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!
NDX futures have hit a new low at 20062.60 this morning. It has declined through Cycle Top support at 20462.56 and is approaching a two-month trendline at 20000.00. A Cyclical sell signal is in place and may be confirmed beneath the trendline. Why the sudden change in trend? The song of the soft landing has put investors asleep. They have been suddenly awakened by rhe reality of earnings.
The options chain shows NDX deep into short gamma which intensifies beneath 20150.00.
RealInvestmentAdvice remarks, “On December 5, 1996, Chairman of the Fed Alan Greenspan offered that stock prices may be too high, thus risking a correction that could result in an economic fallout. He wondered out loud if the market had reached a state of “irrational exuberance.”
Over the past few months, we have seen the same term, irrational exuberance, used to describe the current state of the stock market. To gain perspective on the future, let’s compare the market environment that prompted Greenspan’s comments to today. ”
SPX futures have declined to 5605.20 thus far, possibly bouncing at round number support at 5600.00. However, Intermediate and trendline support lies at 5461.25. A sell signal may be confirmed beneath that level. Today is day 264 in the aging Master Cycle.
Today’s options chain shows short gamma starting beneath 5640.00. Long gamma starts at 5650.00. The battle between the longs and shorts is on.
ZeroHedge reports, “US equity futures slide with tech dragging down S&P and Nasdaq futures as both Semis and Mag7 are being sold pre-mkt with ASML -6% on a Bloomberg report the Biden administration is considering using the most severe restrictions available on companies like Tokyo Electron and European chip giant ASML (which tumbled to the lowest since early June), if companies continue to give China access to advanced semiconductor technology. As of 7:45am ET, S&P futures are down 1% and Nasdaq 100 futs tumble 1.4% with tech giants such as AAPL, NVDA, TSLA, AMD, MU, AVGO, MSFT, AMAT all down 1.4% – 4%. Meanwhile, the great rotation continues for another day with Russell futs positive. The yield curve is twisting flatter as 10-year Treasury yields rose while the dollar weakened and the yen jumps, sending the USDJPY lower as much as 200 pips to just above 156. Commodities are lower with Energy/Metals in the red though Ags are strong and WTI is flat. Today’s macro data focus is on Housing data, Industrial Production, and the Fed’s Beige Book. There are two Fed speakers and the 20Y bond auction which JPM rates strategist believe will require a concession.”
VIX futures rose to a morning high at 14.07 and remain elevated. This is a buy signal confirmation, as the VIX isalready above the 50-day Moving Average. The mid-Cycle resistance which is being challenged this morning, elevates the VIX into positive ground. Look for further confirmation above the May 30 high at 14.88. The Cycles Model calls for a rising VIX through mid-August.
USD futures declined to 103.36 this morning, surpassing the June low at 103.48. It appears that the Cycles Model may allow the USD to decline to its rising trendline and Cycle Bottom at 101.67 bu mid-August. A weakening USD may be an indication of a serious liquidity problem. In addition, the Japanese Yen has been rising since its reversal from its July 3 low. The Euro put in its low on June 26. Foreign investors ma be repatriating their investments.
TNX may have made its Master Cycle low yesterday. on day 266 of the aging Master Cycle. It also touched its rising trendline, suggesting a further rally to new highs. Rising yields may have a direct effect on the outcome of the election. Rate cuts are still a commonplace discussion, but the Cycles Model infers just the opposite.
ZeroHedge remarks, “Housing Start s and Building Permits rose more than expected in June (+3.0% MoM and +3.4% MoM respectively) and May’s disappointments were revised modestly higher too (-4.6% MoM and -2.8% MoM respectively)…”
The modest rebound in permits – forward-looking – appears to have been triggered by a renaissance in Fed rate-cut hopes…”
BKX may have finally made its Master Cycle high by testing its Cycle Top resistance at 114.46 on Day 265. There is a slight possibility of an even higher high today, but keep in mind that the Cycle is aging. It has thrown over its trading channel near 112.50. A decline beneath that trendline may produce an aggressive sell signal. Other critical support lies at 104.10. As in other indices, the larger institutions have added some exuberance to this index.
ZeroHedge observes, “Trump Trump Trump
“Trump trades” have of course been the key focus in the market over the recent past. Most of it on bonds & the dollar. Here are three “other” Trump-trade observations.
1 – M&A bankers love Trump
Expectations for a more business-friendly regulatory regime are the boon private markets have been waiting for. As a proxy for future M&A activity, shares of investment banks Evercore (+7.7%) and Lazard (+9.3%) have soared WTD.”
