October 31, 2023

8:00 am

Good Morning!

NDX futures have risen to an overnight high of 14368.00.  Overhead resistance may lie at the 38.2% Fibonacci level at 14542.40 or possibly higher, at 14643.70, where an unfilled gap may stop the retracement.  The NDX Hi-Lo Index closed yesterday at -396.00, indicating that nearly all of the strength of the rally lies in the mega-caps.  Showing a smaller loss at month-end is critical.  Afterwards, anything goes.

Today’s options expiration shows Maximum Investor Pain at 14500.00 and the most contested space for both puts and calls.  There is virtually no long gamma above 14500.00, while short gamma is held at 50-point intervals down to 14100.00.

ZeroHedge notes, “A deteriorating outlook for corporate earnings offers little support for the S&P 500 reeling from its worst October since 2018.

While data from Bloomberg Intelligence show US firms are on pace to report a surprise increase in third-quarter earnings, forecasts for future quarters have been marked down as companies warned of tepid demand and an uncertain macroeconomic outlook. Deutsche Bank Group AG said analysts’ estimates for the fourth quarter have been cut by a “more than typical” 1.9% since the start of the reporting season.”


SPX futures made an overnight high at 4180.10, only ticks higher than yesterday’s intra-day high at 4177.47.  The uptick is weakening, suggesting a possible pullback to 4120.00-4130.00 before another attempt at a higher retracement.  A lower retracement target is possible.  The 38.2% retracement lies at 4215.00.

Today’s op-ex shows Max Pain at 4205.00.  Long gamma starts at 4220.00, while short gamma begins at 4200.00.  Dealers must close today’s market at or above 4200.00 to achieve minimum payout.

ZeroHedge reports, “Futures were higher and European bourses were solidly in the green on the last day of the month, extending yesterday’s blistering rally which sent the S&P 1.2% higher and which took place after most of the mutual-fund year-end tax loss selling had exhausted itself during last week’s rout. As of 7:45am, S&P futures were higher by 0.2%, Nasdaq 100 futs gained 0.1%, while Europe’s Estoxx 50 outperforms, higher by around 1% on the day with materials sector outperforming. Treasury yields are lower after the US Treasury reduced its estimate for federal borrowing for the current quarter, citing stronger-than-expected revenue; the dollar was weaker against most major currencies, except the yen. Oil prices are edging higher after dropping in the prior session. Israel stepped up ground operations in Gaza and struck more targets in Lebanon and Syria overnight.”



VIX futures declined to a morning low at 19.20.  Support appears at the trendline at 18.80.

Today’s op-ex shows Max Pain at 20.00.  Short gamma starts at 19.00, but is hemmed in there.  Long gamma begins at 21.00 and extends to 45.00.


TNX may have bounced from the Cycle Top at 48.13 as it completes a minor Trading Cycle.  If so, the rally may resume quickly.  The Cycles Model suggests another month of rising rates.

ZeroHedge comments, “One quarter ago, when reporting on the Treasury’s latest marketable debt issuance forecast, we pointed out something striking which sparked a historic selloff in Treasuries over the next 90 days: the US Debt Tsunami had Begun as the “US Was Set To Sell $1 Trillion In Debt in Q2, 2nd Highest In History, As Budget Deficit Explodes, while the forecast debt sale for Q3 was also an eye-watering $852 billion. The numbers were big enough that even the bond market – which had long since habituated to seeing huge debt issuance forecasts every quarter without batting an eyelid – cracked.

Since then it’s went from bad to worse when as we first noted, the US quickly added some $600 billion in total debt in just one month after breaching the key $33 trillion level.”


USD futures are rising toward the Cycle Top at 106.77.  It may still be in a period of trending strength, which may be enhanced by the FOMC meeting.




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