2:00 pm
SPX rose above the 50-day Moving Average, probing to 5514.94. There is a minor possibility of a slight probe higher, possibly to the 50% retracement level at 5528.02. However, the bounce has fulfilled its purpose to totally confuse weaker hands into buying high and selling low. This is called a “shakeout.” We should be looking for a close/decline beneath the 50-day at 5507.47, giving us a sell signal. A further confirmation of a sell signal lies beneath Intermediate support at 5481.21.
ZeroHedge remarks, “For the second day in a row, the market needed a sticksave, and got it thanks to – guess who – Nvidia.
Earlier this morning we reminded readers that NVDA was set to present at the Goldman Tech conference in San Fran…
… an event we said would have greater significance than the CPI print, and sure enough that’s what happened, because as stocks were slumping and were threatening to take out Friday’s lows…”
10:30 am
SPX did not create a new high in the cash market this morning, although the futures did go to 5500.40. Instead, the cash market reversed within a point of the 38.2% Fibonacci retracement at 5498.50. The sell signal has remained intact, thus I did not mention it this morning. There is no reason to be long beneath 5400.00. However, should SPX not make a new low, it may attempt another retracement, possibly to the 50-day Moving Average at 5507.47. It appears to be testing its boundaries, the Friday low being the bottom and the 50-day as possible resistance.
10:05 am
BKX may be accelerating its slide beneath the 50-day Moving Average at 110.19. It is on a confirmed sell signal with the trendline at 103.00 as its next target. The mid-Cycle support is at 102.47 and the 200-day Moving Average is currently at 101.32. The Cycles Model suggests the decline may go to early October, making the Head & Sholders neckline a distinct possibility by month end.
ZeroHedge comments, “94-year-old Warren Buffett’s Berkshire Hathaway has been on a multi-month selling spree of Bank of America shares, raising many questions about the motivation behind abruptly dumping billions of dollars worth of BofA stock. Berkshire’s latest filing indicates that the selling pressure is finally easing as share price slides.”
8:15 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 varied from a low of 18678.50 to 18828.20 in the overnight session, consolidating within yesterday’s trading range. The markets await the CPI report due at 8:30 am. The consensus is a .2% rate of change. Above that may encourage the lower rate of change. Should the CPI come in at .2% or lower, it is believed that the rate reduction may be .50%. NDX is interest rate sensitive so an inflationary reading may have an adverse affect. Currently, the NDX has only retraced 29% of its decline. Should the reading be lower, we may see the NDX rise to the 100-day Moving Average at 18979.71, just beneath the 38.2% retracement at 18986.82.
Today’s options chain shows Max Pain at 18920.00. Long gamma gets serious above 19000.00. Short gamma lies beneath 18910.00.
SPX futures have also consolidated within yesterday’s trading range. An interest rate friendly report may send SPX higher, as it has currently been resisted at the 38.2% Fibonacci retracement level at 5497.53. The 50-day Moving Average is currently at 5504.00.
Today’s op-ex shows Max Pain at 5500.00. Long gamma may begin at 5540.00 while short gamma may begin at 5450.00.
ZeroHedge reports, “US futures, the dollar and treasury yields are all lower post-Debate and pre-CPI but off session lows. As of 8:00am, S&P futures are down 0.1%, recovering from a loss of 0.5% earlier; Nasdaq futures were down 0.2% with Mag7 and Semis lower as Energy stocks rebound from yesterday’s drubbing. Treasuries had minimal moves during the debate, but yields are 3-4bps lower now, hitting fresh 2024 lows. USD is lower and commodities are higher led by Energy, Ags, and Precious, with oil rebounding from Tuesday’s rout. The macro data focus today is on the CPI print (full preview here) and the 10Y bond auction.”
8:30 am
CPI for all items rises 0.2% in August; shelter up
“09/11/2024
In August, the Consumer Price Index for All Urban Consumers rose 0.2 percent, seasonally adjusted, and rose 2.5 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.3 percent in August (SA); up 3.2 percent over the year (NSA).”
9:00 am
ZeroHedge reports, “Following last month’s modest miss in CPI which sparked speculation about a 50bps cut, which was then boosted by the jobs report miss and the huge downward revision, moments ago the BLS reported that – as only a handful of Wall Street strategists warned – CPI actually came in hotter than expected at the core level, rising 0.3% MoM vs expectations of a 0.2% print, with all remaining metrics coming in line, to wit:
- CPI 0.2% MoM (or 0.187% unrounded), Exp. 0.2% – in line
- CPI Core 0.3% MoM (or 0.281% unrounded), Exp. 0.2% – hotter than expected
- CPI 2.5% YoY, Exp. 2.5% – in line
- CPI Core 3.2% YoY, Exp. 3.2% – in line”
VIX futures were lower this morning, as it remains in a corrective pattern. In order to maintain its impulsiveness, it may not decline beneath 18.00. Otherwise alternate structures may be inferred. VIX may have begun its new secular trend. However, short-term Cycles may alter perceptions of what is really transpiring.
The September 18 (monthly) options chain shows Max Pain at 18.00-19.00. Short gamma is very enthusiastic between 13.00 and 17.00. Long gamma may begin at 20.00 and is well populated to 50.00.
TNX made its Cycle low at 36.14 this morning and may have begun its bounce on day 259 of the Master Cycle. Futures made their low at 36.02. While the Cycles Model suggests rates may rise to mid-October, it also suggests this may be the beginning of a secular rise in the 10-year rate and undo the 2yr-10yr rate inversion.
ZeroHedge reports, “With the stock market rollercoaster stuck in “down” mode today, it is probably not a surprise that the flight to safety would be strong to quite strong, and sure enough moments ago when the US sold $58BN in 3Y paper, the demand was the strongest since at least last summer.
Pricing at a high yield of 3.440%, the 3Y auction was not only 37bps below last month’s 3.81% and the lowest since August 2022, but also stopped through the 3.457% When Issued by 1.7bps, the biggest Through since August 2023 and the 4th biggest on record.”
USD futures are on the rise, hitting 101.80 in anticipation of rising interest rates. That, and the deteriorating European economy may propel the USD considerably higher. However, the USD is due for a correction that may last a number of days before forging higher.
The Yen futures probed higher to 71.10 this morning as it forces the unwind of the carry trade even further. The Cycle Top at 70.92 may not stop the rally in the Yen. It may cease being the source of liquidity/financing for our economy, at least for the time being. The rally is due to continue to early October.