9:
BKX appears to be “stuck” just beneath its Cycle Top at 115.98. It gives the impression of a continuous rally, but has not exceeded the July 31 high at 116.07. The powers-that-be may be attempting to keep BKX elevated, but the Cycles Model suggests that a reversal may happen at any time in the next week. Last week the Fed revealed massive portfolio losses. Could it be that banks are also suffering those same kinds of losses?
ZeroHedge remarks, “Oops. Last week the SEC accidentally published internal commentary along with a speech by Chair Gary Gensler.
Here’s one of the comments which was mistakenly included.
I strongly recommend that a sentence be placed here (or somewhere [sic] in the first part of the speech) to reassure markets that you are not making the speech because you think there is an imminent crisis.”
8:00 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 rose to 19928.50 this morning, but was unable to exceed Thursday’s high at 19951.79 (on day 258 of its Master Cycle). The NDX top is extended, with the 50-day Moving Average at 19288.11. Beneath that may lie a confirmed sell signal. While NDX has not exceeded its July 11 ATH at 20672.10, investors continue to defy logic by piling onto the tech ETFs despite consistent hedge fund and smart money selling. NDX has the appearance of the wheels ready to fall off.
Today’s options chain shows Max Pain in the vicinity of 19750.00. Long gamma exists above 19800.00 while short gamma lies beneath 19700.00.
ZeroHedge observes, “A new chatbot-powered exchange-traded fund (ETF) aimed at replicating the investment prowess of Wall Street titans has been launched by Minneapolis-based Intelligent Alpha. The Intelligent Livermore ETF (LIVR) is built around portfolio decisions generated by three prominent large language models (LLMs); ChatGPT, Gemini, and Claude – dubbed the fund’s “investment committee.””
SPX futures rose to a weekend high at 5722.40 before pulling back. It has not exceeded Thursday’s high at 5733.57. The Master Cycle may be complete. Earnings reports anticipate a slowdown. FDX reports, “the magnitude of the Fed rate cuts yesterday signals the weakness of the current environment.” Should the SPX decline beneath the upper trendline at 5675.00, the first confirmation of a reversal may emerge, giving a potential aggressive sell signal. The DJIA futures have barely made a new high this morning measured in ticks, so there may be some leeway in calling a top in the total equities market.
Today’s op-ex shows Max Pain at 5680.00. Long gamma may lie above 5700.00 while short gamma may emerge beneath 5650.00.
ZeroHedge reports, “Futures are higher with both tech and small-caps outperforming as a record $9 billion surge in dealer gamma stabilizes markets and buoys the ongoing meltup despite the start of buyback blackout.
VIX futures rose this morning, but not exceeding the 50-day Moving Average at 18.07, where a buy signal may be found. The Master Cycle low may have been made on Friday at 15.81. The Cycles Model calls for increasing volatility during this week. Trending strength may intensify at month-end.
The September 28 options chain shows short gamma most intensely at 16.00 with 9427 contracts while long gamma gains ascendancy at 18.00 and extends to 60.00.
TNX futures made a weekend high at 37.73, showing a resumption of the rally off the Master Cycle low made on September 17. Intermediate support/resistance is at 37.99, just beneath the trendline at 38.30. A breakout above the trendline may give TNX some recognition of its change in trend. Some commentators are observing that rates volatility (MOVE) is very depressed, suggesting that may be good for the SPX. However, MOVE may be in sync with the VIX, which has just made its Master Cycle low. Never try to make projections with a ruler. It may backfire.
ZeroHedge quotes Powell, “”Today, unemployment is up to 4.2 percent, inflation’s down to a few tenths above 2. So, we know that it is time to recalibrate our policy to something that is more appropriate given the progress on inflation, and on employment, moving to a more sustainable level, so the balance of risks are now even,” answered Chairman Powell. He had just cut interest rates by 50bps.
“The labor market is actually in solid condition. And our intention with our policy is to keep it there. You can say that about the whole economy. The US economy is in good shape. It’s growing at a solid pace, inflation is coming down, the labor market is in strong pace, we want to keep it there. That’s what we’re doing,” explained Jerome, the financial reporters gently tossing him the usual softballs.
Naturally no one asked him how he felt about initiating an easing cycle with the stock market at all-time highs .”
The Japanese Yen bounced from its Intermediate support at 69.17 on Friday and may make another run at its high. This may be a shakeout period for those participating in the Yen carry trade. The Cycles Model suggests that the decline may resume later this week (with strength). The Master Cycle low is not due until the first week of October and may reach mid-Cycle support at 66.21. Thereafter, XDN may rally to challenge the Head & Shoulders neckline.