3:07 pm
SPX has crossed beneath its prior lows at 3060.95 and short-term support at 5572.24. This places it on an aggressive sell signal. An aggressive sell indicates it may no longer be profitable to own the SPX, but a short position may be subject to an occasional blow-back. The Cycles Model had indicated that the decline was due to begin last week. However, the powers that be obviously wanted August to end on a high note. Cycles are not mechanical, so they may be temporarily overridden by extraneous circumstances. At the same time, the double (quadruple by some measures) top indicated that the SPX was simply unable to go higher. Unfortunately, most investors were unable to recognize the stone-cold resistance to the SPX just beneath the July 16 high and many were caught today on the wrong side of the market. It appears that the next support is the 50-day Moving Average at 5507.00, where a bounce may be generated.
12:58 pm
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NDX has fallen beneath its Intermediate support at 19152.00 and last week’s low of 19221.40 this afternoon. This may change the signal to a confirmed sell signal. By the way, the consensus on Wall Street is that NVDA ia a “strong buy.”
10:24
BKX, our liquidity proxy may have made an on0time Master Cycle high on Friday at 116.05, hitting the trading channel trendline. It has already declined beneath the Cycle Top support (now resistance) at 114.64, giving a possible aggressive sell signal. That signal becomes confirmed beneath Intermediate support at 111.17. Hedge funds have been the main source of liquidity as they rotated out of tech into financials. The potential advantages may only be short-term.
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 drifted down to 19397080 this morning, with selling pressure edging out buyers. The 50-day Moving Average is at 19486.71, so the NDX is straddling this important level. This action is rather directionless and the Cycles Model is unclear for the next two weeks. Based on that information, a possible sell signal may be made should the NDX decline beneath last week’s low at 19221.40. Otherwise, the chances of the rally resuming for the next two weeks are growing. The Cycles Model tells us that the current Master Cycle ends on the week of September 16. Should the NDX break above its August 22 high at 19938.89 it may approach it Cycle Top at 20426.32.
I find it difficult to imagine the NDX remaining stationary for the next two weeks. Hedge funds have reduced their exposure to tech, but retail and corporate buybacks remain exceptionally high. Corporations may end buybacks as early as next week, but still gives enough time and buying power to spark a final surge higher.
The NDX options chain has finally turned positive above 19440.00. Options investors appear to be ponying up for another rise in prices.
SPX futures have declined to 5613.20 this morning in what appears to be another consolidation. There may be an aggressive sell signal beneath 5560.00. Otherwise, the outlook appears to be sideways or higher. While SPX may have peaked on Monday, August 26, it has not made a clear break in the rising pattern. Should it go higher, the next target may be the Cycle Top at 5737.86. However, should the market break out, sentiment may push the results as high at 5770.00-5800.00.
Today’s options chain shows Max Pain at 5625.00. Long gamma may take over above 5650.00 while short gamma may begin at 56.15.00.
ZeroHedge reports, “US equity futures are trading near session lows, tracking Monday’s slide in global markets which sent Chinese stocks to 7 month lows, after US markets were closed for Labor day yesterday. As of 8:00am, S&P futures are lower by 0.5% trading around 5630 and unchanged since mid-August even as they nearly hit a new all time high on Friday, while Nasdaq futs lag, down 0.6% with both Mag7 and Semis are under pressure (NVDA -2.4%). Bond yields are ~2bps higher with the USD trading near session highs. Commodities are weaker with all 3 complexes coming for sale; gold and natgas are relative bright spots. Today’s macro data focus is on ISM-Mfg and construction spending as we have a heavy data week capped with Friday’s NFP which is likely the determinant for the Fed cutting 25bps or 50bps. Friday also has the last 2 Fedspeakers before the Fed’s blackout window.”
VIX futures show today’s action challenging the 50-day Moving Average at 16.40. Today is day 265 in the Cycles Model, leaving a very short window for a possible new low. However, the gap between historical norms and current circumstances is very wide.
TNX challenged the declining trendline at 39.00, but dropped back beneath it. The Cycles Model suggests rates may pull back for yet another week before surging higher. This may be equities-friendly as we await the FOMC announcement on September 18. The money supply is being eased globally which brings rates down temporarily.
USD futures appear to be consolidating after the breakout above the Cycle Bottom resistance. It may now test that level (101.14) for support seeking reassurance for the next upturn. This may be accomplished in the next week or so.
Crude oil sank to a morning low of 79.45 as the new Master Cycle takes hold. Crud is on a sell signal which may be reinforced beneath the Cycle Bottom at 69.76. Be forewarned that there is a Head & Shoulders formation beneath it and the Cycle Model suggest the decline may continue to mid-October.
ZeroHedge observes, “Brent crude has extended its recnt losses (sparked last week by the Reuters trial balloon that OPEC+ would boost output due to the Libyan oil production snafu) and tumbled sharply below $75, because the same Libyan oil snafu that allegedly was about to prompt OPEC+ to pump more is about to be resolved (doesn’t matter if it is all circular, as long as oil is sliding ahead of the election: algos will try to make sense of the lack of logic later).
Brent slumped below $75, erasing all YTD gains…”
