The Practical Investor

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.

1:00 pm

SPX is in the middle of a momentum dump, falling beneath 6700.00 where a wall of puts may cause havoc today.  It bounced above  Intermediate support at 6654.33 and may be attempting a close at or above 6700.00 to avoid gamma pain mentioned in this morning’s post.  Should SPX resume the decline this afternoon, dealers may have to add shorts or sell the index to break even on today’s options market.   A decline beneath Short-term support at 6683.00 creates a possible sell signal. Tomorrow may be a bloodbath of selling with the 50-day Moving Average and the Head & Shoulders formation in play.  .

ZeroHedge remarks, “As we detailed last night, the market is experiencing a strong degrossing in recent narrative themes, and that is most evident in Goldman’s high-beta momentum basket which is getting slammed again this morning…

It appears that momo meltdown is finally bleeding over into the broad markets…”

8:15 am

Good Morning!

SPX futures traded moderately lower this morning after attempting to make a new all-time high yesterday afternoon.  It was repelled by its 5-month trendline underlying its trading channel since early May.  The Cycles Model indicates a potential sell-off that may last through the first week of November with increasing downside strength beginning tomorrow.  There are increasing chances of limit-down days, especially starting in November.

Today’s options chain shows Max Pain at 6735.00.  Long gamma may strengthen above 6750.00 while short gamma is close by at 6730.00.  The options chain shows a short trip-lever at 6700.00.

ZeroHedge reports, “US equity futures are flat again, with tech and small caps lagging as traders parsed the latest earnings reports and corporate news amid worries over trade, the US government shutdown and geopolitical risks. Gold and silver extended declines after Tuesday’s slump.”

VIX futures rose to 18.28, testing the trendline before easing back.  A rise above the trendline and especially the mid-Cycle resistance at 19.54 puts the VIX back on track to rise much higher with the Cycle Top resistance at 31.29 in sight.  The Cycles Model suggests today/tomorrow may see a spike in the VIX.  There is a mismatch between the VIX  Cycle and the SPX Cycles which may foretell another bout of chaos in November.  The current VIX Master Cycle may continue its upward path to late December.

Today is weekly options expiration day for the VIX with today’s short VIX options being liquidated, but long VIX options remain.

The 10-year Treasury note futures showed an overnight low at 39.37 while the cash low was 39.49.  The Master cycle low may have been registered yesterday, October 21.  However, the low came early, leaving the possibility of yet a deeper probe sometime this week.  Once the reversal is complete, the new Master Cycle may take bond yields higher to late December.  The new Master Cycle may start off with a panic rally next week.

USD futures rose to 99.14 this morning as it continues to gain strength.  A move above its Master Cycle high at 99.56 may propel the USD to greater heights, as trending strength may begin this weekend an last through the first week of November.  The current Master Cycle may continue on its uptrend through early December and possibly extend through early January.  Some writers think that a dramatically rising USD may cause a financial crisis.  That puts the cart before the horse since , being the strongest currency, investors would flock to the USD as a safe haven.  In other words, it’s the crisis that causes the USD to rise, not the other way around.

Bitcoin declined to 106930.00 this morning, then bounced.  Should it rise above the mid-Cycle resistance at 110223.00, it may test the Intermediate resistance at 114368.00 in the next few days.  However, a panic Cycle may appear in early November, sending Bitcoin down beneath its Cycle Bottom currently at 95613.56.

Gold futures suffered a shake-out of weak hands, declining to 4021.91.  This elicits a sigh of relief by technicians, staying above round number support at 4000.00.  It is also remaining above critical Cycle Top support, suggesting a bounce may be in order.  A spike high may develop as investors panic back into gold, driving it to a possible 4475.00 to 4525.00.

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.

12.28 pm

The Ag Index has rallied from its Master Cycle low on October 14.  The Cycles Model suggests consolidation for the next week with strength of trend appearing toward the end of the month.  Food commodities and industries a in an accumulation phase with emphasis on higher prices around the turn of the month.

12:07 pm

BKX is nearing ita Master Cycle high which may briefly spike above the 50-day Moving Average at 149.11 by the end of the week.  There is a possibility of BKX reaching its lower trendline near 155.00.  All things considered, the reversal may happen by the end of the week.  Investors are buying the dip but don’t have enough strength of purpose to push BKX to a new all-time high.

10:00 am

Good Morning!

SPX may be in a brief pullback that may lead to another push higher.  However, it seems to be tangled with the trendline that offers resistance to any probe higher.  Should the trendline resistance keep the SPX from making a new high (ATH) by the end of the day, there is a likelihood of a decline to follow.  The current Master Cycle has about two weeks left with no outstanding features, so any decline or rally may be shallow.

ZeroHedge reports, “US equity futures are flat, reversing a small overnight loss, with small caps seeing some underperformance in what looks more like profit-taking than material de-risking. As of 8:00am ET, S&P and Nasdaq futures are unchanged after the S&P 500 notched its best two-day gain since June and the Nasdaq closed at a record high; premarket Mag7 / Semis are mixed but are net weaker with cyclicals underperforming as commodity names are underperforming due to a sharp overnight sell-off in precious metals, among the most notable moves today.”

VIX has broken beneath the trendline support at 18.70 and mid-Cycle Support at 19.54, making a 61.8% Fibonacci retracement.  The retracement has the potential of dropping to the 50-day Moving Average at 16.42, but may not last. Trending Strength may return on Thursday  after the weekly options expiration.  There is explosive growth potential during the first week of November.

TNX has morning low of 39.45-39.47, extending the decline beneath the September low.  The decline may match the April 4 low at 38.86 at completion later this week.  Wave (E) is a rogue Wave that may throw off investors, thinking that the lower rates imply the Fed may loosen rates later this year.  On the contrary, rates may start climbing at a very fast rate in another week or so.

Bitcoin is on a bounce to test the 50-day Moving Average at 114129.00 or Intermediate resistance at 114776.00.  The Cycles Model suggests minimal (sideways) activity through the end of October.  However, trending strength may reappear in early November, bringing on a possible panic decline through the end of the month.

Gold futures are correcting hard, but to be expected after the strong push above the trendline (throw-over).  The correction is not expected to last, as volatility settles down later this week.  There may be a final probe to a new all-time high starting next week and through the first week of November.  We may be witnessing a shake-out of weaker hands as the first bout of profit taking emerges.

ZeroHedge remarks, “Precious metals have been clubbed like a baby seal this morning with Gold down over 5% (biggest drop since Aug 2020)…

Silver is doing even worse, down over 7% (biggest drop since Feb 2021)…”

USD has bounced off the 50-day Moving Average at 98.05 and has emerged above the trendline in a very short correction.  With the low in TNX coming in this week, I do not anticipate a retest of the 50-day Moving Average.  The continued rally may last to the end of November.

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.

10:15 am

The Ag Index is approaching its Master Cycle low, due in the next week.  The intended target may be the lower trendline near 340.00.  This is an ideal time to accumulate shares of agricultural companies and commodities.

10:00 am

BKX is testing its trendline near 151.50, making a 50% retracement.  the 50-day Moving Average is at 148.58, delineating the sell signal.  Volatility is rising, suggesting a possible test of the low.  However, the current Master Cycle may end next week at the trendline.

ZeroHedge observes, “JPMorgan CEO Jamie Dimon has sparked controversy in banking and finance circles amid a number of high profile (and sudden) bankruptcies, saying during his earnings call yesterday that:

“My antenna goes up when things like that happen. I probably shouldn’t say this but when you see one cockroach there are probably more.””

7:50 am Please note that I will be absent for the next week due to family and business obligations.  

Good Morning!

SPX futures have risen to 6691.10 this morning and and appear to be lingering nearby, threatening to rise above 6700.00.  Should that take place, the probability of a new high may arise, extending the peak to early November.  The rally may have broken out due to a peace agreement in the Middle East, as sentiment continues to run high in this (still) overbought market.  Despite the rising risks, investors continue to be afraid of missing out.  However, equities are “on the edge” of a downturn.  A decline beneath 6550.00 turns the market bearish.

Today’s options chain shows Max Pain at 6650.00.  Long gamma begins above 6700.00 wile short gamma strengthens beneath 6625.00.

ZeroHedge reports, “US equity futures are again higher due a combination of softening trade rhetoric, a dovish Powell who reassured markets that another rate cut was coming, and solid results from BofA and Morgan Stanley.”

VIX futures have settled back to the trendline and mid-Cycle support at 19.40, maintaining the buy signal.  Should equities run bullish, VIX may decline to the 50-day Moving Average at 16.14.  Regardless of the short-term moves, the VIX appears to be developing a bullish uptrend.  The Cycles Model calls for higher volatility later this week and next week, due to options expiration on Friday.

Today  is VIX options expiration day.  Activity may be mutes until expiration at the close.  Short gamma stretches from 13.50 to 19.00.  Long gamma may begin at 20.00 and pulses at 25.00 and 30.00, showing muted institutional presence.

TNX continues its decline this morning with an approximate week left in the Master Cycle.  It appears likely that TNX may exceed its September low, extending a roguish Wave (E).  Bond volatility is due break out early next week as a precursor to a potential reversal.

USD is hovering above its declining trendline after making a possible Master Cycle high on October 9.  The Master Cycle suggests a potential disturbance in the Cycle this weekend, causing volatility to rise.  Should the USD not decline beneath the 50-day Moving Average at 97.99, there may be a possible phase shift in the USD, resuming the rally.

Bitcoin futures declined to 110160.00 as it approaches mid-Cycle support at 109331.00.  It has cleanly broken beneath the 50-day Moving Average at 114318.00, confirming the sell signal.  The decline may continue with rising volatility through early November, with a possible end to the Master Cycle in late November.

Gold futures have exceeded 4200.00 and may be due for some overbought relief as a short-term pullback is due.  However, volatility may be due to return this weekend with panic buying developing in late October and early November.  The initial target (above 4200.00) has been met.  A throw-over (above the trendline) may develop as early as this weekend.  The “gotta have it” speculators may drive the price of gold to 4500.00 or higher.

ZeroHedge remarks, “Fresh from reporting a solid set of numbers for the third quarter, JPMorgan CEO Jamie Dimon said he sees “some logic” in owning gold, while declining to say whether he thinks the precious metal is overvalued after its record run-up (perhaps smart, considering his catastrophic attempts to assign value to bitcoin over the past decade).”

Crude oil futures dropped to 57.99 this morning, nudging the Master Cycle a little lower.  Crude may be at the low and ready to begin a serious rally into the month of November.  Trending strength appears again this weekend, according to the Cycles Model.

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.

8:10 am

Good Morning!

SPX futures are back beneath the Intermediate support at 6601.00, confirming the sell signal made on Friday.  A further decline beneath the 50-day Moving Average at 6526.00 brings on a plethora of sellers as it is universally recognized as a key support.  Yesterday afternoon I highlighted a Head & Shoulders formation lurking at Friday’s low that targeted a minimum decline to 6336.00, near the September 2 low.  Also in play is the August low at 6212.69 as a short-term goal.  Should we see the decline continue,  we may see the SPX completely retrace the rally from April 7 over the next month.  The SPX went from massively overbought on Thursday to neutral today.  However, Investors are unsure of what to do as the old regime seems to have crumbled.  Commercials are still very long, but may change on a dime.  As a result, retail investors are casting about for investment ideas and the money flows have declined to a trickle.

Today’s options chain shows Max Pain at 6660.00.  Long gamma may begin above 6675.00 while short gamma strengthens beneath 6645.00.

ZeroHedge reports, “The market rollercoaster continues: after Monday’s faceripping bounce, US equity futures are lower again led by tech, part of a global risk-off tone as the US/China trade war returned after Beijing vowed to “fight to the end” in the tariff and trade war, while acknowledging that the door for negotiation is open and trade talks between the two countries had resumed yesterday.”

VIX futures may have stressed to a new high in the overnight market, causing the term structure to spike.  Friday’s market shock is still on investors’ minds with most still unsure of what to do.  Pressure is building for a panic situation that may appear later this week, according to the Cycles Model.

Tomorrow’s options chain shows heavy loads of short gamma from 14.50 to 21.00.  Long gamma may begin above 25.00 with some institutional participation to 55.00.

TNX futures declined to 39.99 in the pre-market session, dropping beneath the Cycle Bottom support at 40.28.  The Cycles Model indicates 1-2 more weeks of decline with a possible target beneath the September low.  This may extend Wave (E), which is not unusual.  The sell-off in equities may be a driver for the decline in yields, as investors still believe that treasuries may be a safe haven.  However, once the decline is complete, a rally may ensue to mid-December.

USD is consolidating beneath Thursday’s Master Cycle high as it enters a corrective period that may last to the end of November.  Should the USD find support at the 50-dayMoving Average (97.96) in the next two weeks, USD may make a bullish turn.

Bitcoin’s bounce was stopped at Intermediate resistance at 116112.00 this morning.  It has remained on a sell signal and may challenge the mid-Cycle support at 109123.90 today, as the Cycles Model suggests volatility may increase today.  Should Friday’s low be exceeded, the Cycles Model suggests a continuous decline may ensue with multiple panic days by mid-November.

Gold futures continue their climb to the upper trendline, currently just above 4200.00.  Another panic upswing may occur this weekend.  Should it reach the trendline, it may go into a throw-over panic session toward the end of the month.  The  rally may still extend to mid-November.  4500 may be possible.  This gold rally is overbought, but may get to be even more explosive.  No one is selling.  There is a concern for capital controls being implemented in Europe, which may be a negative for prices.

WTI Crude futures may have extended its Master Cycle low to this morning when it declined to 57.34.  The Cycle Bottom appears at 57.27, so it appears that there may be a reversal that could develop into a new uptrend.  Note the Head & Shoulders formation that has been in play since the beginning of the year.

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.

2:57 pm

The SPX bounce may have been repelled by short-term resistance at 6663.40, a 55% retracement.  As the market enters its final hour of trading, mutual funds are balancing out the buys and sells.  Should there be a a vacuum of buyers, the mutual funds will be sellers in the final half hour of the day.  Once beneath Friday’s closing low, the Head & Shoulders formation may be triggered with a possible minimum target at the September 2 low.  The August 1 low may also be in play in the next few days.

8:30 am

Good Morning!

SPX futures bounced over the weekend after declining to 6510.00 in the after hours session on Friday(a decline of 3.72% on Friday).  The Futures recovered to 6665.10 over the weekend session, but have since eased back down  to 6630.00 at this time.  The 50-day Moving Average lies at 6522.95, a key support.  The declining fractal is incomplete thus far, requiring yet another plunge beneath 6510.00 to establish an impulsive bearish reversal.

Today’s options chain shows Max Pain at 6620.00.  Long gamma strengthens above 6640.00 while short gamma begins beneath 6600.00 and has a massive put position at 6550.00.

ZeroHedge reports, “US markets closed last week with the largest one-day loss in six months, with Asian overnight futures pointed to a sharp downdraft on Monday. HSCEI and Hang Seng futures closed down 5% (limit down) on Friday night.
However, on Sunday Trump walked back some of his Friday comments, stating that “November 1 is an eternity” and expressing optimism that “they will be fine with China.””

VIX futures have declined to the upper trendline of its 4-month trading channel and the mid-Cycle support at 19.36 this morning.  Should support be found there, VIX may resume its upswing, as it may signal a definite change in trend.

Yhr October 125 options chain shows short gamma in the 14.50 to 21.00 range with a large presence in puts at the 21.00 strike.  Long gamma begins at 25.00 but tapers off at 30.00.  Investors still haven’t caught on that there may be a shift in trend.

TNX has paused above its Cycle Bottom at 40.31.  The Cycles Model shows a possible two-week continuation of the decline, possibly beneath its September 17 low at 39.92, creating a new Master Cycle low.

USD futures may have made their Master Cycle high last Thursday at 99.56.  Should the USD decline beneath the 50-day Moving Average at 98.06, we may see a decline extend to the end of November. However, a general malaise may be building in the European markets, causing liquidity to flee to the US.

Gold futures may have reached 4100.00 this morning as it extends a possible blow-off phase.  The Cycles Model suggests this phase may last into early November.  A throw-over above the upper trendline is possible, making it impossible to estimate the final price target.

Bitcoin has made an approximate 50% retracement of its weekend decline, an approximate 16.25% decline.  The reason for this catastrophic liquidation was overleverage, wiping out virtually all margin accounts.   Since then it has declined back beneath its 50-day Moving Average at 1148362.00, renewing a possible sell signal.  The next level to watch is round number support at 100000.00.  The Cycles Model suggests a continued decline to late November, suggesting the Cycle Bottom at 90722.00 may be challenged.  The April low at 74426.00 may also be in play.

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.

1:05 pm

The Ag Index is in the final phase of its correction.  A reversal may be imminent in the next week., making this a good time to accumulate agricultural shares and commodities.  The Ag sector is experiencing a secular uptrend since June 2020 and may be due for a resumption after the current correction.

ZeroHedge remarks, “The agriculture industry in the United States is deeply broken. Farmers are the foundation of it all, but they are being financially squeezed from every direction. They are being squeezed by the giant monopolies that control the seeds, fertilizer and machinery that they need. And they are also being squeezed by the giant monopolies that purchase most of what they produce. Meanwhile, demand from overseas has dried up thanks to the global trade war. U.S. farmers really are facing a “perfect storm”, and as a result most farms are losing money and bankruptcies are surging.

Most Americans have absolutely no idea how bad it has gotten.”

12:55 pm

BKX has been caught up in the liquidity downdraft that may break the uptrend.  The Cycles Model suggests the decline may last to late October before a corrective bounce may ensue.

ZeroHedge remarks, “Earlier today, when following up on what is the biggest story of the week, if not year, we said that the First Brands bankruptcy, where a historical meltdown of rehypothecated, off-balance sheet debt…

… means that at least $1.9 billion in cash has disappeared, has been completely ignored by virtually everyone due to the far shinier daily AI circle jerk, which helps melt stocks up every single day and serves as a wonderful distraction to everything else.”

12:38 pm

TNX confirmed its race to a new low in the Triangle Formation.  It has about two weeks to go and may challenge the April low at 38.86 in the current Master Cycle.  Thereafter, it may embark on a rally that may last to mid-December.

12:25 pm

VIX may have “phase shifted” into a new Master Cycle as it broke above the upper 6-month trendline.  The move was quite unexpected, based on Trumps threat to massively increase tariffs on Chinese products.  This may allow the new Master Cycle to continue to late December.

12:17 pm

SPX has declined to 6618.18 as it reversed from its all-time high.  The next support may be the 50-day Moving Average at 6527.05 where a bounce may be generated.

ZeroHedge reports, “US equity markets are tumbling following comments from President Trump threatening “a massive increase of tariffs on Chinese products” being imported into the US, accusing China of becoming “hostile” due to their export controls

Additionally, Trump said he saw “no reason” to meet Chinese President Xi Jinping

This immediately prompted a wave of selling pressure across all equity indices with Nasdaq down over 2%.”

9:05 am

Good Morning!

SPX futures are hovering between their all-time highs and the Ending Diagonal trendline at 6700.00.  The Cycles Model suggests today may be an ideal day for a reversal beneath the trendline, allowing equities to begin their decline for the next month.  Retail investors are cautiously adding long positions through calls.  However, smart money may be taking the opposite side, as exhaustion sets in.  The contest may not be evenly matched as earnings season is about to begin in earnest.

Today’s options chain shows Max Pain at 6745.00.  Long gamma may begin above 6750.00 while a wall of over 9,000 put contracts await at 6700.00.

ZeroHedge remarks, “US equity futures are flat as markets took a breather at the end of another “buy-everything” week dominated by speculation about the sustainability of the blistering global equity rally. As of 8:00am ET, S&P 500 were unchanged, with the gauge on track for a modest weekly gain to a new record high despite yesterday’s pullback and with the US government shutdown in its second week with no end in sight and the economic data drought depriving investors of guidance (which appears to be bullish).”

VIX futures continue to wind up for a sudden release as tensions build in the vol area.  The most likely path may be a quick trip to a new low before an explosive move higher.  The alternate scenario may be a simple phase shift into high gear.  The reality is that extended bouts of low volatility lead to explosive releases of highly chaotic moves.

The October 15 options chain shows short gamma beneath 16.00 with a singular substantial holding of puts at 21.00.  Long gamma may begin at 17.00, but without much conviction above 30.00.

TNX dove to 40.90 this morning as it was repelled at the Triangle trendline to make a possibly new low.  The Cycles Model suggests another week of decline and possibly an extension of Wave [E] in an effort to force rates even lower.

ZeroHedge reports, “After two decidedly subpar coupon auctions earlier this week – a soggy 3Y and a disappointing 10Y – moments ago we got the week’s final sale, this time of 30Y paper and this one too could have been stronger (although it also could have been worse).

The reopening of 29Y-10M cusip UM8 priced at a high yield of 4.734%, which while up from 4.651% last month, was still the second lowest since March. It also tailed the When Issued 4.730% by a modest 0.4bps, the 3rd tail in the last 4 auctions.”

USD may have begun a reversal after making a possible Master Cycle high.  However, the fractal may not be complete, leaving room for a possible new high early next week.  However, the breakout may be met with some resistance before resuming it rally.  An alternate view suggests the current Master Cycle may extend to a low in the next week, rather than a high.

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.

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.

7:30 am

Good Morning!

SPX futures made a weaker retracement to 6729.00 this morning before returning to yesterday’s close.  The Cycles Model suggests, not only a loss of bullish energy, but an imminent increase in volatility/trending strength that may solidify the downturn.   The Ending Diagonal trendline is near 6675.00 today and crossing beneath it may invoke an aggressive sell signal.  Intermediate support lies at 6571.86 and the 50-day Moving Average is at 6505.79 beneath which the sell signal is confirmed.  The Cycles Model also infers the decline may last through early November, so this should be taken seriously.

ZeroHedge reports, “utures are higher again, reversing Tuesday’s modest Oracle-led decline, and are led by small caps despite additional multi billion tech investment headlines. As of 8:00am ET, S&P 500 futures were 0.1% higher, set for their 8th gain in the past 9 days, with Nasdaq 100 contacts +0.2% with Mag7, Semis, and AI-themed plays all rallying off the investment news.’

VIX futures have pulled back modestly from yesterday’s high. A breakout above the upper trendline and Intermediate resistance at 19.36 may be imminent.  The Cycles Model suggests a directional change may be imminent.

TNX continues its corrective decline toward the Cycle Bottom near 40.33.  There are about two weeks left in the current Master Cycle and the fractal structure allows a possible deeper decline.  The Treasury auction schedule includes the sale of $39 billion of 10-year notes today, which may confirm the dip in yields.

USD futures have broken out above the trendline near 88.75.  However, the Cycles Model suggests the breakout may be short-lived and may be indicating a potential pullback, which may give some relief to the dollar shorts.

Bitcoin has bounced from its Monday low at 120661.00. in a bounce that may retake a fraction of the decline.  Further downside may be indicated.  A potential target may be Intermediate support at 115538.00.

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.

8:10 am

Good Morning!

SPX futures are hovering beneath their all-time high at 6750.87 (cash) /6751.90 (futures), unable to break through resistance.  Should a reversal be made, the Cycles Model suggests a month-long decline may emerge.  The Ending Diagonal trendline lies near 6650.00, where a sell signal may be found.  Retail investors have been net buyers of ETFs since January with only a brief pause in early April along with record purchases of call options, forcing the dealers to comply by covering them.  How long can it last?  A full market Cycle lasts approximately 183 market days.  The market has arrived at its fullness in time.  What can possibly go wrong?

Today’s options chain shows Max Pain at 6735.00-6740.00.  Long gamma may begin above 6750.00 while short gamma lies beneath 6715.00.

ZeroHedge reports, “Futures are flat after the S&P, Nasdaq and Russell all made new ATHs yesterday, driven by the AI theme and a broad-based rally. As of 8:15am, S&P futures are unchanged while Nasdaq futures eke out a 0.1% gain as trader keep an eye on TSLA’s new car announcement…”

VIX futures are flat above the 50-day Moving Average at 15.80.  Retail call buying in stocks has hit a record 65% of options volume last week and appear to be on a similar footing this week.  Yet, VIX options are rising, largely due to hedging by large investors.

Tomorrow’s options chain shows a single holdout of shorts at 16.00.  Long gamma begins at 17.00 and proceeds with active interest to 30.00.  The October 22 options chain shows massive short interest in the VIX between 15.00 and 19.00.  Long gamma appears above 20.00 and vigorously extends to 100.00.

TNX may be testing trendline support at 41.50 this morning.  Today’s auction of $58 billion of 3-year Treasury notes may test the confidence of investors.  Should it be successful, we may see TNX decline toward the Cycle Bottom at 40.31 over the next few days.

USD futures have risen to 98.56 this morning, anticipating a possible breakout above the declining trendline.  The Cycles Model shows rising strength in to the weekend which may give USD a boost above the trendline.

Bitcoin has pulled back from yesterday’s all-time high at 126287.29 made yesterday.  It may be too soon to call it a top, but the reversal was made in precise Cyclical time.  Bitcoin is at a spike high, making it difficult to obtain any signals until the Intermediate support is crossed at 115299.00.  Once the reversal is made, the Cycles Model suggests a decline to late November.

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.

7:50 am

Good Morning!

SPX futures rose to 6745.00 over the weekend, then pulled back, leaving Friday’s high at 6750.87 intact.  The Cycles Model suggests that last week’s searing bid for 3 consecutive all-time highs may have been an overtime move to pull in the weakest hands.  This has raised confidence so high that analysts are predicting that the earnings bar has been set too low.  S&P earnings reports for the 3rd quarter start next Monday, while 68% of all the S&P companies will have reported by the end of October.  Consensus estimates show that expected earnings growth may be half the average 30% annualized growth rate.  Meanwhile, as money managers predict an inflationary boom, the Cycles Model infers a decline may be forthcoming that may test prior supports.

Today’s options chain shows Max Pain at 6715.00.  Long gamma may begin above 6745.00 while short gamma strengthens beneath 6700.00.

ZeroHedge reports, “Stock futures are higher again as traders stay positive on the upcoming US earnings season, ignore the government shutdown (though federal unions are suing to prevent the furloughs from being converted into RIFs) and get a boost from the latest political shock in Japan where pro-stimulus Sanae Takaichi was picked as the next PM (shocking markets and sending the Nikkei soaring and the yen crashing) as well as the latest chip deal out of Nvidia and AMD.”

VIX futures consolidated beneath Friday’s high over the weekend, leaving it on a buy signal. Last week’s moves were anomalous, as the VIX rose while the SPX also advanced, being led by call buying by retail investors.  This oddity suggests that there may be some very large players that are hedging against a market decline.   The Cycles Model suggests a large move in the VIX may take place in the next 1-2 weeks.

The October 8 options chain shows a singular massive put holding at 16.00 while calls are adding large contracts at 17.00 to 30.00.

TNX has leaped above Intermediate support/resistance at 41.55, creating a possible buy signal for the 10-year Treasury note.  It has also risen above the Triangle trendline, which may offer support in a possible pullback.  The Cycles Model suggests a possible rally to the end of October.  The Treasury auction schedule starts tomorrow while the Cycles Model shows rising bond volatility starting this week.

USD futures slipped above the 50-day Moving Average at 98.06 this morning, reinforcing the existing buy signal.  A continuation of this move may exceed the trading channel trendline at 98.80, creating discomfort for the dollar shorts.  The Cycles Model suggests rising volatility for the next week or so.

Bitcoin may have made its Master Cycle high at 125710.00 yesterday, spot-on day 258 of its Master Cycle.  While the Cycles Model suggests the move may be over, some analysts believe that bitcoin may have gained strength from the shutdown.

Gold futures rose over the weekend, propelling the CME price well over 3900.00.  A fractal structure suggests a potential high near 3933.00.  Should that be so, a decline beneath the Cycle Top at 3796.14 may produce a sell signal.  There is approximately a #0 point differential between the futures and the Chicago Mercantile Exchange.