7:45 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 rose to 19073.10 this morning in a corrective bounce. The most likely scenario today may be an attempt to retest the 50-day Moving Average at 19371.51. However, there is considerable resistance at 19227.20, yesterday’s high and round number resistance at 19300.00. Investors should not take heart at this bounce, since a bounce to maximum resistance (the 50-day) only constitutes a 55% retracement of the decline from 19904.60. In fact, today may be a day to sell the bounce, as next week may involve a panic decline. Tech stress is elevated.
Today’s options chain shows Maximum Investor Pain at 19175.00. Long gamma may begin at 19200.00 while short gamma resides beneath 19150.00.
ZeroHedge summarizes, “KC Fed survey joined yesterday’s Regional Fed surveys in the doldrums (as did today’s plunge in durable goods orders) but of course, all eyes were sternly focused on Q2 GDP’s beat.
That ‘good news’ sparked a hawkish shift lower in rate-cut expectations…
Source: Bloomberg
The Nasdaq lagged..again.. with Small Caps ripping higher. The S&P ended red again with The Dow clinging to gains…
Nasdaq has underperformed Russell 2000 for 11 of the last 12 days, erasing YTD outperformance for the big-tech index”
SPX futures rose to 5449.90 thus far this morning. It may be attempting a corrective bounce to retest Intermediate resistance and the trendline at 5497.46. Should that feat be accomplished, it would constitute a 57% retracement of this week’s decline. Otherwise resistance may lie at 5453.16. The bounce appears to be a Trading Cycle high, suggesting the decline may resume imminently. SPX may be entering the most forceful portion of the decline, so buckle up!
Today’s options chain shows Max Pain at 5475.00, a highly contested strike for both calls and puts. Long gamma may begin at 5480.00, but becomes more serious above 5500.00. Short gamma starts at 5450.00 and is well populated beneath that level. Dealers may be struggling to maintain above short gamma thus far.
ZeroHedge reports, “One day after closing at the lowest level in more than a month, US equity futures have rebounded led by small-caps with tech names also in the green (NVDA +2.4%, META +2.0%, AMZN +1.2%, AAPL +97bp, GOOG/L +72bp). As of 8am ET, S&P futures are 0.8% higher while Nasdaq futs gain 1.1%, suggesting the underlying indexes will pare their weekly slump. Europe’s Stoxx 600 benchmark rose 0.5%. Treasuries and the dollar were little changed.. Bond yields are unchanged ahead of today’s core PCE print which is expected to show further easing in inflation. The USD is flat. Commodities are mixed: oil is lower while base metals/gold are higher. Today the key macro focus will be July’s core PCE which consensus sees dipping to 2.5% YoY vs. 2.6% prior.”
VIX futures appear to be consolidating beneath yesterday’s high. Cycle Top support lies at 16.93. A further correction may depend on the success of the equities bounce.
The July 31 options expiration shows Max Pain at 17.00. Short gamma extends from 14.00 to 16.00. Long gamma may begin at 20.00. and is showing new strength at 30.00.
TNX is consolidating beneath Intermediate resistance at 42.79 and above the trendline just beneath 42.00. The Cycles Model suggests a breakout may endue over the weekend. The uptrend has been maintained and the trendline may provide the launch pad for the next lift-off.
ZeroHedge reports, “The broadly weak trend of US macro data was jolted yesterday by a hotter than expected GDP print – which prompted a hawkish shift in rate-cut expectations. This morning, the doves get another chance for some ‘bad news’ (disinflation) to support their ‘we must cut’ narrative (that Dudley et al. have exposed).
The Fed’s favorite inflation indicator – Core PCE – instead came in slightly hotter than expected, rising 2.6% YoY (vs +2.5% YoY exp). The headline PCE dipped to +2.5%...”
BKX got a second shot at a throw-over above its trading channel. However, a new high has eluded it. As mentioned earlier this week, bad news is often saved until after the close on Fridays. The hope is that the weekend activities may erase the concern of how tenuous the situation really is. Confidence must be kept high, as there are 63 troubled banks that may blow up at any time.
ZeroHedge observes, “Commercial real estate (CRE) issues have been getting more attention this year, causing significant headaches for the banking sector and raising questions about the severity of the situation. Rising vacancy rates, the short maturity of loans, and the loans made during low-interest periods have all contributed to escalating the current predicament. We have written about this several times, and now we aim to explore the problem through the lens of bank balance sheets to determine which ones really suffer under this issue.”
Gold futures bounced to challenge the 50-day Moving Average at 2371.83. However, the breakdown beneath the 50-day Has confirmed the sell signal. Should it fail to close above it, the decline may resume with force. The Cycles Model suggests renewed trending strength may emerge over the weekend and redouble next week. The Cycles Model infers that the decline may resume and extend through mid-September.
ZeroHedge comments, “A growing number of African countries are turning to gold to hedge geopolitical risk and protect against currency losses.
Nigeria, Uganda, Zimbabwe, Madagascar, and several other African nations have made moves to increase gold reserves, bring their gold home, and even back their currencies with the yellow metal.”