SPX bounced from the 100-day MovingAverage at 4341.00 at 1:00 pm. It appears that the bounce may be ending shortly. The 38.2% retracement level is at 4391.05, if it can make it. This is no time for taking short profits. There may yet be another two weeks to go on the dowside.
The projected final probe to 4475.00 did not materialize. In fact, there appears to be a truncated Wave [v] of C in the final hour which remained within the Triangle boundaries.
This morning the SPX futures tumbled to 4398.40, giving up the 50-day Moving Average support at 4438.03. Welcome to phase 2 of the decline. Should this event mark the halfway point of the decline, we may now see a panic phase lasting until October 20.
The La Palma Volcano has opened new vents and the lava flow is more liquid than before, suggesting a deeper source than what was earlier witnessed. Vents are now cutting across the cone that may destabilize it. The U.S. Tsunami Warning System does not see this as a threat.
ZeroHedge reports, “For much of 2021, a vocal contingent of market bulls had claimed that there is no way the broader market could sell off as long as the gigacap tech “general” refused to drop. Well, it looks like that day is finally upon us because this morning US equity futures are sliding again, continuing their Monday drop as yields from the US to Germany again, the 10Y TSY rising as high as 1.55%, driven to an extent by Fed tapering fears but mostly by the surge in oil which has pushed Brent above $80, the highest price since late 2018. The dollar gained amid the deteriorating global supply crunch from oil to semiconductors.
The surge in oil sparked a new round of stagflation fears, sending Nasdaq futures down 240 points or 1.3% as the yield on the benchmark 10-year U.S. Treasury climbed sharply. S&P 500 and Dow Jones futures also retreated, with spoos sliding below 4,400 as to a session low of 4,390.”
VIX futures soared to 21.45 this morning, above the mid-Cycle resistance at 19.73 and the trendline just above 20.00. This may be the beginning of a period of strength that may intensify through next week. Another period of strength may develop during the week of October 18.
The NYSE Hi-Lo Index made a new high yesterday, as expected, but closed beneath the 50-da Moving Average at 77.46. That appears to be the end of the retracement with new lows developing through October 15.
USD futures rose to 93.68, breaking out above the existing high in what may be a running correction. This may lead to a recalibration of the Wave structure.
More resignations may come as the realization that the Fed does not control rates becomes apparent. In addition, when will the dealer banks start to rebel as the Fed loosens the reverse repo spigots to accomodate the banks having to guarantee the purchase of unsold treasury paper?
ZeroHedge reports, “In the aftermath of the ugly 2Y auction at 1130am, moments ago the Treasury followed up with its second coupon auction of the day when it sold $61 billion in 5Y notes. And unlike the “gruesome” tailing 2Y sale, this time demand was far more solid.
Printing at a high yield of 0.990%, the auction stopped through the When Issued 0.994% by 0.4bps, even if it too was the highest yield since February 2020 and decidedly above last month’s 0.831% now that the Fed’s tapering is officially in play.
The Bid to Cover came in at 2.37, which unlike the near record plunge in the 2Y BTC was actually a modest improvement to last month’s 2.35, and also printed right on top of the six-auction average.
The Internals were soggier, with Indirects taking down just 54.3%, below the recent average of 59.8%, and the lowest since March 2020 when foreign buyers took down just 52.1%. And with Directs taking down 20.2% higher than the 17.1% recent average, Dealers were left holding 25.5%, or the most since February.”
NDX futures made a morning low of 14939.40 as it lost the 50-day Moving Average support at 15191.70. While the NDX all-time high was made on September 7, five days later than the SPX, it may be playing catch-up in the decline.
Was this the bounce?
Here we are with major index futs reversing from overnight highs. Both SPX and NASDAQ futs reversed right on short term resistance levels.
We would love to see how this behaves should we dip once more from here.
While Spoos is above the 50 day, NASDAQ is right on it…watch those yields moving higher again.
Rates matter…especially for tech. Then you have the power crunch in China to consider as well. Hard to produce all those iPhones if Beijing is tightening the energy consumption policy…”
The GSCI Ag Index has broken out above Intermediate-term (the higher) resistance at 413.39 and is clearly on a buy signal. For those who want to be long in a short world, this is the place to be. The Cycles Model indicates that this rally may last through mid-December. Not only do we have drought in the Western States, but also snow in Argentina and frost in Brazil and flooding in Europe and China. Can it get any worse?
ZeroHedge answers that question, “Millions of Britons could face a “national shortage” of turkeys, toys, and trees this Christmas due to a lack of skilled European employees following Brexit, according to the chair of a farming association.
The Road Haulage Association (RHA) last month said the UK is facing a shortage of around 100,000 HGV drivers, which along with Brexit, has been further exacerbated by people leaving the industry as well as the pandemic, which halted driver training and testing for nearly a year.
As a result, food supply chains have been drastically disrupted, leading to shortages across some UK supermarket shelves.
Kate Martin of the Traditional Farm Fresh Turkey Association (TFTA) told the PA news agency that Christmas could see a “national shortage” of turkeys on the UK’s supermarket shelves, driven by the declining supply of skilled European workers.”