VIX did not make a new low this morning and does not appear to agree with the ramp in the SPX. Wave (C) of Primary Wave  are wonders to behold, paraphrasing from Robert Prechter in Elliott Wave Principle (page 78). “Third Waves are strong and broad, and the trend is unmistakable.”
ZeroHedge observes, “Realized Volatility Is Low
S&P 500 5-day realized volatility is below its 10th percentile since 1970. S&P 500 5-day realized volatility since 1970.”
SPX may have completed its rally at 4598.53 this morning. If not, round number resistance at 4600.00 appears to be a strong reversal point. It may be a fight to see if the Wednesday call options at 4600.00 will amount to anything. Dealers may be resisting it.
ZeroHedge remarks, “Yesterday, we highlighted the ‘gamma bomb’ that sent TSLA stock soaring above $1000 and the company’s market cap above $1 trillion as total options volume of 3.55mm contracts in TSLA was also a single-day record.
However, as Nomura’s Charlie McElligott notes, most stunning was the fact that 54% of yesterday’s record options volume / flow was concentrated in the 10/29 weekly options, including 1.2mm Calls for just this Friday’s expiration… while the $5.11B of total Call premium vs the $279mm of total Put premium was an unheard of 18 :1 ratio.”
SPX futures rose to a new all-time high at 4589.10 this morning as it stretches into day 270 of the Master Cycle. The Elliott Wave structure suggests a Wave [v] of C of (5) may have begun with a potential target of 4650.00. Wednesday’s options expiration shows little conviction with Max Pain near 4550.00. Should the SPX rise above 4600, it may trigger positive gamma, since there at a net 3100 calls there. It is possible that this trend may be over at Wednesday’s close. Volume in this rally is declining, showing some skepticism about this leg higher.
ZeroHedge reports, “The wall of worry that preoccupied traders just weeks ago has melted away, and has been replaced with a global market melt up (just as Goldman predicted again this weekend), which pushed US index futures to a new all time high this morning when spoos hit 4,580.75, while propelling European and Asian stocks higher as corporate earnings helped boost sentiment amid lingering concerns about inflation and growth. As of 715am ET, US equity futures were up 0.42% or 19.25 points, Dow Jones futures were up 126 points or 0.35% and Nasdaq futures jumped 0.61%, extending cash market gains boosted by Tesla’s rally to a $1 trillion market value on a big order and Facebook’s results announcement revealing strong user growth and a $50 billion stock buyback. 10-year Treasury yields dropped by 1 basis point while the dollar slid to session lows. Bitcoin traded around $63,000.”
NDX futures rose to 15625.00 this morning. There is still the real possibility of non-confirmation of the DJIA and SPX, especially should the reversal happen in the next 24-36 hours. The Wave structure appears complete at the September 7 high.
On Sunday, an earthquake of magnitude 6.5 struck northeastern Taiwan. The quake was large enough to affect Micron’s facilities in the northern Taiwanese city of Taoyuan.
Micron is still evaluating the impact and “determining the appropriate steps to return to full production.” The statement by one of the top computer memory and computer data storage companies was vague and didn’t detail what exact product lines were impacted.
Micron is a top producer of semiconductor chips, and the ongoing shortage in the industry and new developments arising from Taiwan could darken the outlook for chips. Expectations for the chip shortage to normalize could be at least another year. ”
Charles Hugh Smith opines, “When the wreck is recovered, witnesses will wonder why they took such heedless, foolish risks.
You’re in the back seat wedged between tipsy revelers, the driver is drunk and heading into Deadman’s Curve at 90 miles per hour. Nobody’s worried because the driver has never crashed. Before they slid into euphoric incoherence, the other passengers answered your doubts with statistics and pretty charts showing that the driver had never had an accident, so there was nothing to worry about.
They also said that the driver’s Uncle Fed had rigged the vehicle with an anti-accident device, so a crash was impossible. One passenger blurted out that a fellow named Goldy Sacks said the driver could easily “melt up” and take Deadman’s Curve at 120 miles per hour without any trouble.
You see the problem here: the risk of crashing and expiring is soaring but the giddy occupants are completely confident there’s no risk, and this confidence is the source of the danger. If you’re sure Uncle Fed’s device can protect the vehicle from any crash, then why not take Deadman’s Curve at 90 miles per hour?
And if Goldy Sacks says you could actually take it at 120 miles per hour, then taking it at 90 MPH is actually quite prudent and cautious.”
VIX futures hovered above Friday’s low, briefly touching 14.90. Today is day 258 for the current VIX Master Cycle, so it is possible for a new low. Should it occur, the foray to a new low may be brief.
Bloomberg reports, “Two infamous stock volatility strategies on Wall Street look set for a comeback — with protective buffers this time round.
The U.S. Securities and Exchange Commission has approved rule changes that pave the way for a pair of ETFs from Volatility Shares LLC to list and trade. The two products will offer leveraged bets on the Cboe Volatility Index, or VIX.
TNX may be in its final leg of a “running correction.” A normal correction may revisit the Wave (a) low at 15.07 for completion. However, this trend is strong enough to truncate Wave (c) at today’s low. The reason is a burst of trending strength due today in the TNX Cycles Model. In addition, Thursday and Friday also indicate potential stength. TNX may be the runaway train that crashed the equities markets.
CNBC reports, “U.S. Treasury yields moved lower in volatile trading on Monday to start the final week of October
The yield on the benchmark 10-year Treasury note fell nearly 2 basis points to 1.636%. The yield traded as high as 1.673% earlier in the session. The yield on the 30-year Treasury bond slipped less than 1 basis point to trade at 2.086%. Yields move inversely to prices and 1 basis point is equal to 0.01%.”
USD futures appear to be consolidating above Intermediate-term support at 93.57. The correction appears to be over and the rally may resume imminently. There are two weeks left in this Master Cycle with strength surging in the second week of November.