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.”
NDX futures bounced modestly (beneath 1919973.00) after approaching its Ending Diagonal trendline and Intermediate support at 19643.62. A further decline beneath that level confirms the sell signal. The mantra may change from “buy the dip” to “sell the bounce.” Last Thursday’s all-time high remains the top of the Spring rally. Now we have the hot days of Summer ahead of us. Available cash is near an all-time low in mutual funds, indicating buyers are out of ammo.
Today’s options chain shows NDX firmly in short gamma beneath 19850.00. This is a dangerous place to be, as it could snowball into an avalanche of selling.
ZeroHedge remarks, “What is happening…?
Here are a couple of short/medium term catalysts to explain the weakness (outside the most important one – the MoMo carnage – dealt with in previous email).
1. Rotation rampage……Several days of Big Tech underperformance, as investors expanded their exposures, adding more pro-cyclical exposure and lean into small-cap stocks, instead of concentrating positions in growth and momentum names
2. One weak earnings datapoint …..ASML’s weaker than expected 3Q results
3. Show me the AI money…..Increasing focus on AI, tech earnings, and whether there is too much optimism already priced into the stocks
4. Trading a lowered bar ahead of next week……Consensus expects all five of the mega-cap AI-related tech stocks will report a slowdown in sales growth and four will also have a contraction in net margins”
SPX futures have bounced to challenge the upper Ending Diagonal trendline near 5600.00. It may be o a Cyclical aggressive sell signal. The Sell signal may be confirmed beneath the lower (red) trendline and Intermediate support at 6459.59.
Today’s options chain shows Max Pain at 5600.00. Long gamma may begin at 5620.00 while short gamma prevails beneath 5560.00.
ZeroHdge reports, “Futures are higher, rebounding from Wednesday’s tech-fueled rout. At 7:40am, S&P futures are up 0.1% and off session highs, while Nasdaq futures rise 0.4% after concerns over tight US restrictions on chip sales to China drove its worst day since 2022; Semi stocks see some relief after Taiwan chip giant TSMC’s earnings beat expectations: NVDA +2.7%, AMD +2.1%, AVGO +1.3%. Mag7 names are higher, too, with VRT +1.7% pointing to potential gains in second derivative AI plays. Major The Stoxx 600 index added 0.3% as most European markets trade higher ahead of the ECB at 8.15am ET, where the expectation is for rates to be held steady ahead of a potential Sept cut. China-exposed stocks are leading alongside macro recovery while AI/Semis remain under pressure despite positive TSMC earnings. Bond yields are higher 2-3bps with the belly underperforming; European bond yields are higher as many curves bear flatten. After tumbling to a 2-month low thanks to a surge in the yen driven by a reversal in the carry trade, the dollar was slightly higher as President Joe Biden faced intensified calls to bow out of the 2024 race. Commodity weakness continues with pockets of strength in precious metals and natgas (WTI is flat). Today’s macro data is focused on jobless claims and 3x Fed speakers.”
VIX futures are consolidating beneath yesterday’s high and above mid-Cycle support at 13.97. It is now in the upper half of its 8.6-month trading range. The Cycles Model suggests the VIX may continue to rally through late August. It affords a cheap hedge against a calamity i the market.
The July 24 options chain shows calls outnumbering puts at all levels above 13.00. However, there does not seem to be much conviction in the options market.
USD futures may have reversed near the halfway point of its Trading Cycle, indicating a potential rally may ensue through mid-August. Cash may be king for th enext month as both stocks and bonds go into a tailspin.
TNX rose from yesterday’s Master Cycle low at 41.44 to begin a new trek higher. Serious overhead resistance lies at 53.16. Should that be broken, the next resistance is at 68.23. This is a very serious juncture in the Cycles.
Gold futures consolidated beneath yesterday’s potential Master Cycle high at 2488.40 on day 264 of the aging Cycle. The triple top shows how liquidity has been waning since April.
ZeroHedge observes, “At the beginning of the year, I not only laid out 24 stocks that I would be watching for the year based on what I thought the macro environment would do, but I also detailed gold and miners as what I would buy if I had to narrow things down to one trade only.”