3:33 pm
SPX has been unable to rise above yesterday’s high. In addition, yesterday’s action qualifies as a key reversal on on day 265 of the Master Cycle it would be fair to say that the Cyclical highs may have been made. Take appropriate action. This rally can no longer be trusted.
8:00 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!
SPX futures are back over 5600.00 this morning after closing near its low at 5560.95. This may be the last hurrah of the bull market, as fractal analysis suggests its target may be in the range of 5770.00 to 5800.00 over the next few days. The much-anticipated Powell speech at 10:00 am may provide the fuel for the exuberance to come. The rally after August 5 caught many investors off guard, leading to low participation. Yesterday’s setback may provide the incentive to go all-in for investors who missed the early part of the rally. As always, they will be late to the party.
Analysis of the options chain shows Maximum Investor Pain at 5565.00. Long gamma may start at 5575.00 while short gamma may begin at 5550.00.
ZeroHedge reports, “Futures are solidly in the green on the last day of the week ahead of Powell’s Jackson Hole speech, with Tech leading. As of 7:45am S&P futures were up 0.5% while Nasdaq futures gained 0.8% with top MegaCap tech stocks TSLA (+1.5%), NVDA (+1.2%), and AMZN (+69bp). Bond yields are roughly unchanged: the 10Y yield is down 1bp to 3.84% as the USD resumes its slide ahead of what many expect to be another dovish speech by Powell cementing a 25bps Sept rate cut. Commodities are mixed with Oil and Precious Metals higher, while Base Metals are lower. Today, the main focus will be Powell’s speech at Jackson Hole at 10am ET.”
Meanwhile, VIX futures slid back to 16.84 this morning, well above the 50-day Moving Average at 15.99. The phenomenon of rising VIX coupled with a potential panic upside in the SPX may create a very unstable condition as everyone chases the upside with no protection on the downside. The speed at which the VIX has fallen in August may lay the groundwork for further turbulence ahead. This may be the last opportunity to buy downside protection while it is affordable.
The August 28 op-ex shows Max Pain at 16.00. Short gamma resides at 15.00 with little conviction below. Long gamma may begin at 18.00 with pockets of calls up to 30.00. There seems to be no fear of a repeat of the August 5 episode.
TNX has eased back, but still above the Cycle Bottom support at 37.85. Today is day 260 of the Master Cycle. I have marked Wednesday as the MC low, but there is time for a further extension lower. The trendline near 37.00 may be an appropriate target should that event occur.
USD futures declined to 101.15 this morning after being repelled at the Cycle Bottom resistance at 101.41. The Cycles Model offers a volatile outlook for today, with a potential for retesting the trendline at 101.78. Should the Master Cycle extend, this may be the last probe at the low as today would be day 268 of the current MC.
Gold futures are on the rise again at 2538.00 this morning. Today may also offer gold investors their last hurrah as gold may seek to target 2700.00 on day 260 of its Master Cycle. There are absolutely no guarantees, but the fractal structure appears incomplete.
Crude oil futures may be testing the Triangle trendline near 75.70 with a bounce to 74.52 this morning. Today is day 254 in the Master Cycle. A bounce to the trendline (or higher) may set off a possible two-month decline in crude. Note the Head & Shoulders neckline. It has two possible outcomes. The target listed may be the smaller of the two.
Zerohedge remarks, “Oil prices have dipped, with Brent crude hovering around $77 per barrel, leading some market analysts to spot potential short-term buying opportunities. Citi Research, in a note dated August 21, and seen by Investing.com, sees this price pressure as a likely precursor to a rebound despite recent easing in geopolitical tensions.”