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.”
The Shanghai Composite Index declined to a low of 3187.99, triggering a confirmed sell signal by declining beneath the Cycle Top support at 3225.07. The Cycles Model suggests a continued decline to the Cycle Bottom at 2712.42 in a little over a week’s time. Should this occur, it may snuff out all urges to speculate in Chinese stocks for a long time.
SPX futures declined to a morning low at 5764.70. Note the Master Cycle high may have been made on September 26, but is not the all-time high. The final high appears to be targeted for the Cycle Top at 5821.04 with a possible overshoot. Should the ATH be made today, we may also see a Key Reversal by the close.
Today’s options chain shows Max Pain at a highly contested 5750.00. Long gamma may begin at 5775.00 while short gamma may start below 5735.00.
ZeroHedge reports, “Futures are lower ahead of the last trading day of the week, but well off session lows as JPM earnings were solid enough to push the stock higher and reverse some of the market’s losses as Q3 earnings season was officially launched. As of 8:45am, S&P futures are down fractionally, while Nasdaq futures dropped 0.2%, hammered by TSLA which is down -5.8% pre-market as the Robotaxi event failed to meet market expectations. Bond yields are higher with the 10Y rising 3bps to 4.09%, while the Bloomberg Dollar index reversed earlier losses. Commodities are mixed with Oil fractionally lower, base metals higher, and pPrecious metals mixed. Today’s macro focus will be banks earnings and PPI, which came in fractionally light MoM (headline 0.0% MoM, Exp. 0.1%; core 0.2%, exp. 0.2%), but hotter on a YoY basis (core 2.8% YoY, Exp. 2.6%). Over the weekend, key macro catalysts will be China finance minister’s press conference on stimulus package.”
VIX futures have declined to 20.64 this morning. Should there be a final rally in the SPX, VIX may decline to the 50-day Moving Average at 18.88. However, it may resume its rally by the weekend.
The October 16 options chain shows Max Pain at 20.00. Short gamma inhabits the space between 14.00 and 19.00. Long gamma may begin at 21.00 and rises to 50.00.
TNX is consolidating at the trendline. The current Master Cycle may have only a week to go, but the Cycles Model suggests maximum trending strength over that period. The Cycle Top at 47.25 may be the intended target.
The Japanese Yen may be consolidating after yesterday’s potential Master Cycle low at 66.86 on day 261. Traders have been given the all-clear to reenter the Yen carry trade. However, the uptrend may receive a new burst of energy this weekend.
BKX may be poised for its final probe toward its Cycle Top at 117.56. JPM, Wells Fargo and Citigroup are scheduled to report earnings today. While these early reports may, on balance, be positive, there is danger lurking in the regional banks, especially in the southeast, as victims scramble to raise cash to rebuild after hurricanes Helene and Milton. In addition, having survived the quarter-end repo surge, banks may be approaching another repo crisis as the demand for liquidity spikes.