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.
10:20 am
BKX has declined beneath its 50-day Moving Average at 148.08, confirming the trendline sell signal. The Cycles Model suggests a decline may follow to the end of the month. The Ending Diagonal formations usually retrace themselves after completion.
7:55 am
Good Morning!
SPX futures rose to 6765.60 this morning, eking out yet another possible all-time high. The Current Master Cycle is running in overtime. The sell side insists that this time is different. True enough, as the Mag 7 still show earnings while the tech bubble in 2000 was a “cash bonfire.” However, current prices are based on a 30% annualized earnings growth. The consensus suggests earning may slow to half that rate with rising debt to finance that expansion. In the meantime, the largest support for the market is coming from retail, and they’re cautiously using options to push the market higher. Hedge funds and dealers are reluctant followers. However, there is a “disturbance in the force” emerging today and tomorrow that may upend the Cycle. Should that be so, a decline may ensue running through the first week of November.
Today’s options chain shows Max Pain at 6750.00. Long gamma may begin above 6775.00, while short gamma shows a monster position at 6720.00.
ZeroHedge reports, “US equity futures are flat, as the main indexes closed at fresh record highs overnight amid a melt-up that shows no signs of abating, with every small dip being bought and volatility staying low. While plenty of investors have doubts about the AI-driven rally and the tense geopolitical backdrop, the year-end FOMO is the only driver for now.”
The DJIA made it’s all-time high on October 3 at 47049.64. Since then, the NDX and SPX have floundered higher, by investors hyperventilating over only 3 AI stocks. What can possibly go wrong?
VIX futures continue their consolidation above the 50-day Moving Average. The unique feature of this action is that the SPX is still making all-time highs. Coupling this with rising volatility may give the markets a chaotic month in October. The energy buildup is like a coiled spring that may be released at a reversal beneath 6700.00 in the SPX.
The October 15 options chain shows large put holdings at 15, 16 and 21. That being said, long gamma may start at 18.00 and carries the majority to 30.00. The October 22 options chain shows massive put holdings from 15.00 to 19.00. Calls dominate above 20.00 with institutional presence every 5 points higher to 110.00. (That’s not a typo.)
TNX has risen above Intermediate support/resistance at 41.40 this morning, creating a possible buy signal for higher rates. Yesterday’s auction of 10-year notes showed below average demand.
ZeroHedge comments. “After yesterday’s ugly 3Y auction, moments ago the Treasury sold $39 billion in 10Y paper (technically a 9 Year, 10 Month reopening of cusip NT4), and the reception was again rather disappointing.
The note priced at a high yield of 4.117%, up from 4.033% in Sept, but except for that one month, it was the lowest since Oct 2024. The auction also tailed the 4.114% When Issued by 0.3bps, following last month’s stop and was the 2nd tail in the last 8 auctions.”
USD futures cleared the trendline, causing pain for the dollar shorts. The Cycles Model points out a possible increase in strength through the weekend. However, as with many breakouts, the USD is due for a pullback in the subsequent period. The breakout suggests that, longer term, an uptrend may be underway that may last through the month of November.
Bitcoin is pulling away from its Master Cycle high on Monday. Although there is no other technical signal, the Cycles Model suggests an aggressive sell may be in order. The next level of support is the Intermediate level at 115949.00, beneath which a sell signal may be confirmed.