8:00 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 are consolidating beneath its correction high at 19224.59. Despite a 5% decline from the high, investors still believe that NDX is still positive. CTAs (formula buyers and sellers) are selling, but stock buybacks have returned. Billions of purchases are scheduled daily, so what could go wrong? For one thing, the FOMC meeting is scheduled for today and tomorrow. The Cycles Modelinfers better-than-even odds that the decline may continue. In the meantime, the markets are in neutral, pending the outcome of the announcements.
Today’s options chain shows Maximum Investor Pain at 19090.00. Long gamma may begin at 19100.00 while short gamma may start at 19080.00.
ZeroHedge observes, “Billionaire investor Warren Buffett’s Berkshire Hathaway has disclosed in multiple filings this month, the latest on Monday, that it is continuing to reduce its stake in Bank of America, locking in sizeable gains. This comes as Berkshire’s cash pile surged to a record in the first quarter, as Buffett has recently complained about the lack of meaningful deals.”
SPX futures are also consolidating beneath their corrective high at 5491.59. Overhead resistance remains at Intermediate resistance and the Ending Diagonal (red) trendline at 5504.01. The Cycles Model suggests the correction may be complete. It also infers another three weeks of potential decline.
Today’s options chain shows Max Pain at 5465.00. Long gamma may start at 5475.00, but only gathers strength above 5500.00. Short gamma may begin at 5450.00.
ZeroHedge reports, “After yesterday’s market reversal, US equity futures are higher but lacking the strength seen in EU markets. As of 7:50am, S&P and Nasdaq futures are 0.2% higher, with Mag7 stocks mixed and Semis are higher despite NVDA down -63bps and MSFT flat with closely watched earnings after the close. The yield curve is twisting steeper and 10Y yield is 1bps. The dollar is flat and commodities are lower across all 3 complexes. The macro data focus is on JOLTS and Consumer Confidence in what shapes up to be a quiet session ahead of a central bank bonanza that features the BOJ and the Fed tomorrow: both could impact the yield curve though no large moves are expected. The bond market is pricing no moves tomorrow for the Fed but is not pricing a small probability of a 50bps cut in Sept.”
VIX futures remain flat this morning, just beneath its Cycle Top resistance at 16.77. The breakout has already occurred, so this may be a final time to accumulate shares of VIX futures and ETFs. The Cycles Model projects the current uptrend to last until the end of August.
Tomorrow’s options expiration shows Max Pain at 17.00. Short gamma resided between 13.50 and 16.00. Long gamma may begin at 20.00. The longs are gaining confidence.
ZeroHedge comments, “The rollercoaster ride is about to get “fun,” as in unpredictable, volatile and unnerving for those normalized to extreme distortions “fixing” all things financial.
Humans have a knack for normalizing extremes. We quickly habituate to conditions that would have been intolerable before the extremes were normalized by habituation and recency bias. In no time at all, we’ve persuaded ourselves that living on reds, vitamin C and cocaine is not only normal, it’s healthy.”
TNX sits at its 4-year trendline in consolidation. Yesterday’s low at 41.50 appears to be the Master Cycle bottom, on a very late day 279. It is clear that attempts are being made, either directly or indirectly, to keep the TNX down. It will fail miserably.
USD futures rose to challenge the 50-day Moving Average at 104.68. The Cycles Model may show trending strength today as it clears the last hurdle to making a new high. The current Master Cycle may go to mid-August, so there is room to rally.