fed policy tightening. Bond yields are lower, following the decline in European yields; commodities are also mostly lower with a modest decline in oil prices. Today, we get jobless claims data (exp. 234K, vs 228 prior), QSS and the revisions to Nonfarm Productivity and Unit Labor Costs. Keep an eye on the bond market moves following claims data. Fed’s Harker, Williams, Bostic, and Logan will speak today.”



NDX futures have plummeted to 15231.30 thus far, breaking through Intermediate support at 15266.93 and the 50-day Moving Average at 15214.00.  This action has created a confirmed sell signal in the NDX.  The next support is at 15120.00, but may not be likely to stop it.  The Head & Shoulders neckline is at 14550.00.  This decline may not be over until mid-October, so settle in to ride this decline out.

Today’s op-ex shows Maximum Pain at 15350.00.  Long gamma starts at 15400.00, while short gamma starts at 15300.00.  NDX may open deep in short gamma where there is little to stop the decline.

ZeroHedge remarks, “Apple – haven’t seen this in a while

The Apple China bear story continues today again. The stock is down almost 3% in pre market. That means Apple has gone from trading “well” above the 50 day moving average, to trading below the 100 day in 2 sessions. We haven’t seen that in a long time. Note the 200 day is down at 164 ish at the moment.

Source: Refinitiv

As Apple goes…

…goes the market? Apple remains the biggest “sentimentor” out there.



VIX futures have risen to 15.43 thus far, so there is no breakout yet.  However, it has given a confirmed buy signal yesterday by breaking above the 50-day Moving Average at 14.79.  The next hurdle to overcome is the long-term trendline at 18.00.  The Cycles Model shows trending strength in the VIX today.

Next Wednesday’s op-ex shows Max Pain at 14.00 with no short gamma.  Long gamma begins at 17.00 but does not have a lot of follow-through beyond 18.00.  Options investors are not prepared for a breakout in the VIX.


TNX futures have risen to 43.12 this morning and shows shows signs of strengthening as in may complete the current Master Cycle next week.  Don’t discount the Head & Shoulders formation.  The trend may remain until that target is met or exceeded.

ZeroHedge remarks, “The pressure on the Federal Reserve to relent on keeping rates higher for longer will become acute in the coming months as recession risk rises and inflation remains benign.

Recessions are rarely surprising, but they are often shocking. They are a feature of the business cycle and therefore their occurrence is to be expected. But their very nature means that the abruptness with which they occur is a shock that catches most people – and the market – unawares.

We are in a period now where the risk of a recessionary shock has risen and will continue to rise – right at the time when a soft or no-landing outcome has become the dominant narrative.”






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September 6, 2023

1:55 pm

VIX has exceeded it 50-day Moving Average at 14.79, giving a confirmed buy signal.  This new Cycle may last into October.  Plan accordingly.



10:48 am

SPX declined beneath its 50-day Moving Average, producing a confirmed sell signal.  There may be push-back on this move, but the signal is clear.  Take appropriate action.


10:00 am

BKX, our liquidity proxy, has reversed from its Master Cycle high yesterday, day 260.  It has been on a sell signal since the end of July.  Yesterday’s rejection at the 50-day Moving Average reinforces the confirmed sell.  The Cycles Model suggests a potential decline to the October options expiration.

(Reuters) – U.S. lenders are holding onto large piles of cash as insurance against a slowing economy, continuing deposit outflows and looming tougher liquidity rules that could particularly impact mid-sized banks.

The buildup is another example of a risk-averse approach from a sector still trying to regain its footing after a string of springtime bank failures, one which could result in restrained lending.

“This is a logical response to a slowing economy and particularly to a scenario, where you’re seeing deposit outflows and you need to conserve cash,” said David Fanger, senior vice president at Moody’s rating agency.


7:45 am

Good Morning!

NDX futures slipped lower, to 15413.00 as it loses its grip on the rally.  Intermediate support lies at 15280.31 where a sell signal may be applied.  The correction reclaimed 77% of the July-August decline, leading investors to venture into long positions.   Should the above analysis be correct, they may regret that decision.

Today’s op-ex shows Maximum investor pain at 15620.00.  Long gamma has virtually disappeared while short gamma starts abruptly and strongly at 15600.00.  There is another large layer of puts at 15450.00.  Sentiment has definitely turned.

RealInvestmentAdvice points out, “Mega-cap stocks continue to dominate the market in 2023. The question is, why? After all, many other great companies have arguably much better valuations and fundamentals. Yet, those companies continue to lag the market’s overall returns as the bifurcation between the Mega-cap companies and everything else widens. The chat below clarifies the problem, which compares the market-capitalization weighted index to the equal-weight.



SPX futures slipped to 4481.00 thus far this morning, challenging Intermediate support at 4487.24.  Should it open beneath support, a sell signal may be generated.  The 50-day Moving Average at 4468.35 offers confirmation.  The yet-to-be-activated Head & Shoulders profile offers a potential targeting mechanism for this decline.

Today’s op-ex shows Max Pain at 4500.00.  Long gamma starts at 4520.00.  Short gamma begins at 4480.00.

ZeroHedge reports, “US equity futures and global markets are lower this morning with bond yields and the USD flat as collapsing German eco data and elevated oil prices reignited stagflation concerns across the euro area. As of 7:45am, emini S&P and Nasdaq 100 futures were down 0.2%. The Bloomberg Dollar Spot Index edged higher along with the Japanese yen, while oil-linked currencies retreated as Brent crude dipped from 2023 highs; commodities are weaker with a sell-off in energy and metals complexes. Treasury yields were little changed in a lackluster day for bond markets. Gold fell for a second day, while Bitcoin climbed for the first time in three days.”



VIX futures are consolidating after yesterday’s gap up from the low.  The decline to last week’s low was “out of season” and now it has some catching up to do.  The 50-day Moving Average offers a buy signal at 14.78.

Today’s opo-ex shows Max Pain at 14.50.  There is virtually no short gamma, while long gamma starts at 15.00 and rises in a lackluster fashion to 20.00.

ZeroHedge remarks, “VIX seasonality

Time to get busy…

Source: Nomura

VIX seasonality II

Ask yourself…how much can VIX go down from here, how much can it increase….and then assign a probability to it.”



The NYSE High-Low Index abruptly went from a Master Cycle high on Friday to plummet beneath mid-Cycle support at 17.00, going negative as well.  This is also a sell signal showing participation in the rally has dropped significantly.


TNX has pulled back to the Cycle Top support at 42.37, consolidating after yesterday’s spike higher.  The Cycles Model suggests a continued rise in yields to options expiration.


Gold futures declined to a morning low of 1946.25, beneath the 50-day Moving Average at 1950.34, placing it on a sell signal.  Should the decline continue beneath the lip of the Cup with Handle formation, a panic decline may ensue.

ZeroHedge remarks, “If you hold precious metals in your portfolio, there is a good chance you fear hyperinflation and the crash of fiat currencies.

You probably distrust governments in general and believe they are self-serving and have no interest in your economic well-being. It is likely that your holdings in gold are your lifeline – your hope to get you through these times while holding on to your wealth.

But have you ever given any thought to the possibility of having this lifeline confiscated by the authorities?”


USD futures continue to consolidate beneath its Friday master Cycle high.  In the last Master Cycle, it managed to emerge out of its year-long decline.  It may now pull back to its mid-Cycle support at 102.74.  The standard retracement takes an average of three weeks.  However, there are indications that this decline may be shorter.

ZeroHedge observes, “A stronger dollar adding to yuan pressure is an ongoing risk to liquidity in China and the rest of the world.

The yuan fell versus the dollar overnight, with USDCNY nudging near 15-year highs. This is not something welcomed by Chinese policymakers, as evidenced by the gap between USDCNY and the official fixing at near-historical extremes.”




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September 5, 2023

8:10 am

Good Morning!

SPX futures consolidated between 4516.10 and 4495.10 over the holiday weekend, exceeding the Thursday and Friday lows.  It has completed a 5-week shallow Master Cycle, leaving a Head & Shoulders formation to inform us as to the possible outcome of the new Master Cycle.

Today’s op-ex shows Maximum investor Pain at 4515.00.  Long gamma starts at 4535.00 while short gamma begins with a wall of puts at 4500.00.

ZeroHedge reports, “Futures are lower, tracking European bourses and Asian markets, but well off session lows as a brief burst of China-linked optimism promptly following a Monday surge in property stocks and hopes of a Chine recovery turned to bust, as China reported the slowest service sector monthly growth so far this according to the August PMI survey, adding to a series of disappointing data. As of 7:50am ET, S&P futures were down 0.1% to 4,517 reversing the 0.2% gain during the Monday Labor Day holiday session; Nasdaq 100 futures dropped 0.4%. The US currency gained as much as 0.5% against its Group-of-10 peers, touching the highest level since March, sending commodities, gold and bitcoin lower. 10Y Yields are up to 4.22% and once again approaching the key resistance level of 4.25%, pressured not just by oil trading near 2023 highs but also in anticipation of a surge in corporate bond sales this week. Also, UK and euro-zone yields rose Monday and are extending that move. Today’s macro data focus is Durable Goods/Cap Goods plus Factory Orders. Later in the week we receive ISM-Srvcs and Jobless Claims.”



VIX futures ramped up to a weekend high at 14.46.  VX may have found its “floor” on Friday at 13.02, much deeper than I had anticipated.  It also extended its Master Cycle to day 273 in a super-extension.  (Day 275 is the upper limit.)  Note that Wave [B]s tend to be rogue Waves, stretching both time and length.  That is the nature of the market we are in.

Tomorrow’s op-ex shows Max Pain at 14.50.  Short gamma has a weak showing, while long gamma does a breakout above 15.00.

ZeroHedge comments, “A strategy of betting against equity market volatility has survived the summer doldrums with its status as a top-performing trade intact.

The August pullback in stocks in Europe and the US had pushed volatility readings higher, especially as investors braced for a burst of sentiment-testing central bank speeches in Jackson Hole. But while the VIX Index — Wall Street’s “fear” gauge — spiked to the highest since May, traders were quick to sell it again as the need to hedge against market risks quickly faded.”


TNX leaped above its Cycle Top support/resistance at 42.28.  Traders have not anticipated this, while the Cycles Model has been indicating a continued rally through mid-September.  The Head & Shoulders formation is active.

ZeroHedge remarks, “With stock markets in a bit of a “no man’s land” territory after a soggy August which saw the S&P suffer its biggest monthly drop since February (yes, believe it or not, the modest 1.8% drop in August was a hard stop to the 5 consecutive prior months of gains), the latest note from BofA CIO Michael Hartnett is not only somewhat shorter than usual (everyone has to take a break sometimes) but also focuses more on the rates market which was much more exciting in August than stocks.

As Hartnett points out in the “Biggest Picture” segment of his latest weekly Flow Show (available to pro subscribers), the 10-Year US Treasury is on course for a 3rd consecutive loss (after -3.9% in ’21, -17.0% in ’22 and -0.3% in ‘23), something which has not occurred once in the 250-year history of US republic since 1787.



USD futures consolidated between 104.06 and 104.80 over the holiday weekend, leaving Friday’s high of 104.85 as the probable Master Cycle high on day 261.   The Cycles Model offers room for a final probe higher this week.  However, the correction lower may be shallow and short-lived.




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September 1, 2023

10:10 am

BKX, our liquidity proxy, is approaching the 50-day Moving Average at 83.50 on day 256 (average 258 days) of the Master Cycle.  While the Cycle may extend to early next week, it may be foolish to expect it to rally much higher, especially should interest rates resume their climb.   The Head & Shoulders target is still active.

ZeroHedge reports, “After last week’s brief (and small) dip, US money-market funds saw inflows once again last week, adding $14.4BN to reach a new record high of $5.5TN…”


8:00 am

Good Morning!

SPX futures have risen overnight to a high of 4527.20, thus far but await the Monthly Jobs Report.  Yesterday’s high at 4532.26 fulfilled the requirements for a Master Cycle on day 261 with a 72% retracement of the July decline.   In two weeks, the SPX went from oversold to overbought.

8:45 am

SPX futures spiked to 4538.90 at the release of the Employment Situation Survey.  Futures have eased down since then.  This extends the likelihood of a Master Cycle high today.

Today’s op-ex shows Maximum investor Pain at 4495.00.  Long gamma may begin at 4500.00, rising to 4600.00.  Short gamma begins at 4475.00 and has large contract sizes every 50 points down to 4300.00, indicating institutional interest.

ZeroHedge reports, “Futures and global markets are higher ahead of the NFP today at 8:30am ET (full preview here). At 7:40am ET, S&P futures rose 0.3% to 4,531 with Nasdaq futures up 0.2%. Major global markets are also higher, led by the UK (UKX +0.5%, SX5E +0.4%, SXXP +0.4%, DAX +0.1%), with the final Eurozone Mfg PMI is revised lower to 43.5 from 43.7, further boosting odds the ECB is done. On September ECB, Greg Fuzesi thinks that the July minutes and Isabel Schnabel’s comments yesterday (“growth had “moderated visibly”) both consistent with a pause in September ECB. He expects the final hike to happen in October after a pause in September. China reduced banks’ reserve requirement of foreign currency deposits, boosting the yuan, while China’s Caixin Mfg PMIsurprised to the upside: 51.0 vs. 49.0 survey vs. 49.2 prior. Bond yields are lower and the Bloomberg dollar index is flat. Commodities are mostly stronger led by oil. Key macro focus will be the labor data release today (NFP, Unemployment Rate, Avg. Hourly Earnings, Labor Force Participation) at 8.30am ET and the Mfg ISM at 10am ET.”



VIX futures declined to 13.22 thus far this morning after the DOL announcement.  This should not be alarming, since Wave {B}s tend to be rogue waves, extending further than the average.

Wednesday’s op-ex shows Max Pain at 14.50.  Long gamma begins at 15.00 and extends to 28.00.


TNX tested Intermediate support at 40.80 this morning and appears to have reversed course, rising above the neckline at 41.00.  Should it remain above the neckline today, a two-week rally may ensue, ending the current Master Cycle.


USD futures are lower as they may find a base at the mid-Cycle support at 102.74.  The Cyclles Model suggests that trending strength may re-appear next week.




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August 31, 2023

7:45 am

Good Morning!

NDX futures rose to 15491.20 thus far, in a probable attempt to reach 15500.00. (round number resistance and a short gamma wall).  This makes a 67% retracement of the July decline.  The current top-to-top Cycle has taken 43 calendar days and is due for a reversal.  Yesterday’s high was on day 266, which is getting long in the tooth.

Today’s op-ex shows Maximum investor Pain at 15520.00.  Long gamma runs from 15540.00 to 15600.00.  Short gamma starts at 15500.00.  That suggests NDX may open in short gamma today.

ZeroHedge observes, “The massive move lower in the AAII bull – bear spread (outlined here) has resulted in markets squeezing lately. Nothing new, but frustrating for the crowd.

Source: Refinitiv


Smart money

Smart or not, but they missed the latest squeeze…



SPX futures reached a morning high at 4529.50, but may be pulling back.  To reiterate, this Cycle is getting long in the tooth and is due for a reversal.  Thus far it has reached a 69% retracement on day 266.  Retail investors are coming back, buying at the highs.

Today’s op-ex shows Max Pain residing at 4510.00.  Long gamma starts at 4525.00, running to 4600.00.  Short gamma has a 15,582 put wall at 4500.00 and running strong to 4400.00.   Short activity appears to be institutional, due to the large sizes.

ZeroHedge reports, “US stock futures, European bourses and Asian markets all rose, while the 10-year Treasury yield traded near a three-week low and the USD eeked out its first gain of the week as traders reacted to a modest improvement in China’s mfg PMI and looked ahead to Thursday’s PCE data and Friday’s jobs report. At 7:45am ET, S&P futures rose 0.25% to 4,535 while Nasdaq 100 futures reversed earlier losses. Europe’s Stoxx 600 benchmark stayed in the green, buoyed by record profits at UBS as a result of its emergency takeover of Credit Suisse. Commodities are stronger led by oil and metals with natgas and wheat the biggest laggards. Today’s macro data focus includes jobless claims, income/spending and the PCE Deflator. Chicago PMI, expected to rise to 44.2, may point to a stabilization in mfg. Tomorrow we cap off the week with NFP.



VIX futures made a new low at 13.72 this morning, extending its Master Cycle to day 271.  This is still within the normal limits for the Master Cycle.  This Cycle low has been much stronger than anticipated.  The 50-day Moving Average was pierced.  However, we also saw this in equities.  In addition, the August 18 high was weak, while this low was very strong.

Next Wednesday’s op-ex shows Max Pain at 14.00.  Short gamma is non-existent.  Long gamma begins at 15.00 with only modest participation above 20.00.  This is a perfect setup for a runaway VIX, as no one is expecting it.

ZeroHedge notes, “The VIX reset, but…

The VIX went from 13ish to 18 during the initial August sell off, and then basically all the way down again. Don’t forget that volatility is mean reverting and has a “natural floor” level. For VIX this is around 13, give or take. Our favorite contrarian “sell side” indicator, the VIX guy, has not called yet, but we are eagerly awaiting to pick up his call…

Source: Refinitiv

The VVIX crash

The Vix of Vix, VVIX, has put in one of the more aggressive resets we have seen in a long time. Nomura’s McEligott has been spot on explaining the dynamics well over the past weeks. In his latest note he writes: “VIX Dealer “Short Calls” now to 28%ile from what was 1%ile just two weeks ago into VIXperation”.



TNX futures declined to 40.84, approaching Intermediate support at 40.72.  This may be the launch of a two-week rally into the Master Cycle high, due in mid September.

ZeroHedge reports, “One of The Fed’s favorite inflation indicators – Core PCE Deflator – rose 4.2% YoY in July (as expected but higher than June’s +4.1%). Headline PCE jumped up to +3.3% YoY (also as expected) – the biggest jump in YoY prints since June 2022…

Source: Bloomberg

Even more focused, is the Fed’s view on Services inflation ex-Shelter, and the PCE-equivalent shows that is very much stuck at high levels



USD futures declined to a new retracement low at 103.09 this morning.  It may correct down to the mid-Cycle support at 102.76 before resuming its rally until mid-October.  USD hasn’t broken above the June high at 104.61, so most analysts still consider the USD to be in a bear market.  The Cycles Model suggests a return of trending strength next week.


The Euro is an almost inverse image of the USD.  It is currently correcting the decline from its July high.  The possible target may be the 50-day at 109.73.    What is not shown is a potential collapse into the end of the year.  Negative interest rates since 2014 have backfired.  No one wants to buy European bonds.






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August 30, 2023

7:45 am

Good Morning!

NDX may have closed out its Master Cycle on day 259 above the 50-day and Intermediate resistance at 15301.76.  It has completed a 60.6% (near Fibonacci) retracement and may be ready to resume its decline.  With the Master Cycle complete, a confirmed sell signal awaits beneath the 50-day at 15214.04.

NDX futures made an overnight high at 15429.50, an approximate 63.4% retracement before easing down.  The futures are still above Intermediate support/resistance at 15301.76.  An aggressive sell signal awaits there, with confirmation beneath the 50-day.

Today’s op-ex shows Maximum investor Pain at 15375.00.  Long gamma starts at 15390.00 while short gamma begins at 15300.00.  Note how the 50-day matches short gamma.

ZeroHedge notes, “Oversold is gone

On August 20 (here) we pointed out just how oversold the market was. Fast forward to today, and the RSI has moved sharply higher. The question is whether or not we see overbought again?

Source: Refinitiv

NASDAQ seasonality

Right on time….although the more interesting part of the chart comes after September.”



SPX futures rose to an overnight high of 4507.20, overshooting the 61.8% Fibonacci retracement at 4503.40.  It has since eased beneath 4500.00.  An aggressive sell signal awaits at Intermediate support at 4588.95, which upgrades to a confirmed sell signal beneath the 50-day at 4459.79.

Today’s op-ex shows Max Pain at 4475.00.  Long gamma starts at 4490.00, while short gamma begins at 4450.00.


VIX futures consolidated beneath the 50-day at 14.76 this morning.  It has met its downside target, a 74% retracement.  It is now set up to rise above the Cup with Handle trendline.  A buy signal awaits above the 50-day Moving Average at 14.76.

Today’s op-ex shows Max Pain at 16.00.  While there is no shor gamma, long gamma becomes very strong at 18.00.


TNX has risen off the Head & Shoulder neckline, possibly activating that formation.  The Cycles Model suggests trending strength returning next week , leading to a Master Cycle high in mid-September.

ZeroHedge reports, “If there was any concern that today’s post-JOLTS yield plunge would lead to reduced demand for today’s closely watched belly-of-the-curve auction, they evaporated moments ago when demand for 7Y paper was almost off the charts.

Pricing at a high yield of 4.212%, today’s sale of $36BN in 7Y notes priced at the highest yield on record, and about 13bps above the July auction which stopped at 4.087%. And despite concerns that a lack of concession could lead to lower demand, the auction stopped through the 4.232% When Issued by 2bps, the widest stop through since January, with just one tail in the past 4 auctions.

The bid to cover was a solid 2.66, the highest since Jan 2023 and another indication of the solid demand for today’s sale.”


USD futures have declined to 103.04 thus far after making its Master Cycle high on Friday August 25.  It may find support at the mid-cycle at 102.76 although it may go lower.  Trending strength may return later this week or early next week.



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August 29, 2023

12:11 pm

One of the conditions for the Master Cycle was to end at a high above the 50-day Moving Average at 4459.51.  That was accomplished this morning with a high at 4485.50, short of Intermediate resistance at 4488.49.  A reversal on day 259 of the Master Cycle may create a sell signal, especially beneath the 50-day.  The new MasterCycle is due to decline to mid-October.  The Head & Shoulder formation offers a minimum target for this decline.

RealInvestmentAdvice offers this information, “About once a year, I have to address the issue of chasing the “10 Best Days” of the year. Statista recently presented the analysis:

“There is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red. By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods. The graphic below shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.”


8:00 am

Good Morning!

NDX futures rose to an overnight high at 15108.60, then settled back toward 15000.00.  The 50-day Moving Average is at 15207.00, so there may be a failure to thrive in the retracement.  Today is day 259 of the Cycles Model.  Should the NDX make a new low in the next week, it may qualify as a Master Cycle low.  However, the Master Cycle may have terminated early, on day 248.  Should that be the case, the decline may continue through mid-October.  This is a very dangerous place to make any assumptions about a recovery.  A decline in the next couple of days beneath the neckline at 14557.83 may trigger the Head & Shoulders formation.

Today’s op-ex shows Maximum investor Pain at 14990.00.  Long gamma may begin at 15000.00 while short gamma may begin at 14960.00.

ZeroHedge observes, “While hedge funds are getting squeezed (as we predicted), and long-onlies are refusing to buy the dip, the late summer volumes remain too anemic for any major market moves. But that may change if Goldman trader John Flood is correct in warning that CTAs are once again relevant in US equity markets after being a non-factor for the last 3+ months.

According to Flood, CTAs are now long $28BN S&P (77th percentile in terms of historical length)

… and have $5.2BN of S&P to sell this week in a flat tape.”


SPX futures made a higher high over yesterday’s trading range, to 4445.30. unable (thus far) to reach the 50-day at 4457.38.  It is now testing new morning lows at 4425.00.  This may be a failed high, suggesting a decline through the Head & Shoulders neckline may follow.  A possible extension of the Cycle may only be to a higher level, which does not seem to be the case thus far.

Today’s op-ex shows Max Pain at 4440.00.  Long gamma starts at 4455.00 while short gamma begins ar 4400.00.

ZeroHedge reports, “US stock futures erased gains of as much as 0.3% following another parade of modest China stimuli as investors monitored the outlook for interest rates ahead of key inflation and jobs data later this week, with the Federal Reserve’s data dependence in firmly mind. Contracts on the Nasdaq 100 and S&P 500 traded flat by 7:30 a.m. in New York after gaining as much as 0.4% and 0.3%, respectively. In Europe, the Stoxx 600 rises for a second day while Asian stocks closed at the highest level in two weeks, as Chinese equities extended their gains following the country’s market-boosting measures. A fall in Treasury yields also helped sentiment. Treasury yields and the dollar were steady; the USDJPY rose to 146.97, the highest level since November, and a red line for imminent BOJ intervention.”



VIX futures are higher, after bottoming out at 14.95, just above the 50-day Moving Average at 14.74.  The retracement may be over, as the target came into view.  Today may be (have been) a Trading Cycle low.  The next Trading Cycle may be  a high in the latter part of October.  Remember, Cycles are not sine waves.

Tomorrow’s op-ex shows Max Pain at 17.00.  Short gamma starts at 16.00 while long gamma begins at 18.00.

ZeroHedge comments, “Fearless VIX

VIX down on a Monday is not that common as we are supposed to “catch up” the weekend effect. You don’t compare mean reverting assets to trending assets over longer time periods, but shorter term gaps should not be dismissed. Last time VIX traded here, the SPX was 100 points higher…”



TNX rose after testing its Cycle Top at 42.04 this morning.  This shows the rally on a steeper gradient since the April low.  Investors are now accepting higher yields, especially after the breakout.  The Cycles Model shows another week of rising rates into a new Master Cycle high.

ZeroHedge reports, “90 minutes after the day’s first coupon auction in what is a truncated week, the US Treasury sold another coupon bond, this time  $46 billion in 5 Year paper, in what was another solid auction.

The bond priced at a high yield of 4.400%, tailing the When Issued 4.399% by 0.1bps, the third consecutive tailing auction in a row. The yield was also well above last month’s 4.170%, and like the 2Y auction earlier, was the highest since July 2007.

The bid to cover of 2.54 was below last month’s 2.60 but just above the recent average of 2.533.”



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