8: 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 roes to 18586.00 thus far this morning, showing some stability, if not strength. Investors and hedge funds are eagerly buying Mag 7 and AI stocks at a “discount.” While equities may retest the lows, both the Cycles Model and Wave structure indicate a possible blow-off top in the making, provided the 200-day Moving Average at 17727.31 holds. After Monday’s drubbing, the fear of missing out is becoming prevalent again. This may set up the conditions for a very nasty sell-off starting in September.
Today’s options chain shows Maximum Investor Pain at 18590.00. Long gamma may begin above 18500.00 while short gamma resides beneath 18580.00.
ZeroHedge remarks, “That AI love affair did not die
It looks like, in the end, it was AI that saved the markets this week. That love affair from investors toward the AI space (and tech in general) is what brought in the buyers.
- Hedge funds bought the AI TMT space consistently over the past 7 sessions
- The L/S ratio (of AI TMT) is rising and high on a LT basis (91st %-tile), but below highs seen earlier this year
- Hedge funds are also going back to the general US Tech space and mainly Mag7. US tech saw 2 sigma buying this week.”
SPX futures rose to an overnight high at 5361.90. It closed on Friday above the 100-day Moving Average at 5312.60, creating a buy signal. The modest bid continues this morning. There is a probability of a retest of the 1987 trendline at 5119.25. However, time is running out for new lows.
Today’s options chain shows Mas Pain at 5325.00. Long gamma may begin at 5350.00 while short gamma resides beneath 5300.00.
ZeroHedge reports, “US equity futures are seeing a slight bid, tracking Asian and European markets higher, as the week starts off more muted than last week but with a preference towards Quality. As of 7:45am, S&P 500 and Nasdaq 100 contracts are about 0.3% higher as Mag7 names are mixed but net higher and Semis are bid, while Europe’s Stoxx 600 index erased most of a 0.5% advance. Bond yields are flat as is the USD while the yen continued dropping as more jawboning from an ex-BOJ member suggested that rate hikes in Japan are effectively over, giving a green light to restart carry trades . Commodities are stronger led by Energy, WTI is higher after adding 4.5% last week. Copper is higher after 5 consecutive weekly losses and 11 of last 12 weeks, -20% from highs. Today’s macro focus is the NY Fed’s 1-year inflation expectation (3.02% prior). This is a heavy macro data week with both growth and inflation measures and the market is waiting on that data to determine the next market narrative. Earnings are almost complete but DE, HD, and WMT will provide important updates on the Consumer.”
VIX futures have been flat over the weekend. Hedging activity has trailed off, giving the green light to longs for a short while. However, liquidity has crashed in the VIX, limiting possible short-term moves.
The August 14 op-ex shows only a modest amount of activity. However, the August 21 options chain is heavily laden with long predominantly above 20.00 and shorts heavily populated beneath 16.00.
TNX has risen above the trading channel trendline near 39.45. It may be due for a burst of trendline strength as it may find support at the trendline.