10:11 am
BKX has reached its 50% retracement level at 111.13 this morning. A reversal back beneath the 50-day Moving Average at 110.50 may offer an aggressive sell signal. Another large bank takes a hit as Goldman exits the consumer lending business.
ZeroHedge comments, “Amid all the volatility of the last few weeks in stocks, money markets have seen a constant inflow of funds (six straight weeks) with the last week adding $23.4BN to total MM fund AUM to a new record high of $6.324TN…
Source: Bloomberg
That is $188BN of inflow in six weeks – the biggest since the turn of the year seasonal flows.
At the same time, US banks saw almost $53BN of deposit inflows in the week-ending 09/04, pushing total (seasonally-adjusted) deposits to their highest since before the SVB collapse…”
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 are consolidating within Friday’s trading range as we enter day 255 (of an average 258 days) of the Master Cycle. NDX has retraced 75% of the decline starting on August 22 to September 6. This is within the high/normal retracement range. The Master Cycle may have a few more days to go but does not appear likely to exceed its August high. Price may remain sticky near the top as the market awaits the pronouncement of the FOMC on Wednesday. The upcoming reversal may produce a sell signal beneath the 50-day Moving Average at 19358.33. Further confirmation lies at the combined Intermediate and 100-day Moving Averages at 19045.00.
Today’s options chain shows Max Pain at 19250.00. Long gamma may start at 192701.00 while short gamma may begin beneath 19200.00.
ZeroHedge mentions, “Shares of American chipmaker Intel are marginally higher in premarket trading following a Friday evening Bloomberg report indicating the company could secure up to $3.5 billion in federal grants to manufacture chips for US military and intelligence applications.
The report was based on sources familiar with the chipmaker’s binding agreement with US officials. They said the secretive Pentagon program, ‘Secure Enclave,’ that awarded Intel $3.5 billion, is a move by the military to produce chips domestically, more especially in several states, including a facility in Arizona.”
SPX futures are also consolidating inside Friday’s trading range. The SPX retraced 93.8% of its recent decline. SPX may not make a new all-time high unless the DJIA also does so. Despite the excitement about the potential rate cut, this is a negative seasonality for equities, due to the buyback blackout. Market watchers are surprised it has gone this far. A sell signal may be made beneath the double support s at 5489.60. Hedge funds have been net sellers for the past 5 weeks.
Today’s options chain shows Max Pain at 5625.00. Long gamma may begin at 5655.00 while short gamma may start at 5495.00. Dealers may work to keep the strike price near Max Pain as that offers the lowest payout to options investors.
ZeroHedge reports, “Futures are flat, erasing an earlier modest gain, ahead of a very busy week which will see the first Fed rate cut since March 2020. As of 7:45am, S&P futures were down fractionally, with small-caps outperforming following a trend from late last week as investors price in a 50bps rate cut on Wednesday. Nasdaq futures are down 0.3% as Semis lag and the Mag7 are mixed and AAPL slumps as much as 2.4% as noted analyst Ming-Chi Kuo notes that, based on his first weekend pre-order analysis, demand for the iPhone 16 Pro series is lower than expected. There was little reaction in markets to the second attempt to assassinate Donald Trump. Shares of Trump Media & Technology rose as much as 10% in premarket trading after the former president said he has “absolutely no intention of selling” his stake when a lockup expires this week. While JPM’s Andrew Tyler asks rhetorically this morning “let’s see if last week’s bid returns“, it does not look very likely since we just entered the worst 2 week calendar period for the year, and stocks enter a buyback blackout, plus there is no tech conference to spike the euphoric AI narrative yet again. Bond yields are down as the curve bull steepens, pressuring the USD which slides for the 4th day in a row to its lowest level in more than eight months. The move was driven by strength in the yen, which touched the highest since July 2023 amid speculation this week’s slew of central bank decisions will lead to a narrowing interest rate differential between the US and Japan. Commodities are higher with Energy and Metals boosting the index. Today is a light macro day ahead of tomorrow’s Retail Sales and Weds’ Fed Mtg where the market remains split on 25 o5 50bps.”
VIX futures have risen of their Friday low this morning. That is likely to be a minor Trading Cycle low. The Cycles Model calls for a high in the VIX by the end of September. That is not all. VIX has strong seasonality usually through October. However, the Cycles Model calls for a rising volatility trend through the end of November. A buy signal awaits above the 50-day Moving Average at 17.72.
The September 18 options chain shows Max Pain at 18.00. Short gamma dominates the chain between 13.00 and 17.00. Long gamma may begin at 20.00 and is strong to 50.00.
TNX has been lurking near its trendline, making a morning low at 36.26. It appears to have made its Master Cycle low last Wednesday at 36.14, on day 259. A probe above the Cycle Bottom resistance at 36.88 may create a buy signal for TNX (a sell signal for UST). The Cycles Model calls for rising rates until mid-October. In the meantime, experts claim that the policy rates must drop beneath 3.5% to avoid a recession.
Japanese Yen futures have risen even higher, to 71.61 this weekend. The Cycles Model suggests the Yen may continue to rise t o the end of September. This heightens th pressure on the carry trade, as borrowers (in Yen) seek to escape the crushing currency trap. It’s not just hedge funds that are affected. It may also be banks. credit card companies, mortgage companies and insurance companies that have been decimated by this reversal in the payback rate.
USD futures made a new Master Cycle low on day 263 at 100.25. The USD and TNX Cycles are highly correlated. That suggests a very powerful ris off the lows is imminent. The Cycles Model suggests a rising USD through late November.