1:30 pm
SPX opened…and peaked today at the completion of market day 43 from the June 16 top…to the hour. This leaves us 17.2 market days of (panic) decline to complete Primary Wave [3] in a 60.2 market day Cycle. That would be 86 calendar days. Aggressive investors may employ their cash in new short positions. Those who are short may remain so. Confirmation lies below short-term support/resistance at 3667.26.
ZeroHedge remarks, “With just minutes until the European close, US equity and bond markets are puking back earlier gains with Nasdaq is in the red now on the day (after being up almost 3% in the pre-open)…
The selling started the moment the cash market opened – after another big short-squeeze…”
10:00 am
SPX may be about to make its final push in this retracement. Both the 38.2% Fibonacci retracement and the top of Wave (B) [thus far] are at 3806.00. The retracement may stop short at or beneath 3800.00, leaving Wave (B) in its current position. The Broadening Wedge is often called a 5-point reversal pattern and Wave (B) is at point 5. Should the SPX go to or above 3806.00, then it will have created “point 7,” a rare, but possible extension. We should know the final result in the next few hours.
8:25 am
Good Morning!
SPX futures rose to a morning high of 3758.80 (as I write), just above the 78.6% Fibonacci retracement level at 3739.00. Should the SPX open beneath that level, the likelihood of a resumption of the decline is high. An alternate path may be a further rise to the 3800.00 level, completing Intermediate Wave (B) and the Broadening Wedge. The Cycles Model suggests a potential turn at mid-day, giving credence to the alternate path..
In today’s op-ex, the Max Pain level is 3690.00. Long gamma begins at 3700.00, while short gamma begins at 3680.00.
ZeroHedge reports, “It was another overnight emotional and markets rollercoaster session thanks to the constant chaos of newsflow and confusion out of the UK.
Just around midnight ET, the Financial Times reported that the Bank of England would delay the start of its gilt-sale program (i.e. Q.T.), sending UK gilts, sterling and US equity futures sharply higher. Those gains, however, turned to losses when the central bank denied the report in a statement just around 5am ET, pushing the yield on the UK 10-year bond seven basis points higher to 4.05% while cable dumped 0.5%. That said, the BOE didn’t rule out the prospect of the BOE announcing a delay at a later time. The central bank has already delayed the start of the sales once, during the fallout from the government’s fiscal plan last month”
VIX futures declined to a morning low at 30.59. VIX is not supporting the rally in stocks. To do so, the VIX would need to drop beneath 28.50, creating a new low. As it stands, the VIS shows investors are still (fully) hedged.
Tomorrow’s op-ex shows Max pain remains at 39.00, where short gamma begins. Long gamma starts at 30.00 and has a long tail, stretching to 75.00.
TNX appears to be consolidating in place, just above the Cycle Top at 39.74. It may be forming a continuation pattern for Minor Wave B into the low 40’s.