July 25, 2022

11:28 am

The Ag Index may have extended its Master Cycle low to day 314 days from its September 2021 low in a double zigzag pattern.  If correct, the Ag Index may rally through mid-August.  I have no other explanation for this anomaly.  However, it may be said that the 50% retracement of its 2-year rally from its 2019 low was reached at 429.60.

ZeroHedge reports, “At perhaps the worst possible time, scorching heat and dry conditions are jeopardizing US agriculture – threatening soybeans, corn and other crops.

According to the Wall Street Journal, intense heat over the past week has put large portions of the United States – particularly the South and West – at risk during an important period during the Midwest crop-growing season.”


7:50 am

Good Morning!

SPX futures made a small retracement to 3986.30, a 65% retracement of the decline from Friday’s high after completing a 51-day (top-to-top) Cycle.  The Cycles Model projects a 12.9-17.2-day decline into mid-August.

Today’s op-ex shows Max Pain at 3945.00 with calls dominating above 3975.00.  Long gamma may begin at 3975.00 with short gamma beginning at 3900.00.

ZeroHedge reports, “Whether it’s because Goldman forecast over $11 billion in “forced” buying every day this week between the end of the buyback blackout period and systematic purchases amid the sliding VIX, or because hopes of an imminent recession prompted more expectations of a Fed pivot after Friday’s drop led to oversold conditions amid record bearishness, but this morning US equity futures have moved higher ahead of what will be an extremely busy week with 30% of the S&P reporting earnings including big tech, the US revealing if Q2 GDP was negative thus pushing the US into a recession, and the Fed hiking another whopping 75bps. Or perhaps the optimistic sentiment came out of China where Chinese property stocks rallied after a reported move by Beijing to establish a fund to support developers fueled optimism about a turnaround for the struggling sector.

Whatever the reason, stocks and US equity futures reversed earlier declines on Monday and traded near session highs with S&P 500 and Nasdaq 100 futures rising 0.6% and 0.5% respectively, while European stocks extended gains after their best week since May, rising 0.5%. Treasury yields advanced and a dollar gauge slipped. Oil also reversed earlier losses and last traded 0.9% higher.

The S&P 500 posted its biggest weekly gain in a month last week and is on a pace for its largest monthly increase since October. Stocks have gotten a lift as the corporate earnings season began with better-than-feared reports and as investors bet that a lot of the negative economic news was priced in.”


VIX futures are rising out of their Master Cycle low, made on Friday.  The Cycles Model suggests growing strength this week.  While SPX shows a potential Master Cycle low in mid-August, the VIX doesn’t show a Master Cycle high until the week after the monthly op-ex in September.


TNX leaped out of its Master Cycle low on Friday (day 255).  Wave 4 may have been stretched to fit the pattern calling for higher yields in August.  If so, the Cycles Model may call for up to 4 weeks of higher yields.


USD futures appear to be consolidating within Friday’s trading range.  If so, we may see USD on the rise again to a new high by mid-August.  Demand for the USD is ramping higher, as Europe’s economy collapses and may accelerate as equities are sold.


West Texas Crude futures are rising above the mid-Cycle support at 94.93.  The Cycles Model projects rising crude prices through monthly op-ex week in August.  The potential target may be the 50-day Moving Average at 107.82.

ZeroHedge observes, “With the price of oil still stuck in a bizarre jekyll and hyde standoff, where despite soaring physical demand futures prices have been sliding on expectations of an imminent recession setting up an inevitable collision between the two polar opposite camps, some are speculating that oil prices may be finally reaching a bottom.

According to Bloomberg, short positions in the top oil stock exchange traded fund, the USO, have tumbled 14% in the last 30 days. Such aggressive covering by mostly retail investors may indicate that traders see an end to the rout that has dragged oil prices down by more than 20% since mid-June despite consistently strong physical demand. That said, there is no consensus on what’s ahead: while some see a tight market and optimism a US recession will be shallow, others point to a grim demand outlook and robust supply growth.”



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