11:59 am
SPX went well beneath its Monday target mentioned last Friday. The fact is, it may have bounced off the 1987 trendline which is in the vicinity of this morning’s low. Unfortunately for the longs, SPX may not be able to bounce much further. The next stop may be today’s circuit breaker at 4971.00. Today may be a margin call day, especially for the NDX, which has declined over 14% from its July high this morning. Margin calls may begin at 3:00 pm or sooner, depending on how leveraged an investment account may be.
ZeroHedge observes, “US retail traders are panicking this AM after likely receiving push notifications on their smartphones about market turmoil in Asia and Europe, which has since spread to the US premarket. Now that the cash session is about 15 minutes underway, website monitor DownDector reports outages are emerging across several major US brokerage houses as everyone tries to log into their accounts and sell stocks.”
9:40 am
BKX has declined beneath its trading channel trendline at 102.50, confirming the sell signal. The Cycles Model suggests the decline may continue to the end of August. We may begin to see failures occur across the regional and smaller banks.
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 plunges to 17247.20 this morning before a bounce. Welcome to the panic, which may last a few days. A minimal decline would take NDX to 16500.00, but the Cycle Bottom at 15536.80 is not out of the question. This week may offer critical information about the extent of the bear market.
The NDX is so deep in short gamma that there are no publicly available options listings. That may change after the open.
ZeroHedge repors, “Nvidia shares plunged in early premarket trading in New York. The world’s most valuable chip maker is being battered by a global selloff, rising recession fears, AI bubble unwind (mid-July report: “Did The AI Bubble Just Burst, And What Happens Next”) , and reports of delays in its new AI chip production.
The Information reports that Nvidia has informed Microsoft and other cloud providers that its most advanced AI chip models in the Blackwell series (B200 AI chip) face three months of delays following the discovery of a design flaw “unusually late in the production process.”
SPX futures have tanked to 5150.00 thus far this morning, with no end in sight. The decline appears to be headed for the 200-day Moving Average at 5007.66, beneath the 1987 trendline. Buyers have stepped aside, for obvious reasons. The trouble with this decline is that there has been very little hedging, which means there are few shorts that can take profits at this level. Today may turn into a “limit-down” day. The bad news for investors is that limit-down days often happen in a series of two or more. The circuit breakers may be activated should the SPX reach 4971.00.
Today’s options chain is heavily populated with puts all the way to 4200.00. This indicates that large players have been hedging possibly as late as Friday in anticipation of today’s panic. .
ZeroHedge reports, “Good morning and welcome to a global market meltdown, sparked by last week’s catastrophic BOJ decision to hike rates by 0.15bps which in turn crushed the $20 trillion yen carry trade, sent the yen exploding higher and wiping out trillions in highly levered investments, leading to a cascade of selling and forced liquidations which has resulted a historic market crash in Japan and a rout everywhere else.
In the US, futures are sharply lower with tech plunging as the global AI/Semis trade – itself a byproduct of the carry trade – is sold and small-caps are re-shorted. The Nasdaq 100 is set for its biggest opening drop in more than four years, as investors bracing for days of volatility amid rising concerns over a slowing US economy and overheated gains in the tech sector. Nasdaq 100 futures fell as much as 6.5% before paring losses to about 4.5%. That puts the tech-heavy index on track for its worst open since the pandemic days of March 2020.”
VIX futures rocketed to a new high at 61.95 thus far, with no end in sight. Those of you who though my prediction that VIX may rise to its 2020 high at 85.47 might be crazy may now reassess their thought process. Pundits are now comparing today to the 2020 high.
Wednesday’s options chain shows VIX well above what few long calls there are. The market has been caught totally off guard this time.
TNX bounced at 36.69 this morning, well beneath its daily Cycle Bottom. At this (Primary) degree, the weekly chart may be more useful. It shows its Cycle Bottom at 29.38, which may be the target for the current Master Cycle. Fortunately, the MC is due to end in about two weeks. The decline in TNX is attributed to the notion that the Fed may be forced to do multiple rate cuts to prevent a further drawdown in equities. The fact is, the Yen carry trade that has been extant since the 90’s is now over and with it, the “zero percent” financing of the leveraged market as well. In addition, the fall in rates and rise in the 10-year Treasury Notes may be attributed to a knee-jerk reaction of investors seeking a “safe haven” from the declining equities. The Cycles Model suggests this may come to an end in about two weeks.