12:33 pm
NDX has run out of buyers. It has virtually ignored the 50-day Moving Average at 19358.99 and is headed for the 2-hour Cycle Bottom at 18957.43, where it may bounce. Absent a bounce there, it may seek the 100-day Moving Average at 18675.97. What was support is now resistance, so future bounces may test the 50-day, but seldom exceed it during the decline. The saying goes, “The market takes the escalator up, but the elevator down.”
11:01 am
SPX gapped down beneath the trendline at 5540.00 and Intermediate support at 5501.75. The likely target may be the 50-day Moving Average at 5423.57. The trouble is, short gamma runs to 5350.00, if not lower. CTAs are turning bearish today. That’s not a good sign.
7:30 am 2 Chronicles 7:14
“If my people, which are called by my name, shall humble themselves, and pray, and seek 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 declined to a low of 19515.70 thus far this morning after failing to rise above the Ending Diagonal trendline at 19900.00 and closing beneath Intermediate support at 19772.50. It made a 35% retracement. It may threaten the 50-day Moving Average at 19339.50 later today. There are two possible outcomes. The first is a decline through the 50-day which prolongs the decline and may result in a panic. The second is a bounce at the 50-day which may provide some temporary relief from the decline. The Cycles Model indicates a continued decline until mid-August. The ride may not be fun for the unprepared.
Today’s options chain shows Maximum Investor Pain at 19830.00. Long gamma starts at 19900.00. Short gamma may begin at 19820.00, suggesting a gamma-induced decline may be forthcoming.
ZeroHedge observes, “Alphabet reported better than expected top- and bottom-lines for the second quarter after the bell tonight.
- Revenue $84.74 billion, estimate $84.37 billion
- Revenue ex-TAC $71.36 billion, estimate $70.7 billion
- EPS $1.89, estimate $1.84″
SPX futures declined to 5508.90 thus far this morning, just above the Ending Diagonal trendline and Intermediate support at 5492.14. It accomplished a 50% retracement. While the NDX bounce was weak, the SPX bounce may have been appropriate. SPX is close to critical support and may decline beneath it later today. Should that be the case, the next support may be the 50-day, then the 100-day Moving Averages. The Cycles Model does not show trending strength until early August, but the SPX may grind steadily downward until then.
Today’s options chain shows Max Pain at 5565.00. Long gamma may begin at 5585.00 while short gamma lies beneath 5530.00. Should SPX remain beneath that level, there remains a heightened risk of a gamma-induced decline.
ZeroHedge reports, “Stock futures and global markets slumped, with tech dragging the indices lower, after disappointing results from Tesla and Alphabet were followed by lackluster reports from LVMH and Deutsche Bank in Europe. The first Mag7 earnings results were – as we warned in “Now Comes The Hard Part: AI Stocks Face Brutal Q2 Earnings Day Of Reckoning” – a flashing red warning with TSLA tumbling 7%, GOOG down -3%, and the rest of the Mag7 all lower. The yield curve is steepening with 2Y seeing follow-thru buying following yesterday’s strong auction. USD is stronger and commodities are weaker excluding energy. Today’s macro data focus is on Flash PMIs, New Home Sales/mortgage applications, and Inventories. ”
VIX futures climbed to 15.63 this morning after testing the mid-Cycle support at 13.66 yesterday. VIX is due for a surge in trending strength over the weekend, but in the meantime, may grind higher as it explores its new trend.
Today’s op-ex shows Max Pain at 16.00. Short gamma is well-populated beneath 15.00 while there is a dearth of long gamma. Looking into the August expirations, there is little enthusiasm for hedging, other than day traders, which may be the mistake of the year.
USD futures are consolidating above mid-Cycle support at 104.03 this morning. The Cycles Model calls for a higher USD until mid-August.
TNX continues to consolidate beneath important resistance at 42.82. The Cycles Model suggest a breakout by early next week.
BKX rose to test its Cycle Top in a retracement. A decline beneath the trendline at 112.85 may induce a strong decline. We may need patience, since bad news may not become public until after Friday’s close.
ZeroHedge comments, “The economy is slowing and that will hit the zoomers first and the hardest, especially renters…
Shaky Ground
The idea for this post comes from the Wall Street Journal article American Borrowers Are on Shakier Ground.
Years of higher inflation and interest rates have left consumers mired in debt, even as overall economy hums.
I dispute the Journal’s statement the “overall economy hums”.
If the economy was humming we would not see charts like I am about to present.”