8:15 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 made a feeble attempt to retrace to the 50-day Moving Average at 19357.72. Instead, it rose to 19140.70 before resuming its decline. As mentioned yesterday, there simply are no buyers. In addition, short gamma, and 0-DTE investors dominate the daytime activity. Tis morning’s low was 18902.70 and the 100-day Moving Average at 18674.69 awaits testing. Pundits are meekly considering the possibility of a bear market, with more declines ahead. No one seems to have a particular target for the decline.
Today’s options chain shows short gamma beginning at 19100.00. Long gamma is practically nonexistent.
SPX futures declined to 4410.00, beneath the 50-day Moving Average in the overnight market. It is currently testing the 50-day Moving Average at 5427.13. Should it fail the test, the next level of support may be obtained at the 100-day Moving Average at 5285.04. A successful bounce above the 50-day may be met with resistance at Intermediate resistance at 5496.00.
Today’s options chain shows Max Pain at 5500.00. Long gamma may start above 5515.00 while short gamma rules beneath 5475.00. Short gamma is in plentiful supply down to 5350.00. Dealers may try a retracement to 5500.00.
ZeroHedge reports, “US equity futures are lower but well off their worst levels, after a rout in Japan sent the Nikkei tumbling, hammered gold and crypto as the yen carry trade unwound – if only until next week when the BOJ inevitably disappoints yet again. As of 7:50am, S&P futures were 0.1% lower, while Nasdaq futs dropped 0.2%, with tech giants are mixed pre-market trading: AAPL -43bp, NVDA -20bp, AMZN +23bp, GOOG/L +27bp. Wednesday’s session was a bloodbath: the index finally broke a 356 day streak without a down 2% (or greater) move – the longest streak since 2007, when it went 943 days without a down >2% move – as the S&P fell -2.3% (worst day since Dec ’22), NDX fell -3.7% (worst session since Oct ’22), Mag Seven -6% (worst session since Nov ’22), AI winners down -5% to -10%, and Index vol spike (VIX > 18 for first time since April). Bond yields are 5-8bp led by the front end. Commodities are weaker: WTI fell -1.8%; base metals are mostly lower. The USD is lower but also well off its worst levels. Today, the macro data focus will be 2Q data release: Consensus expects GDP to print 2.0% QoQ saar vs. 1.4% prior, driven by a rebound in personal consumption to 2.0% vs 1.5% in Q1.”
VIX futures rose to a new high at 19.04 this morning. Those hoping the VIX might settle back down, the Cycles Model suggests a possible redoubling of trending strength over the weekend. Pundits claim that the rally in VIX may be overdone. Chasing VIX “appears” to be a late short-term trade. On the contrary, with several weeks to go, the current target may be the March 2020 high.
The July 31 options chain shows Max Pain at 16 with a large population of shorts between 1`3.50 and 15.00. Long gamma may begin at 20.00 and long sentiment is growing.
TNX futures may have tested the rising trendline at 41.90 this morning before resuming its ascent. Thus far, it has been repelled by Intermediate resistance at 42.94. Should it rise above that level, TNX may be on a buy signal (UST sell). The Cycles Model suggest a rally may ensue to the week of August 19. Today’s Treasury Auction schedule show $44 billion 7-year notes on the block. Buyers, anyone?
ZeroHedge comments, “One day after a stellar, record-breaking 2Y auction, moments ago the Treasury dumped a clunker in the form of $70 billion in 5Y bonds which tailed badly and which saw a drop in foreign demand. Here are the details.
The high yield of 4.121% was below last month’s 4.335% but tailed the 4.110% When Issued by 1.1bps. In fact, it was the 4th consecutive tailing 5Y auction and 6 of the past 7.
The Bid to Cover was 2.40, up from 2.35 and above the six-auction average of 2.36.”
BKX failed to correct above the Cycle Top at 114.73 and closed at the upper trendline. An aggressive sell signal may be had beneath that trendline at 112.85. The Cycles Model suggests a potential decline through the month of August lies ahead.