7:40 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 paid a visit to the 50-day Moving Average at 19423.00 over night. Having found support there, it has advanced back above Friday’s close at 19508.52. The Cycle Top is at 20360.13, suggesting heavy resistance there. Should it break through, further resistance lies at the next round number, that is, 21000.00. After nearly two weeks of daily advances, there are indications that NDX may not make a new all-time high.
Today’s options chain shows possible Maximum Investor Pain at 19570.00. Long gamma may begin at 19600.00 while short gamma may start at 19550.00.
SPX futures advanced to a morning high at 5571.10, showing the advance to be intact. Having surpassed the 50-day Moving Average at 5477.95, the next resistance appears to be the Cycle Top at 5705.16. Should it emerge above the Cycle Top, the average target may be near 5775.00. The Cycles Model shows a potential week left in the rally. Today is day 262 in the current Master Cycle, so the time element has already been met. However, the DJIA and SPX both must make new all-time highs this week. Once this is accomplished, all bets are off.
Investors are still stuck on fear, as they have not recoupled losses from the August 5 sell-off. In fact, retail investors have only added back 50% of their unwind. Hedge funds have paused their selling late last week, while CTAs, corporations and pensions have been buying an estimated $10 billion per week until September 6.
Today’s options chain shows Max Pain near 5540.00. Long gamma may start at 5550.00 while short gamma may proceed beneath 5500.00.
ZeroHedge reports, “Futures are flat after trading in a narrow overnight range, with small-caps outperforming. As of 7:45am ET S&P futures are up 0.1% at 5,581, after last week’s face-ripping rally which pushed the S&P to within 2% of the all time highs, while Nasdasq futures are unchanged as Mag7 and Semis start the week lower but broad-based strength is limiting losses. Bond yields are 1-2bps lower while broad dollar weakness sees USD/JPY re-test 145 level before rebounding back above 146, while WTI crude oil futures drop around 1%, underpinning Treasuries. Commodities are lower with Energy and Metals weaker while Softs are catching a bid. This week is expected to be a low liquidity week with events centered around the DNC and Jackson Hole with NVDA earnings looming next week. The macro data focus is on Flash PMIs, Housing Data, and Regional Activity updates. Fed Minutes are not expected to be catalytic with Jackson Hole kicking off on Aug 22. Q2 earnings season approaches its close with consumer-related / Retailers earnings this week and NVDA next week.”
VIX futures have risen to a morning high at 16.07, above the 50-day Moving Average at 15.71. This move may give us a potential buy signal. So, while the SPX may be making a new all-time high, the VIX is signaling that hedging may be taken seriously.
This will be a very busy week in the VIX options expiration. Max Pain is at 16.00. Short gamma is heavily subscribed between 12.00 and 15.00. Long gamma now prevails between 20.00. and 47.50. This may be a very difficult dealers’ market.
TNX rose to the trendline near 39.20 and pulled back. While it has reversed from its Master Cycle low and may be on a buy signal, trendline resistance appears to stymie the advance. The Master Cycle has two weeks left. It is possible that TNX may test the low to end the Cycle, should Yellen’s strategy of selling short-term notes work. This will be a busy week for Treasury Auctions.