8:15 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 advanced to 19837.20 this morning before pulling back. Today is day 263 in the aging Cycles Model. There are three elements of the Cycles. The first is time. A Master Cycle may take 258 days, on average. The second is price. In this case, the price may exceed the prior all-time-high. The third is relationship to outside forces, such as the Yen carry trade. The Cycles Model suggests all of these are coming to a head, possibly in the next week. In the meantime, CTAs have now joined the buyers of equities.
Today’s options chain shows Maximum Investor Pain at 19690.00. Long gamma may begin at 19700.00. Short gamma may prevail beneath 19600.00.
ZeroHedge comments, “Earnings are alright
With much of the earnings season behind us, the story is clear. Analysts remain optimistic about earnings in late 2025, but continue to revise near-term estimates lower (by a tiny 1%).”
SPX futures continue their probe higher, reaching 5617.80 this morning. This is frustrating the buy-the-dippers, who are determined to be all-in. Weaker hands often surrender to the siren song (FOMO) at this point, as emotions become heightened. Did you know that virtually anyone with a credit card has been participating in the carry trade? Where do you think all the “free” money has come from? The door to free money may be about to shut, with far-reaching consequences.
Today’s options chain shows Max Pain at 5585.00. Long gamma may start at 5600.00 while short gamma may begin at 5550.00.
ZeroHedge reports, “US equity futures are flat after another narrow overnight range, following another euphoric session on Wall Street amid bets the Fed chair Powell will signal it’s ready to start cutting interest rates as soon as this Friday’s Jackson Hole symposium. As of 7:30am ET, S&P futures were up 0.1% to 5,634 while Nasdaq futures also gained 0.1%. MSCI’s all-country stock index headed for a ninth day of increases, its longest winning streak since December. Oil halted its latest rout, treasury 10-year yields held steady around 3.87%, the Bloomberg dollar index was unchanged after sliding to the lowest since March, while gold exploded to a new record high, trading at $2525. It is a quiet session with just the Philly Fed non-mfg activity index on deck.”
The Japanese Yen is correcting its August spike high. Key support lies at the mid-Cycle line at 66.11. Short-term, the Yen is likely to test that support. A close beneath 66.11 suggests the Yen carry trade may be still alive. However, should the test find support, the Yen may advance to new highs, ending the carry trade.
Inveting.com observes, “We discussed the prospect of a low on the Japanese Yen currency several weeks ago.
The Japanese Yen did rally off important price support and many assets worldwide got a little goofy, the VIX Volatility Index blasted off while the Nikkei dropped more than 20% in a day.
But, at mid-month, the Yen created a monster bearish reversal pattern after testing important price resistance.”
VIX futures did not make a new low in the overnight market, suggesting the Master Cycle may have pivoted on day 250 of its Master Cycle. An advance above the 50-day Moving Average at 15.75 may give a buy signal. Should it do so, it may give investors an early warning of an impending reversal in equities. It may be time to start thinking about hedging instead of FOMO.
TNX is declining, with the potential of testing the testing the long-term trendline at 36.75. The Cycles Model implies that there may be another week of weakness in TNX, followed by a potentially explosive reversal in the following week. The uptrend may remain intact.
ZeroHedge opines, “In 2022 there was considerable debate among alternative economists what the Federal Reserve was likely to do in the face of rising stagflation. There were people who argued that the Fed would capitulate to stock market demands, stop raising interest rates and return to QE. These analysts operated on the assumption that the central bank WANTS to save the US economy from substantial deflationary crisis and that they will happily print money forever in order to delay such an event.”
Gold futures rose to 2570.20 this morning, as it tests the Cycle Top resistance at 2565.94. Today is day 260.00 of the Master Cycle. The Cycles Model suggests that, should gold remain above its Cycle Top (throw-over), the rally may last another week. Car must be taken of the extended nature of this rally, both in time and price.