9:50 am
BKX, our liquidity proxy, may have made its Master Cycle high on Monday, day 249 of its Master Cycle. The powers that be may be hiding the real condition of our banks, but the tide may be leaving, exposing those who are swimming naked, The First support lies at 109.82, beneath which an aggressive sell signal may be found. The 50-day Moving Average is at 107.34, beneath which a confirmed sell signal may be obtained.
7:30 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 stayed flat in the overnight market. Yesterday’s pause has given encouragement to BTFDers. We may see the NDX pull back to the 50-day Moving Average at 19458.36 before moving higher. That may give incentive to rally to the Cycle Top, the last resistance. Todays FOMC minutes are eagerly being awaited, but there is no incentive to lower rates.
Today’s options chain appears to be tightly wound. Long gamma may begin at 19800.00 while short gamma may begin beneath 19780.00.
ZeroHedge remarks, “With 93% of S&P 500 companies reporting, Goldman analysts have found a sharp increase in earnings calls mentioning election uncertainty, likely dampening capital expenditure growth for companies through the end of the year. There are currently 76 days (as of Tuesday) until the November 5th US presidential elections.”
SPX futures are holding steady this morning as the release of the FOMC minutes are due this afternoon. The desire for a rate cut persists, despite the forces that may keep rates high. At the same time, bad news causing a pullback may be all investors need to pile on to the next rally higher.
Today’s options chain shows Max Pain at the hotly contested 5600.00 level. Long gamma may start at 5630.00 while short gamma is close by at 5590.00.
ZeroHedge reports, “lobal markets and US equity futures rose as investors awaited the annual BLS payrolls revisions – where as many as 1 million jobs can be eliminated – due at 10am ET, as well as the FOMC meeting minutes for further clues on interest rate cuts. US equity futures pointed to small moves at the Wall Street open as Europe’s Stoxx 600 edged 0.2% higher amid thin volumes while Asian stocks snapped a 3-day winning spree. As of 7:45am S&P futures were up 0.2% at 5,629 having fully recovered from the early August swoon; Nasdaq futures also gained 0.2%. The yield on 10-year Treasuries was steady at 3.81%, while the dollar paused a three-day run of declines. Oil was flat, halting the recent rout.’
VIX futures rose to a morning high at 16.25, above the 50-day Moving Average at 15.83 and giving a potential buy signal. Today is day 252 of the current Master Cycle, so there may be room for another dip lower. The “taming of the VIX” may lead to asymmetry in the markets, where risks are ignored while investors pile on to more risk.
Today’s options expiration shows Max Pain at 16.00-17.00. Short gamma lies beneath 15.00 while long gamma is building above 20.00.
TNX is testing the Cycle Bottom support at 37.98 and may be making its Master Cycle low on day 258. Granted, the FOMC minutes and press release may “plunge” the TNX lower. However, it is more likely that the FMC may leave the status quo in place.
RealInvestmentAdvice says, “Profitable bond trading opportunities arise when your expectations about Fed policy differ from those of the market. Therefore, with the Fed seemingly embarking on a series of interest rate cuts, it behooves us to appreciate how many interest rate cuts the Fed Funds futures market expects and over what period. Equally important, Fed Funds futures help us assess the market’s economic growth and inflation expectations.”
USD futures may have hit its Master Cycle low at 101.17 this morning on day 265 of its Master Cycle. If correct, it may be setting up for an explosive move higher by the weekend. The USD may sync up with the TNX moving higher. CTAs turned short the USD last week, but they appear late to the party.
In the meantime, the Euro futures may have hit their Master Cycle high today, after breaking through the Triangle formation. This may be a signal to go short the Euro as it has been over-exuberant as of late.
ZeroHedge remarks, “Closing in on huge levels
The EURUSD longer term chart (weekly) shows the EUR approaching the big negative trend line that has been in place since “forever”. We have traded inside the 1.06/1.12 range since 2023. Note the 200 weekly moving average comes in around these levels.”
