August 17, 2022

7:45 am

Good Morning!

SPX futures have declined to 4266.00, on their way to trendline support at 4225.00.  SPX left a “shooting star” candle and closed just above mid-Cycle support at 4298.00. It missed the 200-day Moving Average by a point, but many will claim credit for “calling it.”  Truth is, most pundits were calling for the SPX to rise above that level.  SPX is on an aggressive sell signal above 4225.00.  Look to short on the bounce.

Today’s op-ex shows Max Pain at 4315.00, with long gamma beginning at 4325.00 and short gamma starting at 4275.00.  Today may be a gamma-induced tug-of-war between the bulls and the  bears.

ZeroHedge reports, “Futures were grinding gingerly higher, perhaps celebrating the end of the Cheney family’s presence in Congress, and looked set to re-test Michael Hartnett bearish target of 4,328 on the S&P (which marked the peak of yesterday’s meltup before a waterfall slide lower when spoos got to within half a point of the bogey), when algos and the few remaining carbon-based traders got a stark reminder that central banks will keep hammering risk assets after the UK reported a blistering CPI print, which at a double digit 10.1% was not only higher than the highest forecast, but was the highest in 40 years.

The print appeared to shock markets out of their month-long levitating complacency, and yields – both in the UK and the US – spiked…

… and with yields surging, futures had no choice but to notice and after trading at session highs just before the UK CPI print, they have since tumbled more than 40 points and were last down 0.85% or 37 points to 4,271.”


VIX futures have risen to a new post-reversal high at 20.61.  It is on an aggressive buy signal due to the  Cyclical reversal and may be confirmed above 35.00.  VIX is in the short gamma zone beneath 25.00, so we may expect a chaotic trading day as the current options expire today.


TNX futures rose to a morning high of 28.99 before easing back.  Tis chart is still a cliff hanger, since the current Master Cycle is due to end this week.  There is no breakout, so judgement is withheld until the chart resolves itself.


USD futures rose to 106.69, still within its most recent trading range.  The Cycles Model shows today as a day of strength in the USD.  The next overhead resistance appears to be the Cycle Top and trading channel trendline at 108.51.


West Texas Intermediate Crude futures appears to be consolidating on day 256 of its Master Cycle.  If correct, we may see a Master Cycle low this week, followed by a rally that may go as high as the trendline at 115.00.  This makes no sense, given the lack of liquidity in the markets.  An alternate view may be that the Master Cycle may have been complete at the touch of the mid-Cycle resistance at 95.05.  This should resolve quickly.

ZeroHedge explains, “Speaking on CNBC, Goldman’s head of commodity strategy, Jeff Currie explained why the lower the price of oil drops, the higher it will jump because – all else equal – as demand for oil rises thanks to lower prices without enough supply to match, inventories will shrink far faster and tank bottom will be hit well before the NBER admits a recession has arrived. A similar development took place in Jan 2007 more than a year before the 2008 recession… but not before oil soared to an all time high. This time won’t be any different, and an early glimpse of how the spike in demand will translate into lower inventories came moments ago from the American Petroleum Institute (API) which reported a draw this week for crude oil of 448,000 barrels, while analysts predicted a far smaller draw of 117,000 barrels.”


Gold future have fallen beneath the Lip of the Cup with Handle at 1790.00 and is challenging the 50-day Moving Average at 1788.72.  This may put gold on a confirmed sell signal, pending today’s close.  The Cycles Model calls for another month of decline with targets at the Cycle bottom at 1701.27 or the lower Lip of the Cup with Handle at 1678.00.




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