SPX futures are now testing the Cycle Top resistance at 4555.49 on day 266 of the Master Cycle. Though unexpected, this should not be considered out-of-the ordinary as Cycles may expand or contract based on various inputs. The single most obvious input today is options expiration. Since dealers and hedge funds are net long, today’s options expiration may be a way to reduce long exposure without massive sales. The shares are simply transferred to the options holders, who then may hold or sell. In the meantime, the dealers book a profit at all-time highs.
ZeroHedge reports, “S&P 500 futures traded to within 2 points of their September all time high, rising 0.12% to 4547, just shy of their 4549.5 record after China’s Evergrande unexpectedly made a last minute coupon payment, averting an imminent weekend default and boosting risk sentiment. But while spoos were up, Nasdaq futures edged -0.18% lower after Intel warned of lower profit margins, while Snap crashed 22%, leading declines among social media firms after flagging a hit to digital advertising from privacy changes by Apple. Intel plunged 10% in premarket trading as it missed third-quarter sales expectations, while its Chief Executive pointed to shortage of other chips holding back sales of the company’s flagship processors. 10Y yields dropped 2bps, the dollar slumped and bitcoin traded above $63,000. Fed Chair Powell is scheduled to speak at 11am ET. “
VIX futures tested yesterday’s low at 14.92 this morning but has not gone lower. Today is day 254 of the VIX Master Cycle. While it may go lower, the June low appears to be the limit.
ZeroHedge asks, “What If COVID Rears It’s Ugly Head Again?
The financial market focus on COVID has been much lower over the past few weeks. But what if COVID will be like the Halloween monster that always comes back? We now had the first major new lock-down in a “European” country – Latvia – that closes for 4 weeks. Latvia is “early” in entering the dark, cold and depressing northern hemisphere autumn & winter season…Now, Latvia has a pretty poor vaccination rate (just touching 50%) but so do many other countries around the world. Can COVID be the real “I will be back” monster for this Halloween?”
TNX futures climbed to a morning high of 16.99, suggesting the cash market may do the same. If you think this is crazy, the Cycles Model calls for a triple play of trending strength next week. If the media doesn’t report it, will it go away?
USD futures appear to be consolidating after yesterday’s corrective low. The consolidation may not last, as the Cycles Model suggests trending strength comes roaring back as early as today.