7:45 am 2 Chronicles 7:14
“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”
Good Morning!
The Industrials made a new all-time high on Friday, modifying the Cycles landscape to allow a new all-time high in September. The Cycles Model suggests a steep decline into mid-August. The intended target may be as low as the mid-Cycle support at 34731.25. Should the INDU stay above that support, a new all-time high may be made in September, approaching 45000.00.
Master Cycles may end either at a low or a high. The ensuing Master Cycle may then take the opposite track. In this case Friday’s Master Cycle high allows the August Master Cycle to end at a low. You may recall that I have called the Friday Master Cycle an inversion, since it has created a triple top in the INDU. While it is now due for a correction, this may not be an outright crash. While the weekend futures rose to 40278.00, the INDU is now pulling back from that high. Friday was day 259 in the Master Cycle.
ZeroHedge remarks, “Breadth and liquidity go hand in hand. In this report, we revisit Thursday, what led up to it, and what it might mean going forward. However, first we are compelled to share this really interesting fact about Thursday. According to @bespokeinvest, there was only one other day since 1979 where the Russell 2000 rose 3%+ while the S&P 500 was down, and that was in October 2008.”
SPX futures remained beneath Friday’s all-time high, reaching 5642.90 while Friday’s high was 5655.56. While the Wave structure appears complete, the key may be the 1987 trendline, just above 5050.00. Should SPX remain above that level in the ensuing decline, the probability of a higher high in September remains. Otherwise, declining liquidity may be only strong enough to propel the Industrials higher at the expense of the other indices. Prepare for a correction starting this week.
ZeroHedge reports, “US equity futures are stronger with the Russell/small caps again outperforming as the market rotation was supercharged over the weekend after Trump’s assassination attempt, sending both yields and the dollar higher, and is pushing a broadening that is extending July’s gains. Futures on the S&P 500 rose 0.4% at 6:35ET am in New York, while Nasdaq 100 contracts traded 0.5% higher. Pre-mkt, Mag7 and Semis are stronger with TSLA +4.9%, AAPL +2.1% standing out. Bank earnings continue this morning. The yield curve is twisting steeper and the USD rises, as soaring odds of Trump winning the US election spurred a climb in Treasury yields, led by the long end, and revived risk appetite as US equity futures climbed, outperforming European peers. In commodities there is general weakness but some strength in base with crude leading the Energy complex. As the market shifts its focus toward earnings to search for fundamental support for the nascent broadening, the macro keys this week are Retail Sales, Housing Starts, and at least ten Fed speakers including Jerome Powell today.”
VIX futures rose to 14.05 over the weekend and remain elevated this morning. While VIX closed beneath the 50-day Moving Average at 12.82 on Friday, it is now elevated to a buy signal this morning. A rise above the mid-Cycle resistance at 14.06 may suggest a definite change of trend.
TNX futures rose to 42.57 over the weekend, suggesting the Master Cycle low on Thursday is confirmed and the cash market may go higher. The Cycles Model infers rising rates into mid-August. Thursday was day 261 in the Master Cycle, an appropriate date for a turn.
ZeroHedge observes, “June’s year-over-year Consumer Price Index is still running 3 percent, which is now considered more-or-less on target. Five years ago, that would have been seen as intolerably high. The month-over-month decline of 0.1 percent, the best in a year, was driven by gas and used cars, which are reported as down 10 percent year over year (but still up 30 percent over four years).”
BKX may have made its high on Thursday, July 11, which was day 260 of the Master Cycle. The new Master cycle may extend to late August with the target being the neckline of a massive Head & Shoulders formation at 72.50. This does not bode well for small cap and AI stocks, which are interest sensitive. The reversal may be confirmed with a decline beneath the 50-day Moving Average at 103.63.