2:45 pm This will be my last entry until September 3. Happy Labor Day!
SPX has just gone negative after a valiant, but failed attempt to better Monday’s Master Cycle high. At the same time, the DJIA made yet another ATH, as predicted. This may be considered an aggressive sell signal. NDX has also failed its rally attempt after NVDA’s fizzle. They say hope springs eternal. However, NDX is on a confirmed sell signal beneath its 50-day Moving Average at 19493.00. SPX may have an aggressive sell signal beneath 5560.00. The SPX 50 DMA is at 5498.90, beneath which a sell signal may be confirmed.
8:45 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!
SPX futures bounced after making a new overnight low at 5545.70 after the NVDA announcement. However, it sprang back to 5600.00, which is where the dealers in the options market has maintained Max Pain since last Friday. Critical support at 5560.00 has been broken and the bounce may attract weaker hands into the sell-off that follows. The Master Cycle high was made on Monday and the Cycles Model suggests the market may weaken until the next FOMC meeting on September 17-18. In the meantime, the situation has become more fragile. The buyback bid may end in another week.
Today’s options chain shows Maximum Investor Pain at 5600.00. Long gamma may begin at 5650.00 while short gamma may start at 5550.00.
ZeroHedge reports, “Tech stocks recovered from the knee-jerk selling of Nvidia, which plunged as much as 8% after the company’s Q3 guidance disappointed some even as Q2 results met or beat analysts’ estimates on nearly every measure and showed that revenue more than doubled in the quarter, reinforcing the earnings power of artificial intelligence. As of 7:50am ET, Nasdaq 100 futures added 0.1% after sliding as much 1.4% earlier as Nvidia, which had tumbled sharply in trading after the close of US exchanges, trimmed losses to just down only 2% in pre-market trading. Intel Corp., Apple Inc. and Microsoft Corp. all posted small gains; S&P 500 futs rose 0.2%, fully reversing an earlier drop as Germany’s DAX Index hit a new record. Treasury 10-year yields and the dollar was steady. West Texas Intermediate crude rose to $75 after sliding back under $74 yesterday. On the macro calendar, we have the second 2Q GDP estimate, July trade balance and wholesale inventories and initial jobless claims (8:30am) and July pending home sales (10am).”
VIX futures appear to be consolidating near the 50-day Moving Average at 16.20. The consolidation may not last, as trending strength returns this weekend. Today is day 260 in the Master Cycle. There is a slight chance of a lower low in the next day or so.
The September 4 options chain shows Max Pain at 16.00. There is a solitary crowd of puts at 15.00, while long gamma may begin at 18.00, strengthening at 20.00.
TNX has probed higher this morning to 38.79 thus far. The trendline is at 39.00, which may offer an aggressive buy signal. Someone is selling treasuries in a significant amount to have this effect. Perhaps the BLS??? This could be a matter of unexpected consequences.
ZeroHedge remarks, “Just two hours after (ultra) discount retailer Dollar General reported catastrophic earnings, moments ago the Biden Bureau of Economic analysis decided to pull a BLS, and reported in its first revision of Q2 GDP that the US actually grew much stronger than expected on the back of – drumroll – an unexpected surge in personal consumption.
According to the BEA, Q2 GDP was revised to 3.0% from the 2.8% advance estimate, and beat estimates of a 2.8% print.”
ZeroHedge observes, “After yesterday’s solid 2Y auction, moments ago the US Treasury sold $70BN in 5 year notes, in an auction which saw yields tumble 46.8bps, to 3.642% – the lowest since April 2024 – from 4.110%. However, unlike yesterday’s stopping through 2Y auction, today’s sale tailed the When Issued 3.642% by 0.3bps, which was the 4th tail in the past 5 auctions.”
