8:30 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 have been flat this morning, as it absorbs the new money flows. Short-term resistance is overhead at 19006.43, which may cause a brief pullback. Some readers have pointed out that volume increases on down days, suggesting we should be bearish. However this can be explained by measured selling by some “whales” who are early to cash in due to their size. As I mentioned last week, panic down days must come in multiples, not giving the market a chance to recover before the next onslaught of selling. We have not yet experienced that phenomenon. The Cycles Model suggests that the rally may continue to the end of the month. Stock buybacks end on September 6.
Today’s options chain shows Maximum Investor Pain at 18850.00. Long gamma starts at 19000.00. Short gamma may begin at 18800.00.
ZeroHedge remarks, “Following last month’s ‘deflationary’ print (-0.1% MoM), analysts expected headline CPI to rise 0.2% MoM and they were spot on, shifting the YoY CPI print to 2.9% (from 3.0%) – the lowest since March 2021…”
SPX futures rose to a morning high of 5447.70 thus far, as core consumer prices rose for the 50th consecutive month. It has crossed the 50-day Moving Average at 5444.19, confirming the buy signal. The Cycles Model suggests the rally may last until the end of the month.
Today’s options chain shows Max Pain for investors at 5415.00. Long gamma may begin at 5425.00 while short gamma starts at 5400.00.
ZeroHedge reports, “Futures are flat, after trading in a narrow range overnight which saw Asian stocks gain and European bourses trade mostly higher, with tech down small and small-caps/Russell leading with bond yields up 1bps in the front of the yield curve. As of 7:45am, S&P futures are unchanged at 5,459 after soaring 1.7% on Tuesday, fueled by cooler-than-forecast PPI data while Nasdaq futures are down 0.1% with the Mag7 mixed as NVDA boosts Semis. 10Y yields are down again, sliding to 3.83%, and pushing the USD lower. Commodities are mixed with Energy/Precious higher and Base lower; China’s largest steelmaker warns of 2008-like downturn given the slump in domestic consumption. The macro focus is on CPI (our full preview is here) and Retail Sales tomorrow.”
VIX futures continue their decline as the Cycles Model shows an upcoming pivot by the end of the month. The decline may be targeting the 50-day Moving Average at 15.57.
VIX Aug 21 options shows short gamma prevails between 12.00 and 17.00. Long gamma begins at 20.00 and stretched over nearly the entire spectrum of strikes. There is the liklihood of a lot of speculators getting wrong-footed.
While TNX futures dipped lower, TNX reversed at the Cycle bottom support at 38.28. This may be a positive sign for the uptrend to resume. The US Treasure upcoming Auctions Schedule showws $245 billion of short term bills being auctioned today and tomorrow. A 20-year Bond issuance may be announced tomorrow for later auction this month. Yellen’s practice of auctioning short-term bills rather than long term debt may backfire soon.
ZeroHedge comments, “A recent article co-authored by Stephen Miran and Dr. Nouriel Roubini, aka Dr. Doom, accuses the U.S. Treasury Department of using its debt-issuance powers to manipulate financial conditions. They liken recent Treasury debt issuance decisions to stealth QE. Per the first paragraph of the article’s executive summary:
By adjusting the maturity profile of its debt issuance, the Treasury is dynamically managing financial conditions and through them, the economy, usurping core functions of the Federal Reserve. We dub this novel tool “activist Treasury issuance,” or ATI. By manipulating the amount of interest rate risk owned by investors, ATI works through the same channels as the Fed’s quantitative easing programs.
Is their accusation reasonable?”