7:50 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 made a marginal new high (not a new ATH) at 19953.20 this morning, then pulled back. The surge of inflows may come from foreign sources, as many of the foreign equities markets are in decline. Today is day 263 in the current Master Cycle as the MC extends. Last Thursday’s high may be eclipsed in the cash market, but no new all-time high is indicated in the NDX.
Today’s options chain sows Max Pain at 19750.00. Long gamma may dominate above 19800.00. Short gamma may emerge beneath 19710.00.
ZeroHedge observes, “After last week’s chaotic dumps and pumps across various asset classes amid Powell’s comments, a giant ‘quad witch’ OpEx, and mean-reverting FedSpeak, today saw markets take a pause (of sorts) with stocks, bonds, the dollar, gold, and crypto all relatively flat close-to-close…
…with only crude oil showing any real action – monkeyhammered lower for no apparently good reason…
Source: Bloomberg
Today’s apparently calm demeanour perhaps reflects anxious traders gearing up for a pretty busy week of ‘hard’ and ‘soft’ data, including the Thursday’s durable goods report, Friday’s PCE inflation report, plus the Consumer Confidence survey and Richmond Fed survey tomorrow.”
SPX futures rose to a new all-time high of 5736.30 this morning. The DJIA futures also rose to a marginal new high and may reach 43000.00 in the next few days. The Cycles Model suggests a possible target at the Cycle Top at 5771.98. It was August 15 when I estimated (with some disbelief) the SPX all-time high target near 5780.00 due during the week of September 16. Interesting how the Model has been working with both price and time. Time-wise the Cycle may be overdue but still has room to go in price. Downside support is at 5680.00, giving an aggressive sell signal.
Today’s options chain shows Max Pain at 5695.00 Long gamma begins at 5700.00 while short gamma begins rising beneath 5690.00.
ZeroHedge reports, “US equity futures are higher, led by tech with small-caps underperforming, as European stocks jump near record high (even as Europe slides deeper into recession) and Asian markets surge after China’s announced a flurry of “stronger than expected” stimulus measures which aided China and Hong Kong equities to more than 4% gains. As of 8:00am, S&P and Nasdaq futures were up 0.1%, fluctuating between gains and losses, as traders were unsure if China’s massive stimulus would prove to be inflationary and thus crush the Fed’s hopes for an accelerated easing campaign. “
VIX futures declined 1 tick lower than yesterday’s low to 15.74 on day 257 of the current Master Cycle. The Cycle is complete, or nearly so. The Cycles Model calls for a probable rally to the end of October.
Tomorrow’s option chain shows Max Pain at 17.00. Short gamma is strong at 16.00, but tapers off beneath it. Long gamma begins to rise at 18.00 and strengthens to 60.00. Expectations are set on a much higher VIX.
TNX has risen to 38.10 this morning, above Intermediate support/resistance at 37.95. This places TNX on a potential buy signal with confirmation above the trendline at 38.50.00.
ZeroHedge comments, “The Federal Reserve decided to cut rates by 50 basis points despite what Chairman Powell considers “no risk of a recession or downturn,” a “solid economy,” and a “strong job market.”
After ignoring the impact of monetary aggregates and the warning signs of inflation, the Federal Reserve has breached its price stability mandate for three consecutive years, preferring to prioritize liquidity injections, i.e., printing money, to the recovery of the currency’s purchasing power.”
The Shanghai Composite Index shot up to 2863.15, above its 50-day Moving Average at 2853.13. This created a buy signal just 6 days after making its Master Cycle low. The Cycles Model suggest this rally may venture back to its Cycle Top at 3186.12, then retest the February 5 low. The swings may be wide-ranging and difficult to manage for those who have no experience.
ZeroHedge observes, “This morning, when we reported that a sudden – and extremely overdue – urgency appeared to grip Beijing’s top power echelons in fasttracking a bunch of new monetary stimulus measures, including a cut in the 14-day reverse repo tool, we said to expect much more during today’s impromptu briefing on the economy, attended by the country’s three top financial regulators, which had fueled speculation that China was about to unleash far more efforts to revive growth, among which further cuts to the country’s Reverse Repo rate, and LPR rate but also cuts to the RRR and various other monetary stimulus measures.”
The Japanese Yen continued to sink as currency traders abandoned their long positions. As mentioned earlier, this provide some relief for those still in the Yen carry trade. The next support is the 50-day Moving Average at 67.81. The final support may be the mid-Cycle at 66.20 as the Yen has another week to the downside in the current Master Cycle. Those in the Yen carry trade should consider exiting in the next week.