The Lord’s Prayer
Our Father, who art in heaven, hallowed be thy name. Thy Kingdom come, Thy Will be done, on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. Amen.
10:30 am
The Ag Index is due for a correction alongside stocks, but may not have the depth of decline that may be expected in stocks. A possible target may be the Cycle Bottom at 338.00. This decline may offer an opportunity to accumulate shares of agricultural commodities.
ZeroHedge observes, “Arabica coffee futures have soared over the past six weeks, reaching their highest level since February as traders closely monitor tightening supplies, adverse weather conditions in Brazil and other top growers, and uncertainty surrounding upcoming harvests, which has fueled a short squeeze.”
ZeroHedge further notes, “The best bang for the buck in the grocery store protein aisle this year hasn’t been beef, it’s been eggs. Prices have plummeted thanks to President Trump’s swift action to fix the Biden-Harris regime’s botched bird flu culling disaster. By contrast, ground beef has surged to a record $6.32 per pound, squeezed by the smallest US cattle herd in decades, with a bleak outlook despite some signs of a rebuilding phase nearing.”
8:45 am
SPX futures consolidated beneath yesterday’s high, waiting for the FOMC announcement. The Cycles Model offers two possibilities today, both start with a decline. The first option may be a decline beneath the 50-day Moving Average at 6393.59, reaching possible support near the mid-Cycle support at 5986.22. That option leaves the door open for a subsequent new all-time high in October. The second option may be a deeper, panic decline to the April 7 low, leaving a possible retracement in October, with no new all-time highs. The reason for the second option is that the Cycles Model projects several days of volatile strength starting next week. In addition, the panic decline may extend into earnings season in early October.
Today’s options chain shows Max Pain at 6610.00. Long gamma resides above 6625.00 while short gamma dominates beneath 6590.00. Options are on a hair trigger.
ZeroHedge reports, “US equity futures are flat into today’s Fed decision, with the long end of the yield curve moving lower. As of 8:10am ET, S&P and Nasdaq futures are down 0.1%, with Nvidia lower in premarket trading after the FT reported that China has ordered some companies to terminate orders for a certain type of AI chip (AMD -1%, AVGO flat). Other Mag7 names are flat. Cyclicals are under pressure. In other assets ahead of the Fed, the dollar is near its lowest level in three years although it is catching a bid after losing nearly 1% the last two days, while gold held near a record high. The commodity complex is weaker with notable losses in silver and coffee, each down more than 2.2%. In addition to the Fed today, we also have Housing starts and building permits ahead of tomorrow’s jobless data.”
VIX futures remain above the 50-day Moving Average this morning. The leap above the 50-day yesterday gave the VIX an early buy signal. Most analysts may recognize the buy signal above the declining trendline near 20.00. The Cycles Model suggests a rally may be imminent, with trending strength emerging next week. The current Master Cycle may extend into earnings season in October.
TNX is drifting lower as the FOMC announcement approaches. The Cycles Model suggests that the current decline may last to the end of September with rising volatility. A .25% rate cut may already be “cooked in,” but investors may pay attention to dissenting voices in the FOMC. A further decline next week may be due to the potential loss in confidence in the economy, motivating investors to switch to bonds, a traditional “safe haven.” The wording in the FOMC statement may be studied carefully for nuances.
ZeroHedge reports, “After 3 stellar coupon auctions last week, with 10Y yields trading effectively at the lowest level since last October (excluding the Liberation Day basis trade freak out) , and with the Fed set to cut by at least 25bps, there was little anxiety ahead of today’s 20Y coupon auction. And with good reason: moments ago the day’s coupon auction, a reopening of the 19-Year, 11-Month cusip UN6, went without a glitch in what was a very solid auction. ”
Bitcoin futures remain above the 50-day Moving Average at 114500.00.However, it is overbought and susceptible to weakness. Should it decline beneath the 50-day, there could be trouble for the longs.
USD futures may have made their Master Cycle low yesterday. Should that be so, the new Master Cycle may be on the rise to mid-October. Should that be so, a breakout of the declining channel may occur in the next week. The Master Cycle projects the new trend to last to mid-October with rising strength. A potential target may be no less than the mid-Cycle resistance at 101.58.
Gold futures rose to 3732.80 yesterday, hitting a new all-time high. Likewise, the CME price may have also topped out yesterday in an extended Master Cycle. The Cycles Model suggests a decline may ensue, lasting to mid-November. The decline may begin to accelerate next week, with volatility peaking at month-end.