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.
9:20 am
Good Morning!
SPX futures rose to test Intermediate resistance at 7680.76 this morning. It may pull back to the 52-day Moving Average at /610.41 before moving higher. The pullback may be short-lived, as the Cycles Model suggests a burst of trending strength (short squeeze) may re-appear over the weekend and into next week. Today may be a highly volatile day right up to the close as the indexes rebalance and quad witching day makes its debut.
ZeroHedge reports, “US stock futures are little changed on Friday, with big tech stocks rising while sentiment is supported by another modest decline in oil prices; a near-record $7 trillion quad-witching and index rebalances add to Friday’s set-up.”
VIX declined through the 52-day Moving Average , confirming its sell signal. The target may be the bottom trendline of the Ending diagonal formation near 12.50. The Cycles Model allow approximaely 3 weeks for the VIX to reach its target.
The US 10-year Bond Yield futures reached 49.94 this morning,as it tests the Heaad & Shoulders neckline at 50.00. The necklne resistance may hold on this attempt, sending TNX down to support in 2-3 weeks. The first level of support is the Cycle Top at 48.87. Should TNX not go lower than the Cycle Top, the immediate effect may be a rally above the neckline.
The US Dollar continues its rally off the Madter Cycle low. The Cycles Model allows the rally to continue to mid-October, putting the Head & Shoulders neckline in its path. Today may be a particularly strong day, with follow-up strength in early October. The Dollar shorts are becoming uncomfortable as a squeeze may develop.
Crude oil has reversed out of its correction and may be headed higher. The Cycle Top is in sight and trending strength may return next week. Thr current Master Cycle may last until mid-October, suggesting the February high may be its final target. Refineries may switch to diesel production instead of gasoline due to a wider profit margin.
ZeroHedge explains, “How taxes, regulation, refinery closures, sanctions and declining domestic production turned a geopolitical shock into a diesel-price crisis
Do not blame diesel prices on the Iran war or the disruption of the Strait of Hormuz. The geopolitical risk premium attached to oil prices is relevant, but the market was already weakened by policy choices.”
ZeroHedge notes, “A major refinery in the US Midwest went offline this week after a power outage, adding to global refining disruptions as US diesel prices reach record highs.”
Gold has pulled back from Intermdeate resistance at 4399.00 this morning. The Cycles Model is neutral for about a week, suggesting a sideways-to-declining correction. The bounce may resume next week with the mid-Cycle resistance at 4556.71 as a potential target.
The Ag Index has declined through its Cycle Top support at 427.41 and may be headed for Intermediate support at 419.16. The Cycle allow up to 2 weeks to perform a double reversal. That period may come to a close next week.