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.
8:15 am
Good Morning!
SPX futures bounced to 6366.00 this morning as investors continue to buy the dip. However, each successive bounce becomes smaller and unable to make new highs. The case in point, the bounce from Friday’s low retraced 82%, while this morning’s retracement was 70%. Meanwhile, support at 6310.00 is eroding and may be unable to preserve the “uptrend.” SPX is on an aggressive sell signal. A decline beneath Intermediate support at 6257.99 upgrades the sell to “confirmed.” The 50-day Moving Average at 6155.98 holds the key to universal recognition that the “uptrend” is broken.
Today’s options chain shows Max Pain at 6345.00. Long gamma is available above 6350.00 while short gamma resides beneath 6300.00. The wild card is the 0DTE traders who may pile on in any directional move.
RealInvestmentAdvice considers, “While the market steadily rose throughout June and July, corporate insiders were growing less enthusiastic about the stock market. Less than a third of S&P 500 companies saw insiders purchase stock in their own company in July. That is the lowest figure since 2018. Moreover, the ratio of buys to sells for insiders fell to almost half of its longer-term average and now sits at its second-lowest reading in four years. Per Bloomberg’s article “Corporate Insiders Were Dumping Stocks Into July’s Record Rally“”
ZeroHedge reports, “US equity futures rise at the end of a week in which markets were buffeted by tariffs, geopolitical developments and corporate earnings. As of 8:00am ET, S&P 500 futures were up 0.3%, with the underlying index on track for its biggest weekly gain in five. Nasdaq 100 futures gained 0.4% as the AI narrative gets more fuel from TSMC and Softbank. In premarket trading, MegaCap Tech sees NVDA leading gains (+0.7%); sectors like Utilities and Consumer Staples are outperforming. Intel rises after CEO Lip-Bu Tan said he’s got the backing of the company’s board, following Trump’s call for his resignation; Tesla slipped after disbanding its Dojo team, upending its effort to build a supercomputer for driverless-vehicle technology. Headlines were quiet since yesterday’s close with no major macro data reporting today. The next key catalyst will be August 12 CPI release. Trump nominated CEA Chair Stephen Miran to fill Kugler’s expiring term which prompted JPM to now see a 25bp cut in September (vs. his previous December call), following by three 25bps cut in the next three meetings. Yields are flat and USD is lower. Commodities are mixed with oil and precious metals higher, while base metals are flat. Gold is in focus after US Customs and Border Protection clarified that Swiss 1kg and 100oz gold bars are subject to reciprocal tariffs. Otherwise its pretty quiet to close out the week with no major data and Fed’s Musalem speaking at 10:20am.”
VIX futures hovered near yesterday’s low beneath the 50-day Moving Average at 16.89. The Cycles Model anticipates a show of strength this weekend, followed by multiple panic rallies over the next two weeks. This may take investors by total surprise as there is little hedging to date.
The August 13 options chain shows short gamma residing at 15.00-16.00. Long gamma starts at 17.00, but only extends to 25.00.
The 10-year Treasury bond yield remains beneath the triple resistance at 43.37-43.91. There is still a chance of a final probe lower to the Cycle Bottom at 41.06, but it is diminishing quickly. The Cycles Model suggests a very strong move higher on Monday which has the potential of resuming the uptrend.
ZeroHedge observes, “After two decidedly ugly auctions, including a poor 3Y on Tuesday and a very poor 10Y yesterday, moments ago the Treasury concluded the week’s trio of refunding auctions when it sold $25BN in 30Y paper. And this particular auction may have been the worst of the lot.
The final refunding auction priced at a high yield of 4.813%, which while lower than July’s 4.889% was not low enough, and with the When Issued at 4.792%, the auction tailed the When Issued by 2.1bps, the biggest tail since last August.”
USD futures have risen this morning after having made a probable Master Cycle low at 97.94 yesterday. It has challenged the 50-day Moving Average at 98.28. Should it close above it, there may be a buys signal on USD. The Cycles Model suggests a probable rally to mid-September, anticipating a rise to the mid-Cycle support/resistance at 102.97.
Gold futures rose to 3534.10 while spot prices (chart) lag as it winds up its Master Cycle. The tariff on Swiss gold has upended the market temporarily, causing a possible reversal that may last to September. There is no shortage of gold in the US. The tariff is meant to curb the trade deficit.