8:00 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 bounced to 19721.80 this morning, just above Intermediate resistance at 19700.00 but under the trendline near 19750.00. Should it go higher, short-term resistance is at 20000.00. The 50% retracement level is near 20075.00. The bounce may last a day or so, correcting last week’s drubbing.
Today’s options chain shows Maximum Investor Pain at 19725.00. Long gamma may begin at 19750.00 while short gamma may start at at 19710.00. Sentiment in the options chain appears to be more bullish than bearish.
ZeroHedge remarks, “Most common plain bull market
S&P500 and “developed markets equities” at pole positions in terms of Sharpe YTD. The non-exotic risk-adjusted bull….”
SPX futures rose to a morning high at 5542.80. Overhead resistance lies at5565.44, then 5600.00, the 61.8% Fibonacci retracement level. The Cycles Model suggests the correction may last a little more than a day.
Today’s options chain shows Max Pain near 5520.00. Long gamma may begin near 5540.00 while short gamma strengthens ar 5500.00.
ZeroHedge reports, “Global markets are relatively muted after a second consecutive historic weekend for US politics, one where Joe Biden ended his reelection campaign and (reluctantly) endorsed Vice President Kamala Harris. As of 7:45am, S&P futures are up 0.5%, led by tech with small caps also positive but lagging as the rotation takes a break; Nasdaq 100 futures gained 0.9%, reversing some of last week’s painful 4% slump. European stocks rose more than 1%, snapping a five-day losing streak and their worst week this year as the Trump Trade looks a bit shaky this morning (his odds on Predictit are down from 70% to 60% in the past week): the dollar is sliding slightly, havens like the Swiss franc and Treasuries edge higher as the yield curve twists flatter. Commodities are mixed with Ags higher and Energy/Metals lower. The biggest news this weekend is Biden dropping out of the Presidential race and VP Harris is now the presumptive nominee, though others may enter the race. As JPM’s Market Intel desk writes this morning, we have seen “some unwinds of the Trump Trade, it is possible that unwinds further as the market looks to Trump with a split Congress.” Elsewhere, it is a light macro day as we enter the second busiest week of earnings season with ~20% of the SPX reporting.”
VIX futures are down to a morning low at 16.14. The correction may be steep, down to the 50-day Moving Average at 12.87, offering a buying opportunity for investors looking for cheap hedges. Friday’s momentary decline to 10.52 was an anomaly. Recall tha I mentioned last week that institutions were overwhelmingly short the VIX. The anomaly may be explained by either a fat finger or a favor may have been called to reverse a bad trade.
Wednesday’s options chain shows Max pain at 16.00 Short gamma lies beneath 15.00 while long gamma may begin at 18.00. Sentiment in the VIX is still overwhelmingly bearish.
TNX may be consolidating near its Friday high. The Master Cycle low was made on Wednesday. However, overhead resistance lies at 42.82, above which a clear buy signal may be had. There is little reaction to Biden stepping out of the race.
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