12:30 pm
SPX may be taking aim for either its daily Cycle Top at 5817.52 or its 2-hour Cycle Top at 5829.87. The Master Cycle has extended to 278 days, a very unusual event. Despite the extension, the structure makes perfect sense.
12:21 pm
BKX may be attempting to reach the Cycle Top at 117.48 before reversing. There has been a valiant attempt at keeping prices high as the internals deteriorate. It is likely that there may be a bank failure or two about to hit the fan. No wonder Warren Buffett is getting out. Hurricane Milton may cause a demand for cash that simply cannot be met after the last hurricane.
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!
The Shanghai Composite Index fell to 3262.26 this morning, beneath the weekly Cycle Top at 3400.00. That action offers an aggressive sell signal. The Daily Cycle Top is at 3211.42, offering a confirmed sell signal. The Shanghai Composite has made a 42% retracement of the entire 9-day rally in just two days, causing many speculators to “swear off” investing in China. Chinese stocks have always been a hotbed of speculation, including the use of margin. The current Master Cycle may be over in the next week. Take this however you want, but either we hit a very low Cycle Bottom (below 2718.59) or the Chinese markets may be closed.
SPX futures dipped to 5732.00 this morning, but bounced back to the flat line. There is a certain desperation to keep the SPX above 5700.00. However, margin calls abound in those dipping into China stocks. The Cycles Model suggests the ability to make a new ATH is fast approaching zero. It warns that, should the SPX fall beneath 5700.00 a panic decline may set in.
Today’s options chain shows Max Pain at 5735.00. Long gamma may begin above 5750.00 while short gamma resides beneath 5715.00.
ZeroHedge reports, “US equity futures are lower on news that the DOJ is considering a breakup of Alphabet’s Google search engine, in what would be a historic antitrust crackdown on Big Tech; Europe was flat while Asian markets slumped after Chinese A-shares suffered their biggest one-day plunge since February 2020 as investors are getting restless and demand stimulus actions from Beijing instead of just more words. ”
VIX futures are consolidating around the Cycle Top at 21.88 this morning. The Cycles Model calls for an increase in trending strength through the end of the month. However, the VIX may resume its climb through the end of November.
The October 16 options chain shows Max Pain at 20.00. Short gamma is heavily populated between 14.00 and 19.00. Long gamma begins at 21.00 and may extend to 45.00.
TNX is consolidating this morning after yesterday’s new high. The consolidation may not last, as trending strength may be on the rise by this weekend. Today is day 251, giving TNX a week or so of additional gains. Should it break out above the mid-Cycle resistance at 44.85, the Cycle Top at 47.25 may be next week’s target. Talk of further interest rate cuts are being squelched by this rally.
ZeroHedge reports, “One would think that the first coupon auction after the Fed’s rate cut would have passed better; one would be wrong.
Moments ago the Treasury sold $58 billion in 3Y paper, matching the all time high issuance for the tenor, in an auction that was unexpectedly ugly. The sale stopped at a high yield of 3.878%, the highest since July, and tailing the When Issued 3.871% by 0.7bps, the first and biggest tail since June and followed the biggest stop through since August 2023.”
Japanese Yen futures are consolidating this morning as the market digests its gains from the Master Cycle low. The Cycles Model shows growing strength into the weekend with the rally continuing through the end of the month. The window for closure of the Yen carry trade is closing fast while the consensus is that its time to jump back in to the Yen carry with expectations that the decline may continue.
USD futures are also consolidating this morning after a searing rally from the Master Cycle low on September 18 The Cycles Model suggests the consolidation may be short-lives, as a burst of trending strength may be due today and extend to the weekend. What people may not understand is, as chaotic as the financial situation is here, it may be even worse in ?Europe and China, driving liquidity toward the USD.
Crude Oil futures fell to a morning low at 71.84, beneath the 50-day Moving Average at 72.76. The signal is changed from an aggressive sell signal to a confirmed sell one day after its Master Cycle high. There is a possibility of a bounce off the neckline of the Head & Shoulders formation, but the longer view may be that crude may continue its decline to the year-end. Should that occur, those that believe that the 2023 low may hold may want to hedge their bets.
Gold futures declined to 2625.40 this morning, leaving the September 26 high intact. Should gold pass through Intermediate support at 2599.00 and the 50-day Moving Average at 2556.00, we may see the Cycles Model continue its decline into late November. Latecomers to the rally are already feeling some pain, but that may palle as gold declines beneath the 50-day.