9:52 am
BKX may have reached its Master Cycle high at 116.27 yesterday, on day 265. Should that be the case, a sell signal may be obtained beneath Intermediate support at 113.05. Further confirmation lies beneath the 50-day Moving Average at 111.57. The double hurricane season and associated stressors may bring the demand for cash far beyond the bank’s capabilities to supply through loans or withdrawals. In addition, insurance companies will also be coming under stress. This event may be the economic equivalent of the Great San Francisco Earthquake.
ZeroHedge observes, “Hurricane Milton moved off Florida’s east coast early this AM, downgraded to a Cat. 1 storm. Milton made landfall around 2030 ET on Wednseday near Siesta Key, Florida, a barrier island next to Sarasota. The storm’s destructive winds and torrential rains sparked widespread power outages to over 3 million customers in the state.”
8:30 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!
SPX futures remained flat overnight, but have started to decline at the release of the CPI report.
The rally may be complete as of yesterday’s close at 5796.80. The chances of reaching the Cycle Top at 5818.00 may diminish with the passing of time. The nearest support lies at 5726.67, offering an aggressive sell signal beneath it. A confirmed sell signal may be obtained beneath Intermediate support at 5641.59. Should the reversal take place today, it may do so with elevated volatility.
Today’s options chain shows Max Pain at 5755.00. Long gamma may start at 5790.00 while short gamma begins beneath 5745.00.
ZeroHedge reports, “US equity futures are lower as traders awaited the latest inflation data that will determine if the Fed opts for a slower pace of interest-rate cuts. As of 8:00am, S&P 500 futures are down 0.2% after hitting a record high on Wednesday; Nasdaq futures are down by the same amount with most Mag7 stocks flat; TSLA is leading with a +1.1% pre-market move ahead of its Robotaxi unveil event tonight. Delta Air Lines Inc. kicked off the third-quarter earnings season, with profit and sales forecasts falling short of expectations. JPMorgan Chase & Co. and Wells Fargo & Co. are scheduled to report on Friday. Ten-year Treasury yields held above 4%, near the highest levels since end-July. Bloomberg’s dollar index was steady after an eight-day streak of gains, its longest since April 2022. Commodities are mixed with Oil higher, Base Metals lower, and Precious Metals higher. Today, key macro focus will be CPI, along with AMD (Advancing AI) and TSLA (Robotaxi) events.
The Shanghai Composite fell to 3228.12, finding support at the Cycle Top at 3216.66. It is on an aggressive sell signal with a confirmed sell signal pending a decline beneath the Cycle Top. The Cycles Model gives the Shanghai another week of decline in which the Cycle Bottom at 2717.08 may be challenged. A decline beneath that level may induce an even greater decline. Often when stimuli fail, short sales are banned with an increases probability of a market closure.
VIX futures are tentatively rising again. The Cycles Model suggests trending strength reappears by the weekend. However, should the SPX attempt a rally, the VIX may briefly visit the 50-day Moving Average at 18.79.
TNX tested the upper trendline of its former trading channel at 41.12. Futures rose as high at 41.39, suggesting the cash market may do the same today. There may be a brief pullback. However, the Cycles Model offers a triple dose of strength over the weekend and the following week. Volatility is on the rise as well.
ZeroHedge reports, “After yesterday’s ugly, tailing 3Y auction, which saw a plunge in foreign demand as a result of the recent spike in yields as faith in the Fed’s easing plans has been deeply shaken in recent weeks, moments ago the Treasury sold $39BN in 10Y paper (in the form of reopening of 9Y-10M cusip LF6), in a sale that was substandard at best.
The auction stopped at a high yield of 4.066%, up sharply from last month’s 3.648% (which was the lowest since May 2023), and tailed the When Issued 4.062% by 0.4bps, a big reversal from last month’s 1.4bps through auction (but nowhere near as bad as the 3.1bps tail in August).”
Japanese Yen futures may have bottomed out its Master Cycle at 6690.00 this morning, on day 261 of its Master Cycle. Shold that be the case, a reversal may be imminent. The Cycles Model suggests trending strength may return by the weekend. The window for exiting the Yen carry trade may be closing. A buy signal for the Yen may occur at the 50-day Moving Average at 68.78.