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.
9:00 am
Good Morning!
SPX futures rose to 6659.70 “on news that Nvidia will invest $5BN in Intel at $23.28 per share.” Yesterday’s dip was shallow enough to allow a new all-time high this morning. The Cycle Top resistance lies at 6678.56, which imposes a possible upper limit on the rally. Dealers may be motivated to bring SPX futures down beneath long gamma at 6620.00, or face having to buy shares in an overcrowded, overbought market. This may complete the bullish fractal and allow a deeper correction. The Cycles Model May allow another week of rally, but SPX has entered its turn window, allowing a reversal forthwith. A decline beneath the trendline and Intermediate support at 6450.00 offers a sell signal.
Today’s options chain shows Max Pain at 6600.00. Long gamma becomes dominant above 6620.00 while short gamma reigns beneath 6590.00.
ZeroHedge reports, “Futures are higher and back into record territory as investors shrug off some contradictions in the Fed’s policy statement and Powell’s hawkish news conference and refocus on the most dovish Fed statement since 2021, per JPM. “For whatever reason, it appears the Fed’s reaction function has shifted in a more dovish direction,” according to Bloomberg Econ head Anna Wong. S&P 500 futures were 0.8% higher at 8:05 am ET while Nasdaq 100 futures were +1.1%. Pre-mkt, Mag7 / Semis are bid up with NVDA +2.3%, AVGO +1.9%, TSLA +1.6%, GOOG +1.3%; tech was boosted by news that NVDA would buy a $5BN stake in rival chipmaker Intel. Nikkei +1.15%, Hang Seng -1.35%, Shanghai -1.15%, FTSE +15bps, CAC +1.1%, DAX +1.2%. “Last night the market was taking the view that this wasn’t so much of a dovish cut but, after sleeping on it, it decided that it was enough to keep the market going,” said Karen Georges, an equity fund manager at Ecofi in Paris. “Fed cuts are good for tech and long duration stocks.” Sure enough, both tech and small caps are outperforming as the US is poised for an “Everything Rally” alongside a global risk-on tone. The yield curve is bull flattening and USD is flat. Large-Caps across all the super-sectors are higher pre-mkt. Today’s macro data focus is on jobless claims where investors will look to confirm last week’s spike was a one-off.”
VIX futures corrected down to 14.33 this morning, possibly completing its two-week correction. What may follow is a breakout above the 4-month trading channel that has been bouncing off the “floor” of the VIX trading range. This action may offer a n opportunity to accumulate hedges against what may follow.
TNX is challenging the Triangle formation trendline after a strong reversal out of a possible Master Cycle low on Wednesday. The trendline lies between 41.10 and 41.20. A rally above that level confirms a buy signal for TNX (a sell signal for UST). Should the rally continue, investors may become less confident in equities. Meanwhile, money flows into commodities suggest a rising concern about inflation.
Bitcoin resumed its rally, but remains overbought. There are approximately two weeks left in the current Master Cycle, leaving open the option of going higher. The Cycles Model allows Bitcoin to advance to the Cycle Top resistance at 128546.10. However, Bitcoin has reached the 61.8% Fibonacci retracement value this morning, suggesting a possible early reversal.
USD futures are climbing toward the 50-day Moving Average at 97.98, above which a buy signal may be obtained. The USD reached its Master Cycle low on Wednesday, making a very strong reversal. The Cycles Model infers a probable rally to mid-October. During that time, the USD may break out of its declining trend channel, defined by the trendline at 99.00.
Gold futures may have reached their Master Cycle high yesterday at 3705.71. Since then it has been in a sharp decline. This action offers a possible aggressive sell signal. Unfortunately, it may not be confirmed until gold declines beneath Intermediate support at 3454.89. The Cycles Model may allow the subsequent decline to last until mid-November. This infers a possible decline to the Cycle Bottom at 2602.32.