I’m finding this hard to believe, but it appears that Wave v of (c) may have truncated. In other words, all of the components are there, but it has fallen short of its target beyond this morning’s high at 4440.82. We may get confirmation should the SPX decline beneath 4429.00. Remember, the dealers want to take the SPX to MAX PAIN at or just below 4400.00. That leaves them with the least payout on the expiring options. This may also incite a panic sell-off ino the close and the start of the new bear market.
You may consider that action as a probable aggressive sell signal. The VIX and Hi-Lo Index are not likely to confirm today.
NDX may have completed its Master Cycle high yesterday. The structure appears complete. A decline beneath the trendline at 15000 confirms the reversal. Short term suport lies at 14933.36, which adds additional confirmation. NDX may be taking its cue from the Shanghai Composite Index which closed in the red this morning.
The morning surge to 4440.82 was not the final high. SPX still has one last probe after this to the Cycle Top at 4459.25 or a few points higher. Today is day 270 of the Master Cycle which makes it very stretched indeed. The snap back may be fierce. Remember, in order to hit MAX PAIN for the options market, it must decline back to 4400.00 or just below it at the close. An aggressive sell signal lies at Short-term support at 4397.17.
SPX futures ventured into new all-time high this morning, making a new high at 4432.20. There is some reluctance by the dealers to go higher, as these same shares must be sold after expiration at a possible loss. There is very little liquidity in the cash market. All of the new money is buying options.
There is a strong pull to 4450.00, where ther is a net open interest in 10,191 calls. The SPX may go there, but the trick is to decline back down to 4400 by the close of the session where there are only a net open interest of only 2087 calls.
ZeroHedge reports, “US equity futures rose 0.1% to a new all time high of 4.425 in a subdued session which saw European shares steady and Asian dip slightly ahead of the last payrolls report before the Jackson Hole symposium. After a busy week of earnings and discussions on when the Federal Reserve should begin stimulus cuts amid concerns that rising cases of the Delta coronavirus variant could hurt the economic recovery, the dollar climbed about 0.2%, oil traded at $69 a barrel, and the 10-year Treasury yield rises back above 1.25% on whisper expectations that today’s jobs report will show a 1MM+ print and trigger a tapering announcement by the Fed. At 740 a.m. ET, Dow e-minis were up 29 points, or 0.09%, S&P 500 e-minis were up 2.5 points, or 0.06%, and Nasdaq 100 e-minis were down 18.5 points, or 0.12%.
ZeroHedge follows up, “Well that escalated quickly…
Treasuries are being sold immediately after the big payrolls beat with 10Y Yields above 1.28%…
Demand for cyclicals and rotation away from growth is the immediate reaction as Nasdaq tumbles and Small Caps surge…
TNX rallied strongly, confirming Wednesday as the Master Cycle low (day 257). Investors were beginning to believe that falling interest rates were a “given.” All of a sudden, TNX is climbing to a potential target of 20.00. The Cycles Model suggests this may happen as early as mid-September.
ZeroHedge observes, “If you make a conscious choice to ignore all long-term consequences, managing your personal finances can be a lot of fun. For example, instead of rationally evaluating what sort of mortgage payment you can actually afford, why not take a plunge and buy a $600,000 house? You only live once, right? And instead of making your current dumpy vehicle last another year or two, why not take out a huge loan on a brand new $60,000 SUV? You know you deserve it. While you are at it, why don’t you go on another huge spending spree and max out all of your credit cards again. Paying off those credit cards will be very painful in the long run, but nobody thinks much about long-term consequences these days.
Just look at the federal government. They are 28 trillion dollars in debt and yet our politicians continue to throw money around like a bunch of drunken sailors.
Of course the federal government is far from alone. State and local governments have never been so deep in debt, we are in the midst of the greatest corporate debt binge of all time, and U.S. consumers are certainly doing their part. In fact, last quarter we witnessed the largest increase in consumer debt since just before the last financial crisis…
VIX futures have broken beneath the trendline in an all-out effort to keep the momentum going in the SPX. I had been pondering how a Master Cycle low would occur at this point in the calendar. Now it is clear. Support for the VIX now lies at 16.33.