SPX futures are consolidating beneath Wednesday’s high on day 247. Today is day 252, leaving this week as a possible turn window, if not already. Seasonality may keep SPX elevated this week. However, the index is vulnerable to an abrupt change, as the rally has run out of shorts to take behind the wood shed. Stay alert, as a probe higher may result in a key reversal. Overhead resistance may lie at the August high at 4541.25.
Today’s options chain shows 4510.00 to offer Maximum investor Pain. Long gamma starts at 4530.00, while short gamma begins at 4500.00.
ZeroHedge reports, “US stock futures erased earlier losses to trade flat as Microsoft gained 2% in premarket trading, sending it to a new all time high, after it said Sam Altman will lead the software developer’s new in-house artificial intelligence team. The OpenAI co-founder was ousted from his startup last week.”
VIX futures broke above Friday’s trading range, hitting 14.31 this morning. Friday’s low occurred on day 249. An early Master Cycle low is anticipated, but the evidence is not yet clear. A breakout at 15.57 may offer an aggressive buy signal.
Wednesday’s options chain shows no short gamma, while long gamma may begin at 14.00, which may give reassurance to early aggressive longs.
ZeroHedge observes, “.Natural floor
Volatility is a mean reverting asset. The most recent spike is gone and we are approaching some sort of “natural floor”. We are not saying volatilities must spike from here, but we are approaching levels of volatilities where there is little further downside. Using relatively cheap optionality here is attractive. Replace longs with cheap upside calls or call spreads. Hedge the long book with downside hedges etc.”
TNX has moved higher this morning, putting the markets on edge. Friday’s potential Master Cycle low occurred on day 249. Today is day 252. The first breakout level and short-term resistance occurs at 45.59. The 50-day Moving Average is at 46.17, where a confirmed buy signal may be made.
ZeroHedge notes, “The 10 year
The US 10 year broke below the bigger trend line a few sessions ago. Note we almost touched the 100 day (4.33%) today. The HS flagged recently is big, but things seldomly move in a straight line. We need to see much more “frustration” if this is a top. The 200 day is down around the 4% area…”
USD futures challenged the 200-day Moving Average at 103.42 this morning and has risen above it. Today is day 257 of the current Master Cycle. It is due for an imminent reversal. A reversal may show money flows coming out of bonds and equities into cash as a safe haven.