3:55 pm
SPX has broken out of the gap, creating an aggressive sell signal. Once beneath the 50-day Moving Average at 4346.50, the sell signal is confirmed.
ZeroHedge reports, “Complete disaster.
That’s the only way one can describe today’s 30Y auction, which many expected could be challenging after a mediocre 3Y and a subpar 10Y auction earlier this year, but nobody expected… this.
The bond priced at a high yield of 4.769%, which was below last month’s 4.837%, and just shy of the April 2010 high. But more importantly, it tailed the When Issued by a whopping 5.3bps, which was… well… terrible, because as shown in the chart below, this was the biggest tail on record (going back to 2016).”
8:15 am
Good Morn
ing!
NDX futures are consolidating just beneath yesterday’s new high at 15343.18. The new high (above the October 12 high) alters the structure of the Cycles. Today is day 251 of the existing NDX Master Cycle. Should the MC high be finalized in the next few days, the new Master Cycle may go immediately into decline lasting to mid-January. Unfortunately, many investors are influenced by the breakout and being cheered on by dealers who need to sell their book.
Today’s options expiration shows Maximum Investor Pain at 15310.00. Long gamma starts at 15320.00, but does not have a follow-through. Short gamma begins at 15310.00 with moderate follow through.
ZeroHedge remarks, “GS repeats: There is no need for a recession
“Despite the good news on growth and inflation in 2023, concerns about a recession among forecasters haven’t declined much. Even in the US, which has outperformed so clearly on growth in the past year, the chart shows that the median forecaster still estimates a probability of around 50% that a recession will start in the next 12 months.This is down only modestly from the 65% probability seen in late 2022 and far above our own probability of 15% (which in turn is down from 35% in late 2022).”
Source: Goldman
2024 will be an “everything up” market
Goldman’s 2024 cross-asset return forecasts. The bull is back.
SPX futures climbed to 4394.10, making a new high and altering the Cycle structure. The correct structure is called an expanded flat, inferring a lower corrective low, but the final (Wave C) high being in proximity to the Wave A high. The SPX has rallied sufficiently to be complete, once it registers the new high in the cash (daytime) market. It may not close the gap at 4401.38-4402.20. It is also in the reversal window for a Master Cycle. I expect both the NDX and SPX to make their reversal simultaneously.
Today’s op-ex shows high market tension and possible Max Pain at 4370.00-4380.00. Long gamma starts at 4400.00. Short gamma begins at 4370.00.
ZeroHedge reports, “S&P 500 futures edged higher on Thursday after notching an eight-day streak of gains, and setting up the benchmark index for its longest winning streak since 2004, as investors monitored bond yields, corporate earnings and the price of oil. Treasuries fell and the dollar rose ahead of more speeches by central bank officials including more remarks by Fed chair Powell. After a listless overnight session, as of 7:45am S&P futures were up 0.1% and Nasdaq was down by a similar amount. Elsewhere, Europe’s Stoxx 600 index rose 0.6%, Asian stocks closed green, oil hovered near a three-month low after plunging almost 7% over the previous two sessions, yields on 10-year Treasuries held below 4.5%, the dollar gained and bitcoin was set to rise above $37,000, an 18 month high.”
VIX futures have made a new low at 14.13 in an expanded correction. The new Master Cycle is about to begin. It may last in an historic new high by mid-January. Nuff said.
Next Wednesday’s op-ex shows Max Pain at 19.00. Short gamma extends from 13.00 to 17.00. Long gamma begins at 20.00 and may extend to 70.00.
TNX futures made a low of 44.1while the cash market bottomed at 45.26. The trading channel trendline appears to be holding TNX, which is deeply oversold. It may linger near the lows until next week, when trending strength roars back. The current Master Cycle may resume the uptrend through the end of November.
ZeroHedge observes, “The impressive rally in stocks and bonds over the last week or two is likely to take a breather, with both assets now overbought in the short term.
Bonds have been deeply oversold since last year, but the latest rally to ~4.5% in the 10-year has taken Treasuries to only one standard deviation below their long-term mean growth level (back towards the range they normally inhabited before the extremes of the pandemic).”
Crude oil futures consolidated above yesterday’s low, but appear poised to make new lows as trending strength may stage a comeback this weekend. The Cycles Model suggests up to two more weeks of decline, where the Head & Shoulders target may be met.
ZeroHedge poses the question,”Surprising many, the price for crude oil has collapsed in the last few days, with Brent back below $80 and WTI well below pre-Israel-attack lows back at near 4-month-lows…
The question for many is – why, or why now?”