7:50 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!
NDX futures consolidated beneath their new all-time high at 20672.10 made on Thursday, the 258th day of the Master Cycle. It was announced by a Key Reversal on that day, which hasn’t been surpassed. The Cycle Top support lies at 20431.00 and has been broken through, creating an aggressive Cyclical sell signal. Institutional fund managers remain net long while hedge funds and individual investors are becoming increasingly short.
Today’s options chain shows Maximum Investor Pain at 20430.00. Long gamma may arise at 20450.00 while short gamma may begin at 20420.00.
SPX futures are consolidating beneath yesterday’s all-time high at 5666.94, on day 262 of the Master Cycle. The INDU also made it’s all-time high yesterday at 40351.10. Both indices are in the reversal zone. The Cycles Model calls for a decline into mid-August that may take many by surprise. The probable target for the ensuing decline maybe near 5100.00. The Dow may be due for another all-time high in September while the SPX and NDX may not go higher. You may recall that the previous all-time high was made on November 22, 2021 in the NDX while the Dow and SPX made their previous highs on January 3, 2022. A similar situation may develop here, as well. The upper trendline of the Ending Diagonal (red) may be found near 5600.00 while the lower trendline of the Ending Diagonal may be found near 5550.00 for a possible sell signal.
Today’s options chain shows Max Pain at 5630.00. Long gamma may exist above 5650.00 while short gamma may begin at 5600.00.
ZeroHedge reports, “US equity futures are modestly higher, rebounding from session lows, and led by Russell futures as the rotation looks poised to continue as bond yields are lower with the curve bull flattening. As of 7:45am, S&P futures are 0.1% higher with Nasdaq futures rising 0.2%. Premarket, Mag7 is mixed with TSLA +1.7% the standout with Semis flattish. European stocks were red across the board, as China also traded lower after Trump’s selection of JD Vance – who said China represents the biggest threat to the US – as his VP, triggered further trade and geopolitical concerns in the region. FTSE -20bp/DAX -35bps/CAC -70bps/Shanghai +8bps/Hang Seng -1.6%/Nikkei +20bps/Kospi +18bps. Treasuries rose, pushing yields to their lowest since March, as expectations for a September rate cut rose: 10-year rates fell to as low as 4.17% while 2Y yields was at 4.41%. At the same time, the US Dollar is seeing some support, but the story is the BOJ and potential JPY intervention, though JPY is weaker. Commodities are weaker across all 3 complex with precious metals, natgas, and softs providing some support. Today’s macro data focus is on Retail Sales where the headline number likely is negative based upon lower gasoline prices but the Control Group is likely higher as the consumer spent on everything else.”
VIX futures rose to 13.47 this morning and remains in positive territory. Institutions remain net short the VIX, limiting its potential to rally. The Cycles Model suggests the VIX ay rise through mid-August and possibly to the end of ?August. VIX shorts currently remain the most overbought/oversold asset, next to AI. There is a potential for a violent turn higher that may leave the shorts scrambling to cover.
TNX futures made a new low, while the cash market did not. Since the charts are using the cash market, Thursday’s low remains the Cycle low. A buy signal may be obtained above the mid-Cycle resistance at 43.24. The Cycles Model suggests that yields may rally into the third week of August.
ZeroHedge remarks, “If you don’t think the Fed has become an abject handmaid of the Wall Street gamblers, take a gander at the chart below. Owing to the slight down-tick in this week’s monthly CPI report, the outcry for rate cuts is reaching a deafening roar down in the trading pits.”
ZeroHedge further remarks, “After Powell, fully expectedly, refused to drop any hints today at the timing of The Fed’s next action, he did mention that the last three inflation reading had “added to confidence.”
Speculation on the when not the if is building.
“The FOMC has an undeniable (if never acknowledged) incentive to avoid initiating cuts in the last two months of a presidential election campaign. This doesn’t mean the committee couldn’t cut in September, but it does mean that July would be preferable,” concludes Goldman Sachs chief economist Jan Hatzius in a brief note this morning.”