Note: I may be unable to report on my blog tomorrow due to pressing family matters.
NDX futures declined to a morning low of 10780.00 thus far. The next support level is at 10700, where a bounce may be possible. While last Tuesday’s high at 11681.80 qualifies as a Master Cycle high, the timing is a bit early (day 243), allowing for the Master Cycle to create a new low by the end of next week.
Today’s options expiration for NDX are thin, but short gamma is discernible beneath 10900.00. There are only a handful of calls, making it impossible to locate long gamma. QQQ (close: 265.68) options show Max Pain at 277.50. Long gamma begins at 280.00, while short gamma comes on strong at 275.00 and below. Options may be a virtual train wreck today.
ZeroHedge comments, “It will live in the annals of market infamy as the day the Fed rugpulled the market, when first a very dovish statement sparked a frenzied buying spree, only to be followed by a blistering, hawkish assault on the bulls during Powell’s press conference, leading to risk freefall, and the worst final 90 minutes of a Fed day in history, according to Bespoke.”
SPX futures tumbled beneath Intermediate-term support at 3734.72, leaving the next technical support at either round number support at 3700.00 or the Lip of the Cup with Handle formation at 3650.00. A potential Master Cycle high was made on Monday (day 249) at 3911.79. However, a very strong decline is in store that may more accurately position the Master Cycle.
Today’s op-ex shows Max Pain at 3785.00 with no clear long gamma reading nearby. Short gamma, on the other hand, begins at 3775.00. Shorts are not as populated as would be expected due to the squeeze which ended on Monday.
ZeroHedge reports, “… US index futures extended their plunge on Thursday, signaling more losses for equities ahead of another 75bps rate hike (give or take) by the Bank of England. As of 730 a.m. ET, contracts on the S&P 500 dropped 0.7%, while Nasdaq 100 futures were down 0.9%, extending earlier losses.
Both underlying equity indexes have fallen for three straight days, with the S&P 500 losing 2.5% on Wednesday. The dollar gained as investors looked toward US jobs data, which may help to determine the pace of upcoming rate hikes.”
VIX futures rose to 26.53 as I write, threatening a breakout above the mid-Cycle resistance at 26.67. VIX seems to be “stuck” in a lower range due to the fact that more than half of the puts and calls were for 1 day or less. VIX, on the other hand, measures the expected volatility over the next 30 days! Basically, hedge funds and speculators have used the VIX as a day trading platform with no real long-term expectations. The Cycles Model suggests that is about to change.
USD futures rose to 113.03 this morning, leaving it above Intermediate-term support at 111.78. The Cycles Model shows the USD getting a jolt of strength at the end of this week that may propel it to a new high. The new Master Cycle may continue the rally through mid-December.
TNX rose to a morning high at 42.23, breaking above Cycle Top resistance at 41.62. It may continue to rise until mid-November where the current MC terminates. The longer view is that TNX may remain in rally mode until early next year, when it achieves its target at 53.16.
ZeroHedge reports, “The Bank of England hiked rates by 75bps as expected (7 voted for 75bps, 1 voted for 50bps, and 1 voted for 25bps) after CPI soared to a 40-year high in September.
This is the biggest BoE rate-hike in three decades (eighth hike in a row and the biggest since 1992), but we note that the Monetary Policy Committee (MPC) pushed back aggressively against the hawkish market expectations ahead.
…the peak in rates will be “lower than priced into financial markets”