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 Banking Index may be bouncing beneath the mid-Cycle support/resistance at 173.16. Should it rise above the mid-Cycle, it may rise to the Intermediate level currently at 183.84, depending on how far rates decline. The Master Cycle terminates late in October. The OFR (Office of Financial Research) is being gutted and still offers out-of-date data, which may be a concern.
ZeroHedge remarks, “The size of the repo market has ballooned to over $13.5 trillion in outstanding agreements daily, according to the government’s Office of Financial Research (OFR). Via the repo market, financial institutions borrow from, and lend to, each other mostly overnight, but also for longer periods, such as for one week, secured by high-quality liquid collateral with a “haircut.””
8:00 am
Good Morning!
SPX futures are hovering near Intermediate support/resistance at 7686.31 this morning. The 52-day Moving Average lies at 7637.67, which may be the downside target to propel a bounce higher. The uptrend is intact, but subject to multiple crosswinds. The economy appears resilient despite rising rates and the prospect of war hasn’t intensified to the point of no return despite aggressions on all sides. The decline in the price of oil doesn’t bring relief from the stress. The fractal structure may be incomplete to the upside. If so, the market awaits the news that signals some relief.
ZeroHedge reports, “Futures are higher with S&P leading both tech and small caps ahead of today’s core PCE data and Micron earnings after the close, as yields remain sticky, unchanged from yesterday’s multi-decade highs, and the USD fractionally lower.”
The premarket VIX is consolidating at the 52-day Moving Averate at 16.04, waiting for a breakout or a breakdown. The Cycles model suggests “down” for the next move. The Triangle “tail” may not be fully formed. It awaits completion at the lower trading channel trendline near 12.50. Should the animal spirits return to equities, the VIX may undershoot the trendline.
The US 10-year Bond Yield opened lower this morning, signaling rate relief may be at hand. Should rates relax, they may find support at the neckline of the Head & Shoulders formation. The Cycle Top also rests there, giving strength to that suport. A pullbackmay shake out some of the crowded shorts in bonds.
The US Dollar Index has pulled back from its Cycle Top and neckline at 101.83, having reached a high yesterday at 101.61. USD is also on track for a correction, possibly to the 52-day Moving Average currently at 99.96 in the next two weeks.
Crude oil bounced this morning, but downward pressure is still extant. The most likely support may be at the 52-day Moving Average at 88.12. Tankers are moving through Hormuz, Saudi Arabia has restarted its pipeline and Trump may rescind the Russian sanctions in exchange for political prisoners. What can possibly go wrong?
ZeroHedge notes, “Texas ranchers and truckers could start seeing some relief at the fuel pump starting this week after Gov. Greg Abbott proclaimed a statewide disaster on Sept. 28 to ease diesel shortages.”
Gold has bounced from round number support at 4100.00 this morning. The Cycles Model allows an approximate two week rally that may test the mid-Cycle resistance at 4547.17. It may go higher due to trending strength appearing in the next week.
The Agricultural Index tested last week’s lo and it held. This supports the thesis of a rising trend as price has found support. The Cycles Model infers a possible two-month rally that may engage the Head & Shoulders formation.