October 15, 2021

7:30 am

Good Morning!

My wife and I are leaving for a “destination wedding” at Boyne Falls this weekend.  The colors should be magnificent.

SPX futures rose to an overnight high of 4457.80 where Wave [v] of C is .62 times Wave [i] of C.  Wave [v] of C is often equal to Wave [i] of C at 4475.00.  Generally C Waves are equal to their corresponding A Waves which makes the potential target at 4480.00.  It appears that, while the time target has been made, the distance target may have another probe higher.  Today is day 259 of the current Master Cycle.  Up to a week ago, I could not imagine that this Cycle would end in a high.

In today’s options market, 4435.00 appears to be the Max Pain level, while options become bullish at 4450.00.  Positive gamma becomes irresistable at 4475.00.  In SPY (442.50), the battle rages with open interest at 75,326 at 440.00 calls in todays expiration, while open interest in puts is 84,369 puts at today’s expiration,  That may also be the Max Pain level, although the dealers and hedge funds that sold these option may be like a cat on a hot tin roof.  Which way to jump?

ZeroHedge reports, “One day after the S&P posted its biggest one-day surge since March, index futures extended this week’s gains, helped by a stellar bank earnings, while the latest labor market data and inflation eased stagflation fears for the time being. . The 10-year Treasury yield rose and the dollar was steady. Goldman Sachs reports on Friday. At 715 a.m. ET, Dow e-minis were up 147 points, or 0.42%, S&P 500 e-minis were up 16.5 points, or 0.37%, and Nasdaq 100 e-minis were up 42.75 points, or 0.28%.”


VIX futures made a new low this morning at 16.55.  While this looks like a Master Cycle low, today is only day 247.  It’s not impossible for a Cycle to go from low to high in 8.6 market days.  That puts us at Wednesday October 27 as a potential Master Cycle high.  The Wave structure is winding up for an upward probe that may be a multiple of Wave 1.


The KBW Bank Index has stopped making new highs on Monday, which is a puzzle after blow-out earnings being reported on all but Wells Fargo during the week.  I made comment on it earlier this week that the timing was noteworthy based on the Cycles.  Now we have something else to consider.

ZeroHedge remarks, “Back in February, when looking at the Treasury’s debt and cash projections, we warned that the market was about to be hit with “Mind-Boggling Liquidity” as the Treasury was about to release some $1.1 trillion in cash from its account at the Fed (the Treasury General Account or TGA), in effect conducting a parallel – and stealth – QE to the Fed’s own $120BN/month liquidity injections.

That’s precisely what happened, and since then, Treasury cash levels collapsed from an all time high of $1.8 trillion down to the previous target of $300 billion, and then continued dropping as the Treasury used up most of its cash to plug holes associated with the ongoing debt ceiling drama.

But that’s now over, at least until December, and with Treasury cash dropping to a 4 year low of $59 billion on Wednesday, the Treasury is now set for a sharp liquidity drain as it seeks to build up some $480 billion in funding through the early December debt ceiling reprieve, which is how much time and capacity Janet Yellen bought herself with the stop-gap debt ceiling deal that passed just in the nick of time last week when Senator McConnell caved to the democrats.”


TNX bounced this morning after the first leg of its correction.  The Cycles Model suggests TNX may ride on trending strength above last week’s high.  It also indicates the corrective phase may last until mid-November.


The GSCI Ag Index appears to have completed a Trading (minor) Cycle low and may break above its resistance area.  The current Master Cycle is due for completion in mid-December.  Don’t let the modest uptrend fool you.  We may see growing trending strength into the end of October.

ZeroHedge remarks, “At least someone is honest when it comes to soaring food inflation:

“Food is too cheap,” Ranjit Boparan, who is known as the “Chicken King” in the UK, was quoted by Reuters 

“In relative terms, a chicken today is cheaper to buy than it was 20 years ago. How can it be right that a whole chicken costs less than a pint of beer? You’re looking at a different world from now on where the shopper pays more,” Boparan said, who produces 33% of all poultry products in the country. ”

TheEpochTimes reports, “Compared with just one month ago, consumers are paying slightly more for most goods and services. Compared with a year ago, however, they’re paying significantly more, according to Labor Department data released this week.

The Labor Department reported that the consumer price index, a key inflation gauge that measures how much Americans pay for goods and services, rose about 0.4 percent in September. The year-over-year prices increased 5.4 percent, which some noted is the largest yearly increase since January 1991.”




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