Good Morning and welcome to the Ides of March!
The DJ 30 futures made a modest new (all-time) high this morning at 32821.50 on day 262 of its Master Cycle. It has exceeded its Cycle Top resistance at 32589.40. A reversal back beneath this support/resistance line may offer an aggressive sell signal, considering the length of its Master Cycle.
ZeroHedge considers, “As DB’s Jim Reid wrote in his latest Friday Thematic Research recap from the last day of the week, Thursday saw the first all-time high in the S&P 500 for a whole month.
It was nevertheless the 11th ATH in 2021 to date, and if anyone (spuriously) decides to annualize this, it would mean 57 in total for the year which would be the fourth largest behind 1995 (77), 1964 (62) and 2017 (62).
As Reid observes, such clusters of all-time highs are unsurprisingly focused around secular market valuation highs with the late 1920s, mid 1960s, late 1990s and the current period the obvious points. However, there have also been long periods where we’ve been devoid of ATHs, usually after one of these market peaks. The longest was the 6490 business days between September 1929 and September 1955.”
SPX futures rose to 3947.62 before pulling back to breakeven. The SPX structure allows another probe higher on its day 259 of the Master Cycle. The FOMC meets this week, which may keep equities near the top of their range. In addition, there may be a spike of trending strength on Thursday, keeping the SPX pinned higher into options expiration.
ZeroHedge reports, “Global shares rose and US equity futures were flat as U.S. bond yields hovered near a 13-month to start the week as bets economic growth will accelerate kept high duration stocks depressed as investors braced for Federal Reserve and other key central bank meetings in the days ahead. The Dow notched five consecutive record highs last week as approval of one of the largest fiscal stimulus in U.S. history and vaccine rollouts fueled demand for economy-linked stocks such as banks, energy, materials at the cost of tech names with lofty valuations.
At 7:40 a.m. ET, Dow E-minis were up 118 points, or 0.36%, Nasdaq 100 E-minis were up 24.75 points, or 0.19% and S&P 500 E-minis were up 5 points, or 0.1%, fading an earlier gain of 3,948 amid caution how the Fed would respond to the stimulus-fueled snapback in economic activity.”
NDX futures challenged Short-term resistance at 12995.98 before pulling back into negative territory. Of all the indices, the NDX had the most bearish profile. It is currently on a sell signal and a continued decline beneath the Lip of its Cup with Handle formation not only certifies the decline, but also may have the capability of turning the other indices negative as well. Having been rejected at the 50-day Moving Average last Thursday has put the NDX on a slippery slope that may accelerate quarter-end selling for all the indices.
VIX futures rose to a high of 21.55 this morning. It is beneath the 50-day Moving Average at 23.95, which is the level to watch this week. Friday was day 270 in the current Master Cycle. Today we may see both the VIX and SPX rising, as the new Master Cycle in the VIX may establish itself.
The strength of last week’s decline was much higher than the previous rally where I had previously tagged the Cycle end, suggesting the Master Cycle may have ended last Friday instead. I am more cognizant of measures of strength at the end of the Cycle, since price action, while often indicative, may not be accurate in determining the turns.
ZeroHedge remarks, ”
Massive central banks week coming up, with obviously Fed stealing the show (we have BoE, BoJ and Norges Bank as well).
The reopening bull is very much alive and manufacturing cycle is gaining momentum. The rollover of the Chinese credit impulse is not the focus this time, but worth keeping in mind (those effects are scheduled for later this year).
Inflation is a huge focus for the upcoming meeting. The “moderate overshooting” of inflation looks to possibly be overshooting more than just “moderately”. Powell simply reiterating the same message will probably not make markets overly calm.”
TNX opened above 16.00, showing continued strength in the Cycle. There are two possible outcomes this week in the Cycles. The first is the Completion of Minor Wave 4, which may be due to test one of the support levels beneath it on a Trading Cycle low later this week. The second is a continuation of Minor Wave 5, which may extend to the last week of April. The second outcome is likely to be the final outcome in either event.