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.”
Good Morning!
SPX futures rose to 5848.10 in an apparent attempt to break out above Friday’s high at 5862.82, where it tested the Ending Diagonal trendline. Remember, crossing beneath that trendline gave an aggressive sell signal last week. An aggressive sell signal comes with the instruction to lighten up on long positions. Selling on the bounce makes today s good day to do so. The Cycles Model suggests this week may see an increase in trending strength. Should the SPX remain beneath the trendline, the that translates into a strong decline.
Today’s options chain shows Max Pain at 5835.00. Long gamma may begin above 5850.00 while short gamma lurks beneath 5820.00.
ZeroHedge reports, “As we enter the most hectic two-week period of the year, futures are stronger following the S&P’s first weekly loss in 7 weeks; both Tech and Small-Caps are outperforming with the yield curve bear steepening and USD flat reversing an earlier spike as a splunge in the yen also reversed following a shock outcome to Japan’s election this weekend which saw the ruling LDP lose its parliamentary coalition majority for the first time since 2009. A sense of relief swept through markets after Israel’s retaliatory strikes against Iran was just as performative as back in April, and avoided oil and nuclear facilities, with crude tumbling 5%. As of 8:00am ET, S&P futures were up 0.5%, but well off session highs; Nasdaq futures gained 0.6% with Mag 7 and semi stocks higher premarket. Oil/Energy commodities plunge, WTI down 6%, as the latest Israeli attack was another “straight to DVD” production and avoided energy facilities in Iran. Base metals have a bid but the balance of the commodity complex is lower. It’s an extremely busy week, with payrolls on Friday and over 40% of the S&P reporting earnings, but today’s macro calendar is light with only Dallas Fed calendar but keep any eye on Japanese politics and any potential read-through for the US yield curve and Credit demand.”
VIX futures continue to consolidate within recent trading ranges in a symmetrical Triangle formation (a continuation pattern). VIX is on a buy signal and may be prepared to go higher until early December. It is on a definite uptrend since July and is quite capable of exceeding the August 5 high.
The October 30 options chain shows Max Pain at 19.00. Short gamma is limited to 17.00-18.00. Long gamma begins at 20.00 and extends to 30.00 with an outlier at 80.00. The outlier may indicate smart money taking an extreme position in the event of a blowout move.
The Shanghai Composite Index rose to 3321.22 today, unable to overcome the October 23 Master Cycle high at 3331.08. A confirmed sell signal awaits beneath the Cycle Top at 3275.93. The new Master Cycle may resume the decline until early December. The Target may be the Cycle Bottom and Head & Shoulders neckline at 2701.27. A decline beneath that level may have drastic consequences, including a possible market closure.
TNX futures rallied to 43.22 this weekend, while the cash market rose to 42.56 this morning. Yields may go higher, as indicated by the weekend futures. The Cycles Model indicates trending strength until Wednesday, suggesting a possible spike high in the TNX this week. An alternate possibility may be a phase transition that allow the current Cycle to continue its uptrend with only a minimal pullback, since trending strength may return early next (election) week.
ZeroHedge remarks, “US 10 year is approaching the massive trend line that has been in place since October 2023. 4.3%, give or take, is the level to watch. Note RSI is at “extreme” levels, but on the other hand, we have traded in overbought land for a few weeks.”
The Japanese Yen futures may have bottomed out over the weekend at 65.175 while the cash market made a low of 65.46. Today is day 258 of the Master Cycle, so we may see the low in the next day or so. Change may be imminent in Japan’s political quagmire. Runaway inflation may result in higher rates at the Bank of Japan and with it may come a dramatic strengthening of the Yen.
ZeroHedge observes, “In a surprising turn of events, Japan’s ruling Liberal Democratic Party and its coalition partner are set to lose their majority in Sunday’s election, according to a forecast from public broadcaster NHK, raising questions about the future of Prime Minister Shigeru Ishiba.
Amid voter discontent over a slush-fund scandal, not to mention Japan’s worst runaway inflation in generations, the LDP and Komeito appear likely to fall short of the 233 seats needed for a majority in the lower house of parliament, NHK forecasts. Ishiba had aimed to secure a majority with his coalition partner, recognizing that the LDP would not retain the 247 seats it held before the election.
Falling short of that goal would mark the first time the LDP has lost a coalition majority in an election since 2009.”
USD futures pulled back to 103.99 as it consolidates in a possible pullback to the mid-Cycle support at 103.65. This week’s activities may be pretty calm, but next week’s trending strength shoots up for the entire week. The Current Master Cycle may extend until the end of November (in strength). Its target may be the Cycle Top resistance at 106.76.
Crude Oil futures dove to a morning low at 66.94 before a bounce to retest the Cycle Bottom (no resistance) at 67.89. The neckline of the Head & Shoulders formation at 68.00 has been triggered, with potential consequences listed on the chart. The current Master Cycle may last until the end of the year (in decline). What does smart money know that we don’t? Geopolitical risk plays a big part in this scenario.
ZeroHedge observes, “Oil at massive levels (again)
Oil is down big overnight. DB on the weekend Israel attacks: “The targeted scope of the attack and the absence of an immediate retaliation signal have seen markets price out some of the geopolitical risk premium”. Oil is trading at the massive $72 area again. We have dipped below on a few occasions, but these are make or break levels to watch.”
