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 probed to 5829.60 this morning, challenging the Cycle Top currently at 5825.65. The Cycle Top is dynamic. It is recalculated every day and offers resistance to the Cyclical movements at the end of the Cycle (Wave 5). The expectation today is that the SPX may briefly exceed the Cycle Top but go into full reversal by mid-day. A Key Reversal may be in the making.
Today’s options chain shows Max Pain at 5800.00. Long gamma becomes strong at 5840.00. Short gamma may begin at 5770.00.
ZeroHedge reports, “US bonds may be closed for the Columbus Day holiday, but stocks are open and merrily melting up on pace for their 46th record high of 2024. As of 8:00am, S&P futures are higher by around 0.2% and trading above Friday’s all time high while Nasdaq 100 futs rise 0.2% with NVDA, AAPL, and GOOG leading in MegaCap Tech as investors gear up for the latest round of corporate earnings and turn increasingly turn their focus toward the US election where a pro-market Trump victory looks more likely by the day. In China, the CSI 300 Index closer ~2% higher after a choppy session where markets pumped, then dumped, then rebounded once the National Team stepped in as traders digested the latest disappointing pledges from Beijing over the weekend to support the economy. Europe’s Estoxx 50 is flat. US cash bond markets are closed today; the Bloomberg Dollar index is higher. Commodities are mixed: oil prices are -2.3% lower, base metals are higher, and precious metals show mixed movements. This week, we will have a busy earnings calendar, along with Retail Sales release on Thursday.”
VIX futures consolidated beneath the Cycle Top at 22.12 as it awaits the SPX reversal. VIX may be poised to beak through the Cycle Top and may exceed the August high by the end of the month.
The October 16 options chain shows Max Paina at 21.00. Short gamma is strong between 14.00 and 19.00. Long gamma may begin at 25.00 and remain strong to 55.00.
TNX futures rose to 41.43 over the weekend, but subsided as the cash market (for treasuries) opened. It is likely that TNX may challenge the mid-Cycle resistance at 41.85 by mid-week, when a reversal may take place.
The Shanghai Composite Index bounced to 3294.00 in an attempt to test the weekly Cycle Top at 3387.61. Th e weekly chart shows a massive Head & Shoulders formation that may be triggered in the next two weeks. We must be aware of a decline to the bottom, as it indicates a lack of liquidity that may spread worldwide. A failure of this magnitude may lead the Chinese government to consider alternatives to their attempts to reliquify the markets. Studies show that Chinese M1 (total money supply)grew this year but M2 (cash and savings) shrank more than M1 grew. This shows a lack of confidence in the Chinese economy. To counter the lack of confidence the Chinese government may turn to war as a distraction.
ZeroHedge observes, “On Monday China has launched large military drills encircling the self-governing island of Taiwan, which Taipei has blasted as an “unreasonable provocation”. China’s PLA military deployed warships and fighter jets to send a “stern warning” against “separatist acts of Taiwan independence forces”.”
Japanese Yen futures may be making their Master Cycle low today on day 265. The era of “easy money” may be over as the rise in the Yen may overcome the attraction of low interest rate loans from the Bank of Japan.