11:55 am
We may legitimately put NDX on a sell signal, having made a lower low beneath the 50-day Moving Average. SPX isn’t far behind. It must decline beneath Thursday’s low at 5560.95 to earn a sell signal. Finally, the DJIA has made its new all-time high and may have completed its rally on Monday. Now we find out what effect NVDA has with its earnings announcement.
7:45 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 dipped to a morning low of 19491.00. Two announcements may have an impact on the markets today. The first is the PCE, due to be announced at 8:30 am on Friday August 30. The second is the earnings announcement for NVDA, due at 4:20 pm followed by a conference call at 5:00 pm. The results may prompt a move in NVDA of ~9.5% in either direction, prompting potentially large index moves. This has the appearance of a make or break move for the NDX.
Today’s options chain shows Maximum Investor Pain at 19630.00 Long gamma may start at 19670.00 while short gamma may begin at 19620.00.
SPX futures are consolidating within yesterday’s trading range after an overnight high at 5633.00. The Master Cycle high may have been made on Monday, day 269. This is a very stretched Master Cycle. The Cycles Model identifies today as a high volatility/high strength day, a potentially lethal combination to the bull market.
Today’s options chain shows Max Pain at 5630.00. Long gamma may start above 5650.00 while short gamma may begin beneath 5600.00.
ZeroHedge reports, “US futures flat ahead of a key earnings release from Nvidia, the $3 trillion stock at the forefront of the global artificial-intelligence frenzy and the culprit for most of the market’s upside in the past two years. Viewed a barometer for AI spending across much of the technology industry, Nvidia – viewed by many as this bubble’s CSCO – is expected to project revenue growth of more than 70% for the current quarter when it reports after market close on Wednesday (full preview here). Any disappointment is certain to roil markets, given the company’s heft in US indexes. As of 8:00am S&P futures are flat, trading largely unchanged for the past week; Nasdaq 100 futs are barely in the red as NVDA erases an earlier gain in the green pre-mkt with the balance of Mag7 performing similarly and Semis are also bid. Bond yields are lower, tracking another sharp drop in oil. The USD is extending on yesterday’s gains while commodities are lower, led by Energy though Base Metals are continuing their recent bull run. The macro data focus will be on Fedspeak, bond auctions, and mortgage applications which gained 0.5% after last week’s double digit plunge (-10.1%).”
VIX futures have risen overnight to 15.85, as investors become more aware of risk. VIX has been testing the 50-day Moving Average at 16.21. A confirmed buy signal resides above it. However, there is a possibility of a probe lower than the August 19 low.
Today’s op-ex shows Max Pain at 17.00 Short gamma resides at 15.00 while long gamma may begin above 20.00.
TNX futures probed down to 38.08 while the cash market made a low (so far) at 38.22. The Master Cycle low may have been made on August 21 (day 258). If so, TNX may be due for a resumption of the uptrend.
ZeroHedge reports, “After a sharp reversal in yields, which in August tumbled to a fresh 2024 low, some traders were eyeing today’s 2Y auction nervously to see if the move higher in yields would lead to some indigestion. In the end, it turned out there was no reason to be worried because moments ago the Treasury sold $69BN in paper to stellar market demand.
The auction stopped at a high yield of 3.874%, the lowest since August 2022 and down sharply from the 4.434% last month, a 56bps drop which was the biggest since the December recession scare (when we saw a 57bps drop), which in turn was the biggest since the March 2023 bank crisis. In short: any time you have a 50bps+ drop in sequential 2Y bond yields, you get a powerful recession scare. And yet, aside from March 2020 when the entire world shut down, the past two such recession scares ended up being a false start. We’ll see if this latest one is the same.”
ZeroHedge cautions, “Reading the excellent article by Brian Meehan of Bloomberg Intelligence, “Basis Trade Growth Is Massive”, I was reminded just how stupid clearinghouses really are. If you ever meet a head of a clearinghouse, I can assure it was not brains that got them to this key position in global finance.
As the article points out, there is now a $1.1 trillion notional short position in US treasury futures. You should not read this as the market being bearish on treasuries. It is a levered trade to make a “risk free” return on the difference in price between off the run treasuries and treasury future positions. For every short position in the treasury futures, there should be a long position in the physical market.”
Gold futures are in decline from the Master Cycle high made last Tuesday, August 20, after losing its best momentum in March. This morning’s low was 2528.25. The Cycles Model suggests that gold may show trending strength on the downside this week. This is a good time to lighten one’s exposure to gold. A sell signal may be issued beneath Intermediate support at 2467.21.
Crude oil futures crossed beneath its Triangle trendline near 76.00 this morning to a morning low at 73.86. It may have made its Master Cycle high on Monday, day 257 of the Master Cycle The next support may be found at the Cycle Bottom at 69.69. The likelihood of oil prices dropping beneath that level is very high, as the new Cycle may last until late October.
USD futures have rallied off their Master Cycle low made on Tuesday. A buy signal may be obtained above the Cycle Bottom resistance at 101.22.