GKX has attempted to make a new high yesterday, but failed by just a few ticks. I have marked the low on day 247 of the Master Cycle. Today is day 252, so there is still a chance of a new low for Wave (C). Given that the turn window is so short, accumulation of shares (DBA) may be wise. As usual, five months after a peak in prices, the media announces the turn in food prices may be in. Just in time for prices to start rising again.
ZeroHedge reports, “A massive logjam of more than 2,000 barges at various parts of the Mississippi River is being cleared Monday morning.
Southbound vessel traffic resumed early morning on the Mississippi River near Stack Island, an island located in Issaquena County, Mississippi after northbound traffic was cleared Sunday, Archer-Daniels-Midland Co. wrote in a note.
“We were able to completely clear the Northbound queue,” ADM said.
ADM added that once all the southbound congestion is resolved, the Coast Guard will allow one-way traffic moving forward.”
This is not a satisfactory outcome, but we are back to the original structure until another Wave lower is made. Today is day 260 and is a more likely Master Cycle pivot than last Wednesday’s pivot at day 254 until proven otherwise. The Lip of the Cup with Handle formation is still near 3600.00, as is the Cycle Bottom support, which may be why Wave 5 is so short. This has become a tricky pivot and the Broadening formation may still be bearish. Should the SPX close above 3600.00, a cautious trader may take off half the short position, but keep the remainder until the SPX rises over 3650.00-3700.00, where long gamma may take effect. A close beneath 3600.00 leaves traders vulnerable in either direction but short gamma appears to rule trading at this time.
BKX, our liquidity proxy, has declined beneath it’s Head & Shoulders neckline and made a new 2022 low. The Cycles Model suggests a continued decline to the end of October. Credit Suisse’s capital shortfall is in the news. Market stresses are eroding the capital structure of many banks and CS may be the first to go down.
Today I am bringing out my alternate Elliott Wave Structure as a better fit with the Cycles and certain formations in the chart. I am tentatively counting last Wednesday’s high as an Intermediate Wave (B) instead of a minor Wave 4. Wave 4s can be triangles and zigzags but not Broadening Wedges. Broadening formations seem to be the property of Wave Bs. If the old Master Cycle were to continue, today would be day 260. We would need a limit down day to complete the old Master Cycle, should it still be appropriate. Should the old Master Cycle be intact, 3400.00 is still the target. Under the new structure, the next target would be below 3000.00 by mid-November.
SPX futures declined to 3575.75 before easing back to flat with yesterday’s close.
In today’s op-ex, Maximum Pain for investors is 3625.00. Long gamma begins at 3675.00 while short gamma starts at 3600.00.
ZeroHedge reports, “Another day, another rout, only this time there was an even more ominous twist. It’s shaping up as another risk off day on Wall Street, and around the world, as stocks fell… again… as usual… pressured by the relentless rout in the chip sector (following Friday’s decision by the Biden administration to put fresh curbs on China’s access to US semiconductor technology) which sent chip giant Taiwan Semi conductor plunging 8.3%, its biggest drop on record, and wiped out $240 billion in market cap from the global semiconductor sector, while US futures extended their Monday slump amid general amid fears of persistently high inflation two days ahead of the CPI report, and signs that company earnings were set to disappoint. A gauge of the dollar climbed to the highest this month before reversing.
But the ominous twist today is that for the second time in two weeks, the BOE stepped in the market, this time boosting its “temporary” QE to add linker bonds to its usual array of gilt purchases to tackle what it called “fire-sale dynamics.” While this helped lift gilts and cable (if only briefly), its effect on futures was truly transitory, with the Emini dumping as much as 1% to a low of 3584, falling below the key level of 3,600, before stabilizing uneasily just above 3,600. It was down 0.6% at last check, while Nasdaq future were 0.5% lower as of 7:45am ET.”
VIX futures rose to 33.95, remaining beneath the Cycle Top resistance at 34.40. I have tentatively marked last Wednesday as a Master Cycle Bottom. There are just a few more days that may change this outlook, as this would be day 260 of the old Master Cycle.
In tomorrow’s op-ex, Max Pain is at 29.00. Short gamma begins at 28.00, while long gamma starts at 30.00. VIX may be due for a powerful move higher.
TNX futures climbed to 40.06 over the holiday weekend. Today, however, it opened at 39.00 and resumes its upward march with a high thus far of 39.37.
USD futures rose to 113.46 before easing back to the flat line. In doing so, it challenged the Cycle Top resistance at 113.23. The Cycles Model shows growing strength into the next Master Cycle (high) over the next week or so.