9:55 am
BKX reversed beneath its Cycle Top support at 114.80 and may be now on an aggressive sell signal. The sell signal may be confirmed beneath the 50-day Moving Average at 105.86 and again at the trendline at 102.50. The sell signal may last through the end of August. The likely target may be the Head & Shoulders neckline at 72.50.
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 made a weekend high at 19181.80, short of Thursday’s retracement high at 19227.20, a 43% retracement of last week’s decline. Should it go higher it may attempt to probe near the 50% retracement value just beneath the 50-day Moving Average at 19388.10. The current retracement appears to be irregular and due for a final probe higher later today. What follows may be the strongest decline yet. The Cycles Model identifies the ingredients for a panic starting the week of August 5. High hopes have been put on a rate cut in September. It may not happen.
Today’s options chain shows Maximum Investor Pain at 19075.00 Long gamma may begin at 19100.00 while short gamma may start at 19060.00.
ZeroHedge observes , “Baby Pool Closed for “Maintenance”
Anyone who ever got that notice from a town or community pool knows exactly what happened. It feels like some of that has gone on in our markets of late, ensuring that this is an “adult swim.” For those who have had their vacations disrupted or are about to experience that as market volatility continues, we feel your pain!
The Nasdaq 100 has had some wild swings, and the S&P 500 broke a long string of trading days without dropping 2%. Stocks ended the week strong on Friday and we got to continue to examine de-grossing, rotations, and de-risking. Last weekend we delved into these subjects in Know When to Fold ‘Em and we refined our views on Thursday morning in A Lot Going On.”
SPX futures rose to a weekend high at 5491.91 before easing back. As of this morning, it has made a 52.3% retracement. Intermediate resistance and the Ending Diagonal trendline lie at 5500.58, a 56% retracement. A cookie cutter retracement would stop very near 5500.00. What follows may be the 3rd of 5 possible declines in this Cycle that become steeper as they progress. The minimum decline this week may end at the 100-day Moving Average at 5290.95.
Today’s op-ex shows Max pain at 5460.00. Long gamma may begin at 5500.00 while short gamma may start at 5430.00. Sentiment appears on the short side.
ZeroHedge reports, “Starting what is the most important week for the market this summer – where 40% of the S&P reports earnings, the Fed reveals the September rate cut, along with decisions by the BOJ and BOE, and wel also get the July jobs report with countless other macro events on deck – stocks are solidly in the green as the carry trade destruction and tech rout that marked the past two weeks appears to have finally ended (as hedge funds buy the dip), and US equity futures as well as Asian and European markets are well in the green signaling rising optimism ahead of major central bank decisions and big tech earnings due this week. As of 7:45am ET, S&P 500 futures are up 0.4% while Nasdaq 100 futures gain 0.6%, with both set to extend their rebound for a second day after last week’s tech-fueled slump. Europe’s benchmark stock gauge rose 0.5% while Asian stocks gained more than 1%. Treasury yields declined four basis points to 4.16%, while the dollar edged higher against a basket of currencies. Bitcoin soared, rising just shy of $70,000 after Donald Trump said to “never sell your bitcoin.” It’s a quiet start to the extremely busy week, with just the Dallas Fed Manufacturing index on deck today.”
VIX futures are consolidating inside Friday’s trading range. It may continue its retracement to a possible low near 15.00. However, there may be a show of trending strength beginning today. VIX performance may have broken away from the SPX/NYSE and may run parallel to the TNX for the balance of August.
Wednesday’s op-ex reveals Max Pain at 17.00. Short gamma appears to be growing between 13.50 and 16.00. However, long gamma appears to be growing faster between 20.00 and 30.00.
TNX has made a retracement low to the trendline at 41.59. The trendline may offer a platform for a strong reversal, as the Cycles Model shows trending strength developing today. A breakout above the mid-Cycle resistance and the prior high at 42.92 may be a signal to go long the TNX/short the UST. Many prognosticators are bullish bonds.
ZeroHedge remarks, “The rates reset
The US 10 year yield has come down substantially, and is trading right on the huge trend line that has been in place since April last year. We are trading way below the 200 day (now negatively sloping). Also worth pointing out is the death cross, where the 50 day is crossing the 200 day.”
USD futures ripped higher this morning, as it has risen above the 200-day Moving Average at 104.45. This creates a buy signal for the dollar. This may be the beginning of new trending strength as the USD surges higher through mid-August.