I will be out of town to attend the funeral of my uncle. Here are a few early thoughts.
SPX futures rose to an overnight high of 3856.00, but have since receded to the flat line as I write. The key from yesterday’s activity is that SPX reversed at the 50-day moving average at 3876.01 at a key inflection point, an aggressive but unconfirmed sell signal. A decline beneath Intermediate-term support at 3757.13 confirms the decline. Analysts admit that this is a technical rally in a bear market, but have no clear picture of its target.
Today’s op-ex is light with Max Pain at 3835.00. Long gamma begins at 3900.00. Put contracts are dispersed, with no clear gamma line down to 3600.00. Options buyers appear cautious, with the shorts being much more so.
ZeroHedge reports, “US equity futures swung between gains and losses (a remarkable achievement considering the collapse in generals such as GOOGL and MSFT and last night’s 25% implosion in META, something which startled even JPMorgan’s top trader) as investors weighed disappointing tech earnings amid growing hopes of a Fed pivot and/or a Treasury buyback (Op Twist) announcement.
Contracts on the S&P 500 were little changed as of 7:30 a.m. in New York, while Nasdaq 100 futures fell 0.4% after both indexes snapped a three-day winning streak on Wednesday, dragged down by negative sentiment toward tech following a string of disappointing earnings.”
ZeroHedge poses the question, “Following several quite remarkable days in the market, here are some comments from JPM’s head of TMT trading Ronald Adler who summarizes the key underlying tension:
Shorts are getting NERVOUS. I’m getting a lot of questions today as to “why is that stock that I’m short/underweight outperforming or simply not down?”
NDX futures continues their slide to a low of 11320.60 after closing beneath Intermediate-term support at 11444.20. This appears to confirm yesterday’s sell signal and may provide guidance for the SPX as well. The next support is the trendline at 11050.00.
Today’s op-ex is very light, with a small cluster of calls at 11350.00. Gamma is difficult to determine in either direction.
ZeroHedge remarks, “Rock & Roll earnings
Implied was right…..The average S&P500 stock has moved +/-4.7% on earnings QTD, the highest since 2011.
Bear market seasonality
Very different from normal seasonality. Seasonality does not look the same in different market regimes. We should be very close to the “seasonal top” for bear markets right now and heading lower into year-end.”
VIX futures are positive, but still within yesterday’s trading range…
What is noteworthy is that VIX may have made a very extended Master Cycle low yesterday, at day 275, The NYSE Hi-Lo also made its Master Cycle high yesterday at 29.00, a very weak showing.