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.
8:05 am
Good Morning!
SPX futures rose to 7489.40 thus far this morning, after bouncing off Thursday’s low at 7376.00. It has crossed above the 52-day Moving Average at 7469.51, creating a buy signal. The new master cycle may run upward to mid-September. While investors and hedge funds bought downside protection, the way was cleared for a reversal. Trending strength may reappear imminently as shorts cover above the 52-day Moving Average.
ZeroHedge reports, “A sharp drop in oil prices prompted by a quieter weekend for geopolitics and a pause in MidEast hostilities also sparked a drop in bond yields and the USD. A powerful relief rally in stocks and bonds emerged after a lull in hostilities in the Middle East, and started a week packed with earnings and a stack of interest-rate decisions on a positive note.”
The premarket VIX fell to a morning low at 17.53 thus far, aiming at the 52-day Moving Average at 17.40.00. A period of strength may be upon the VIX, possibly driving the VIX beneath the 52-day and offering a sell signal. Cross asset volatility is considered too low to offer a clear direction to the market. Nevertheless, The Cycles Model explains that volatility is due to go lower as risk aversion is put aside in a rising equities market.
The US Dollar index is consolidating beneath the Cycle Top resistance at 101.51 after challenging it on Thursday. Should it break out above the Cycle Top, the Head & Shoulders target comes into play. In the meantime, the neckline and Intermediate support may provide a floor at 100.88.
The US 10-year Bond Yield has pulled back to test the Cycle Top support at 46.45. Should it hold, TNX may continue its probe upward toward its Head & Shoulders target at 54.72 through the month of August. The alternate view is a further pullback to the 52-day Moving Average at 45.22 before probing higher.
Bitcoin is consolidating above its 52-day Moving Average at 63086.00. The Cycles Model allows another week or so of potential rally toward the mid-Cycle resistance at 70364.00.
Crude oil fell beneath the 52-day Moving Average at 84.56 this morning after breaking the downtrend line above 90.00. Should it drift lower, the next support lies at the Intermediate level at 78.34 with a follow-up floor at the mid-Cycle support at 76.55. However, The month of August brings possible upside strength that may propel WTI to 130.00.
ZeroHedge remarks, “Oil futures are being offered this morning after President Trump on Friday declined to continue strikes on Iran. The ‘pause’ was extended over the weekend and reciprocated by the Iranians, marking the first ‘cease’ of the ceasefire in almost a fortnight.”
Gold was rejeced again at Intermediate resistance at 4115.00 yhis morning. The sideways consolidation may break down as early as Wednesday. The Cycles Model has gold resuming its descent through the month of August with the minimum decline to the Cycle Bottom at 3766.80. However, it may extend to mid-September with the lower trendline of the trading channel in mind.
The Ag Indes reversed down this morning from its Master Cycle high on Friday. This action normally allows GKX to pull back for a period of 2-3 weeks. However, a dose of strength on Thursday may push GKX higher. Trending strength may also return in early August with a resumption of the trend above the neckline. The Head & Shoulders target may be realized by early September.
BKX rose above the Cycle Top support/resistance line at 189.00, but fell back. A further decline may create a possible aggressive sell signal. A further decline beneath Intermediate support at 184.03 may confirm the sell signal.