October 3, 2023

12:46 pm

SPX is probing new lows, but is approaching a key support.  The 200-day Moving Average is at 4202.00 (corrected).  This may set up a 2-week bounce that may revisit the neckline at 4335.00.  This is not the end of the decline, but SPX is getting oversold.  Stay alert.


7:45 am

Good Morning!

NDX futures have been consolidating near the top of yesterday’s trading range overnight, but are coming down this morning.  Overhead resistance lies at the 100+day Moving Average at 14909.00.  A decline beneath 14700.00 breaks the consolidation, while a decline beneath 14400 activates the Head & Shoulders formation.  NDX remains on a sell signal beneath the 50-day Moving Average at 15179.29.

Today’s op-ex shows Maximum investor Pain at 14830.00.  Long gamma comes on strong at 14840.00, while short gamma persists beneath 14825.00.

ZeroHedge remarks, “Kolanovic; There are enough similarities to 2008 to warrant caution

“Our cautious outlook will likely remain in place as long as interest rates remain deeply restrictive, valuations expensive, and the overhang of geopolitical risks persists. Since the start of the year, the headwinds for markets are stronger and tailwinds weaker, in our view. Lags in the impact of high rates are longer this time, but we believe most of the negative effects are still to come. Delinquencies in consumer loans and corporate bankruptcies are starting to move higher, and this trend is likely to continue absent a cut in rates. The oil price surge is adding a drag to growth. While we are not saying that the situation now is the same as in 2007-2008, there are enough similarities to warrant caution” (Kolanovic)”


SPX futures first tested yesterday’s high by rising to 4299.50, then sold off to the low with a decline to 4264.00 thus far.  The consolidation ends beneath 4260.00 and the sell signal is strengthened beneath the mid-Cycle support at 4229.45.  Most traders believe that the market will bounce from here, but new lows may stifle the thought.

Today’s op-ex shows Max Pain at 4285.00.  Long gamma starts at 4300.00 while short gamma kicks in at 4275.00.

ZeroHedge reports, “In a deja vu repeat of Monday’s open, and really a carbon copy of most mornings in the past month, what was a modest attempt to push futures higher has crashed and burned with US equity futures sliding to session lows as yields resumed their surge once again, the 10Y rising up to a new 16 year high of 4.74%, with 30Ys also rising to the highest since 2007, hitting 4.856%.

As a result what was a modest 0.3% gain in spoos turned into a 0.4% loss as S&P futures dropped to session lows of 4,307 as of 7:35am with Nasdaq futures dragged 0.5% lower. The Bloomberg Dollar Spot Index followed yields tick for tick and rose to an 10-month high, pressuring most Group-of-10 currencies. The selloff rippled across equity and commodity markets, with Europe’s Stoxx 600 sliding to a six-month low as WTI traded near $89 a barrel and gold and Bitcoin fell.”


VIX futures rose to to 18.56 this morning, with a promise of higher vales to come.  Once above the trendline at 18.50 the VIX has the capability of meeting and exceeding the March high at 30.81.  VIX is on a confirmed buy signal.

Tomorrow’s op-ex shows VIX solidly in long gamma above 17.00 and stretching to 40.00.


TNX futures rose to a morning high ov 47.57 as yields relentlessly move higher.  The Head & Shoulders target is clearly in view while three months ago it was considered an impossibility by many.  Even more amazing is that it may reach its target by month end.

ZeroHedge points out, “One of the largest 3-month steepenings

One of the largest 3-month steepenings of the US 2s10s curve.

Source: Goldman

More bear steepening ahead

Kolanovic says that bear steepening might not be behind us given:

1. bond funds appear to be overweight USTs

2. the banking system continues to shed duration

3. the JGB sell-off may have encouraged relative value flows away from other core government bond markets to JGBs

4. global non-bank investors remain modestly OW bonds



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