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 have risen to 19105.10 this morning after having completed 13 days of decline and bouncing from the 100-day Moving Average at 18707.34. Commentators are hoping for a tradable low this week. The Cycles May offer some temporary relief from the decline, but A panic Cycle may begin later this week/early next week. The Cycles Model suggests that NDX may only be halfway through its destructive decline, with the worst yet to come.
Today’s options chain shows Maximum Investor Pain at 19050.00. Long gamma shows somw life at 19080.00 while short gamma may begin at 19000.00. This morning’s action is simply to remove NDX from the grasp of the shorts.
SPX futures have risen to 5492.20 thus far this morning. However, it remains beneath Intermediate resistance and the Ending Diagonal trendline at 5506.23. Unlike the NDX, SPX has had 6 days of decline, followed by 4+ market days of sideways consolidation/correction. The Wave structure favors a “flat” correction ending just above 5500.00. The Cycles Model also anticipates a possible 13-day decline from today’s high.
Today’s op-ex shows Max Pain at 5485.00. Long gamma may begin at 5500.00 while short gamma may stat at 5450.00.
ZeroHedge reports, “Despite disappointing earnings from world’s second biggest company and Mag 7 titan, Microsoft, global stocks rallied on Wednesday, with Nasdaq 100 index futures jumping, as a flurry of bullish news powered a rebound in technology stocks ahead of today’s Fed meeting. US equity futures are higher with Tech leading and Semis outperforming: NVDA +5% pre-mkt following AMD’s earnings (+9.3%) and a positive read-thru from MSFT earnings even though Microsoft itself is down 3% (cutting losses from as much as 7% and is the only member of Mag7 in the red). As of 7:45am ET S&P futures were up 0.9% with Nasdaq futures surging more than 1.5% as the AI trade appears to remain intact despite yesterday’s latest tech rout. Bond yields are flat and USD is weaker ahead of today’s FOMC decision where Jerome Powell is expected to signal a potential rate cut for the US in September later today (see our preview here) as the yen soars after the BOJ surprises with a hawkish hike even as its economy careens of a cliff assuring this will be the shortest hiking cycle in recent history. Commodities higher led by energy following yesterday’s supply drawdown and relief rally as WTI has seen ~8% drawdown this month; oil extended gains after Hamas said Israel killed its political leader, stoking tensions in a region that produces around a third of the world’s crude. Today, we receive ADP (which has not been predictive of NFP) and the Fed decision. Mag7 earnings continues with META.”
VIX futures are hovering inside yesterday’s trading range. The correction may target between 15.00-15.50 as a final low before moving considerably higher. The Cycles Model introduces a potential panic rally beginning this weekend. Commentators suggest there may be too much AI fear. Recency bias may not allow them to see the Cycles at work.
Today’s op-ex shows Max Pain at 17.00. with short gamma inhabiting 13.50-16.00. Long gamma begins at 20.00.
TNX futures declined to a morning low at 41.07 while the cash market made a low of 41.12 in a throw-under the trendline. This may be the Master Cycle low, despite being 281 days long. There are multiple reasons, including a persistent market sentiment favoring a rate cut in September, despite multiple denials from the Fed to date. Should the FOMC not grant their wish, the reaction may be violent.
ZeroHedge announces, “Earlier this week, in our Quarterly Refunding preview we said that “the August refunding package will be identical to the one in May, with $125bn in gross issuance across 3y, 10y and 30y auctions. In addition, expect unchanged 5y TIPS new issue and 30y TIPS reopening (at $23bn and $8bn, respectively), and a $1bn increase to the 10y TIPS reopening (to $17bn) to commensurate with the increase in the 10y TIPS new issue auctioned this month.”
USD futures declined to 103.67, beneath the mid-Cycle support at 103.93 and the the 200-day Moving Average at 104.14. A Master Cycle low is due in mid-August. A possible target may be the Cycle Bottom and trendline at 101.72.
BKX may be due for a reversal today, on day 279 of its stretched Master Cycle. Its current Cycle structure has interesting similarities to the UST. Banks have been relying on lower rates to keep their wheels from falling off. That is about to end.