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.

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.

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.

2:38 pm

SPX has declined to 6705.67 after making another all-time high at 6750.00.  The final hour of the day will tell us whether the reversal today is the one.  A Key Reversal may be made by declining and closing beneath 6693.00.  While not a guarantee, Key Reversals have a high propensity to signal a change in trend.  Good luck and good trading!

8:00 am

Good Morning!

SPX futures are hovering beneath yesterday’s high.  AI fever is jumping off the charts as shutdown fears and overbought conditions are being overridden by the Fear of Missing Out.  There is no NFP report today, leaving the state of the economy in a fog.  The current Master Cycle has extended about a week and is due for a reversal.  Fractal resistance lies at 6750.00 while the Cycle Top has risen to 6790.37.  There is no assurance that either possible target may be met.  The trendline and Intermediate support lie at 6648.55 where a possible sell signal may be obtained.

Today’s options chain shows a heavy population of puts and calls at 6700.00.  Long gamma may dominate above 6725.00 while short gamma strengthens beneath 6675.00.

ZeroHedge reports, “US equity futures are heading into Day 3 of the US government shutdown on pace for what is now another daily all time high. S&P 500 and Nasdaq 100 futures rose 0.1% as of 8:15 am in New York, on course for the longest winning streak since July.”

VIX futures declined beneath the 50-day Moving Average to 16.43 this morning.  Should the downtrend continue, there is a possibility of a further decline to the lower trendline near 12.50 in the next week.  Caution is being tossed to the wind as hedges may be abandoned.

The October 8 options chain shows speculators are playing cards close to the vest as the largest number of put contracts is at 16.00 and the largest call swarm is at 17.00.

The 10-year Treasury yield is hovering near yesterday’s close as investors await further developments.  The Cycles Model suggests steady-to-lower rates over the next several weeks.  The downside target may be the Cycle Bottom, currently at 40.28.

Bitcoin has pulled back from yesterday’s high at 121187.00, making a Master Cycle high or very nearly so.  The fractal target for this probe is near 122000.00, so we remain neutral on BTC.

USD continues to hover beneath the 50-day Moving Average at 98.05..  The Cycles Model shows weakness for the next week or so, suggesting the USD may decline to the lower trendline near 95.00.

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.

10:09 am

BKX has crossed beneath its Ending Diagonal trendline and Intermediate support/resistance at 150.01.  This place BKX on a sell signal.  Further confirmation may be made beneath the 50-day Moving Average at 147.68.  This may be the canary i the coal mine telling us that liquidity is getting thin at the top.  The initial target may be the mid-Cycle support at 134.06.  However, should a panic develop, the April 7 low may be noted.

8:30 am

Good Morning!

SPX futures rose to a new all-time-high at 6731.40 as it surges to its final destination.  There is a high probability that resistance between 6750.00 and the Cycle Top is at 6779.70, the final bastion of resistance in the context of the Master Cycle.  There are no assurances that any of the targets may be met.

Today’s options chain shows Max Pain at 6690.00.  Long gamma begins at 6700.00 and is especially strong above 6750.00 while short gamma resides beneath 6680.00.

ZeroHedge reports, “US equity futures are higher with tech and small caps both outperforming as the screaming AI euphoria drove global indexes to fresh highs after an OpenAI share sale valued the company at an eye-popping $500 billion, catapulting the firm to become the world’s most valuable startup…”

VIX futures have declined to 15.95 this morning, being supported above the 50-day Moving Average at 15.78.   Should an effort to suppress the VIX in the next few days, it may produce a Master Cycle low near 12.70.  This would give the VIX free rein to rally through late December.  There is a mismatch between the SPX and the VIX Cycles, which portends a chaotic market through the end of the year.  An alternate view is a possible Cycle Top in the next week or so, as investors panic during the next week or so..

The October 8 options chain shows declining short gamma at 16.00.  Long gamma begins at 17.00 and building a presence up to 55.00.

The US Treasury Note Yield is consolidating beneath the trendline.  The Cycles Model allows approximately three more weeks of decline with a potential target near the Cycle Bottom support at 40.30.

USD futures remain beneath Intermediate resistance at 97.83 this morning. The Cycles Model allows an approximate week of decline with a possible target near 95.00-96.00.  USD shorts may note: Once the USD reaches its mark, a possible rally may take the USD higher through early December.

Bitcoin may be in its final surge to its proposed target at 122000.00 today, with the potential of reaching it in the next few days.  Should it exceed that reference point, Cycle Top resistance is at 128823.41 in an extended Cycle.

Gold futures rose another 25 points in the after-hours to 3922.80, then made a sudden and sharp reversal.  There is an approximate 35 point mismatch between the futures and the CME.  Watch for a possible decline beneath the Cycle Top support at 3780.04 (3814.00 in the futures), offering a possible sell signal.

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.

8:00 am

Good Morning!

SPX futures declined to 6629.10 this morning as the government shutdown becomes reality.    Markets are based on confidence.  A shutdown destroys confidence in government, as if it wasn’t already lost.  Since government spending affects so much of our economy, confidence declines in the markets’ ability to perform as usual, as well.  Critical support lies at the Ending Diagonal trendline and Intermediate support at 6532.10.

This morning’s options chain shows Max Pain at 6665.00.  Long gamma rules above 6700.00, while short gamma dominates beneath 6650.00.

ZeroHedge reports, “US stock futures are weaker to start the new quarter but have cut overnight losses by more than a third, as the first US government shutdown in nearly seven years begins. The first shutdown during Trump 1.0 lasted 3 days and the second shutdown 35 days: how long will this one last? As of 8:00am ET, S&P futures are down 0.4%, but well off session lows while Nasdaq futures drop 0.5%.”

VIX futures rose to 17.28 this morning as instability sets in.  The Cycles Model infers a potential spike in volatility during the next two weeks as investors/speculators assess the impact of the shutdown.  As the crowd was obliged to follow the market higher, the cost of protection has risen, forcing the dealers to short the downside.  Should the market fail, dealer covering could magnify the downside move in equities.

Today’s options expire at the close.  The October 8 options chain shows short gamma at 16.00.  Long gamma starts at 17.00 and is building to 30.00.

10-year Treasury Note yields declined to a morning low at 40.93 before a minor bounce.  It is on a sell signal with a potential target near the Cycle Bottom at 40.32.

ZeroHedge observes, “Ahead of today’s ADP print we said that traders will be especially focused on the otherwise unreliable number, since the government shutdown which hit at midnight means that this Friday’s payrolls report will likely not happen. Well, if that is the case, the market – and Fed – may well be expecting a jumbo 50bps rate cut again in 3 weeks, because moments ago ADP reported that in September, the US private sector shed 32,000 jobs, the worst print since March 2023…”

USD futures declined to 97.14 this morning, not yet showing in the forex market. The Cycles Model suggests the USD may go lower over the next two weeks.  A potential target may be the lower trendline near 95.00, possibly extending Wave [4] even lower.

Gold futures rocketed to 3922.10 this morning as government uncertainty incentivizes investors to seek a safe haven.  Gold has “thrown over” its Cycle Top at 3771.64, putting it in an unstable position.  A reversal beneath the Cycle Top may incur a sell signal.

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.

8:00 am

Good Morning!

SPX futures reached a low of 6642.40 this morning and is lingering near the low.  The Trendline and Intermediate support lie at 6525.00, where a sell signal awaits.  While no accepted technical signal is given yet, the Master Cycle has turned.  The  Cycles Model offers a potential decline that may last until early November, giving it time to potentially match the April 7 low.  Traders await updates on the potential government shutdown, looming as early as tomorrow.

Today’s options chain shows a very large contingent of puts and calls at 6650.00.  Long gamma gains mastery above 6675 while short gamma dominates beneath 6620.00.

ZeroHedge reports, “Futures are lower as we close out the quarter/month, ahead of what is a most likely (80% odds on Polymarket) government shutdown. As of 8:00am ET, S&P and Nasdaq futures are down 0.2% as sentiment sours after Monday’s optimism. Still, on the final trading day of the month, the S&P 500 is on track for its best September since 2010. ”

VIX futures rose to 16.70 in the overnight session.  It is on a buy signal above 15.73.  Overhead resistance lies at the upper trendline and Intermediate resistance at 19.39.  The Cycles Model suggests a potential breakout in the next two weeks.  The fractal structure suggests the next possible move may be to challenge the impeding trendline.  While hedging is yet tentative, the rush to hedging may explode as the trendline is broken.

Tomorrow’s options chain shows short gamma at 15.00-16.00.  Long gamma gains dominance at 17.00 and is beginning to fill the space between 20.00 and 25.00.

TNX has nudged beneath the trendline, with the next support at 41.00.  However, the government shutdown may temporarily strengthen bonds, causing yields to drop to the Cycle Bottom near 40.34.  Should that be the case, the current Master Cycle may run to mid-October.

While Bitcoin rose above the 50-day Moving Average at 113815.00 yesterday, it fell beneath it this morning on a potential reversal day in the Master Cycle.  It made a 61.8% Fibonacci retracement at 114493.00 yesterday, fulfilling one of the standards for a retracement.   That being said, we may wait for further clarity which may arrive in the next few days.

USD futures are consolidating beneath the 50-day Moving Average at 98.03.  This suggests a possible decline over the next two weeks to the trendline near 95.00.  Should that be so, dollar shorts may get a temporary reprieve from their pain as the bounce may be over.

Gold futures made a reversal this morning after having potentially completed its final fractal in the series.  Should gold decline beneath its Cycle Top at 3762.97, it may offer an aggressive sell signal.  The Model suggests a potential decline may last to mid-November.  Calls for higher prices may persist until the 50-day Moving Average at 3479.18 is broken.

ZeroHedge comments, “Gold at $7,000, silver at $100—Frank Holmes isn’t pulling punches. The U.S. Global Investors CEO, who called $4,000 gold back in 2020, warns that the world teeters on the edge of monetary and geopolitical chaos. Exploding global debt, record military spending, and a Fed trapped between inflation and recession are fueling the perfect storm for precious metals.”

Crude oil has taken a nosedive at the prospect of a government shutdown.  After all, the US Government may be the largest customer of oil-based fuels.  A Master Cycle low is pending until clarification is made about what is being paid and what is being deferred.  The Cycles Model suggests that confusion about the government consumption of oil may be resolved in the next week.

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.

8:00am

Good Morning!

SPX futures rose to 6683.40, taking the high road on Friday to complete its first declining fractal.  NDX is leading the decline and may reverse in the first market hour while the SPX may linger another hour or two.  No one is particularly alarmed.  What few that have recognized the reversal have concluded that the decline may be shallow.  They are correct thus far.  However, the Cycles Model anticipated 5-6 weeks of decline ahead.  While this week’s calendar shows few domestic issues, flight tracking data shows a wave of U.S. tankers being deployed to Europe.

Today’s options chain shows Max Pain at 6640.00.  Long gamma may begin above 6670.00 while short gamma becomes very strong beneath 6610.00.

ZeroHedge reports, “Last week’s small market swoon is a distant memory with US equity futures up sharply on Monday, led by tech and small caps as the S&P looks to set a new ATH. As of 8:00am ET, S&P futures are up 0.5% (and off session highs) keeping the benchmark on track for its best September since at least 2013, even as the month is typically difficult for stocks.”

VIX futures rose to 16.00 over the weekend.  It is back above the 50-day Moving Average at 15.80.  Some of the discounts in the options market have disappeared over the weekend.  There is an anomaly in the Cycles Model, showing VIX peaking in about 2 weeks, while the SPX may continue its decline to early November.  Making things more interesting, market internals agree with the VIX, giving it credence as a possible leading indicator.

The October 1 options chain shows Max Pain at 17.00.  Short gamma still resides at 15.00-16.00.  Long gamma becomes very strong above 20.00 with institutional participation every 5 points above 20.00 to 55.00.

TNX has pulled back over the weekend, consolidating above the trendline.  The most likely path may be a test of the 50-day Moving Average at 43.32 as the Cycles Model indicates a further probe higher may be building.  Analysts claim that the prospect of a government shutdown on Wednesday may already be figured into their calculations.

Bitcoin has bounced to test Intermediate resistance at 112.610.00.  Should it go higher, a plausible target may be near 122000.00.  The Cycles Model may be winding up its final corrective probe higher.  The EU is considering capital controls to keep money from fleeing the continent.  In that case, bitcoin owned by Europeans may be cashed into US dollars to insulate them from seizure.

US dollar futures are testing Intermediate support at 97.84.  Should it break down, a new low may be made.  The Alternate view calls for a possible breakout of the declining trend channel.  The answer may reveal itself in the next two weeks.  Seasonality experts say that “Now is the time to buy the dollar.”

Gold futures are continuing to climb to new heights as it has broken out above the Cycle top at 3755.02.  The Cycles Model suggests that gold may continue its uptrend to mid-November.

ZeroHedge notes, “On the back of a 45% surge in the price of gold this year, the US Treasury’s hoard of the barbarous relic has surpassed $1 trillion in value for the first time in history.”

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.

9:50 am

BKX is testing the upper trendline of its Ending Diagonal formation.  The Cycles Model anticipates a spike in volatility today and lasting into early next week.  A break of the Ending Diagonal is possible.  Should that take place, a decline to the April 7 low may be indicated.  The collapse of Tricolor and the bankruptcy of First Brands Group have taken the shine off asset-backed securities.  Banks are beginning to struggle to assess the impact on their own balance sheets.

8:00 am

Good Morning!

SPX futures made an overnight high at 6620.80 as it attempted to continue the bounce from yesterday’s low.  Intermediate support and the 4-month trendline lie at 6609.92, beneath which lurks a sell signal.  Further confirmation of the sell signal lies at 6446.79, marking the 50-day Moving Average.  The Cycles Model suggests a brief probe higher in an attempt to close the gap at 6635.84.  Should it fail, the trendline may be at risk of being broken.  Successfully closing the gap may extend the bounce.  Once the decision is made, the Cycles Model infers a very strong reaction.

Today’s options chain shows Max Pain at 6610.00.  Long gamma may begin at 6620.00.  Short gamma offers a put wall of 8,828 contracts at 6600.00, telling a cautionary tale should the SPX decline.

ZeroHedge reports, “US equity futures are flat as the market struggled for traction ahead of today’s core PCE report and as investors ponder the Fed’s next policy move following a raft of much stronger than expected US data.”

VIX futures are consolidating above the 50-day Moving Average at 15.84.  The Cycles Model shows trending strength returning today.  A breakout of the mid-Cycle resistance and channel trendline at 19.41 is possible.

TNX is consolidating between the trendline and Intermediate resistance after having broken through it yesterday.  This has further confirmed the buy signal.  The Cycles Model suggests another month of rally for TNX.

ZeroHedge reports, “After a poor 2Y auction, a subpar 5Y yesterday, it only makes sense that the week’s final coupon auction – today’s sale of 7Y paper – was the ugliest yet.

Stopping at a high yield of 3.953%, this was a slight pick up from last month’s 3.925%. It also tailed the When Issued 3.947 by 0.6bps, the biggest tail since August 2024.”

Bitcoin futures are flat after yesterday’s 4.3% rout.  The Cycles Model tagged today as a high volatility day, so the questions is, “Did the volatility come early?  Or, was yesterday a leading indicator of what is to come?”  A partial  explanation suggests the latter, as there may be another surge over the weekend and early next week.  The final low of the current Master Cycle may not arrive until the week of October 6.

USD futures are pulling back after yesterday’s surge above the 50-day Moving Average, confirming a buy signal.  The USD shorts are in pain as I write.  The next resistance is the upper channel trendline near 99.00.  The Cycles Model suggests the USD may linger beneath the trendline over the next week.  Indications are that a breakout may be possible during the week of October 6.  Subsequently, a pullback may emerge in mid-October.

The Ag Index is on a short-term bounce within a decline that may last to mid-October.  The target may be the declining trendline near 345.00.  Th edecline offers an opportunity to accumulate shares as a substantial rally may be about to resume afterwards.

ZeroHedge remarks, “President Donald Trump on Thursday announced that he would use tariff revenue to provide aid to American farmers until his import levies start to benefit them – which he says is only a matter of time.”

1. 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.

2:40 pm

SPX plunged deeper than the morning futures had indicated, changing the conditions for the bounce and subsequent sell-off.  Sellers have abandoned the “down” escalator in favor of the elevator as the next decline is about to become steeper and faster.  Pensions and institutions had already been primed for an orderly rebalancing, taking profits and reducing risk.  However, a certain disorder has been revealed, leading sellers to react sooner and more emphatically.    The next support is the trendline at 6511.00.  The bottom of this decline may be closer to the 50-day Moving Average at 6451.00.

Good Morning!

SPX futures declined to 6607.40 and may be due for a bounce.  The retracement may reach 6650.00 to 6690.00, depending on current events.  Fear of missing out is still strong, despite deteriorating conditions.  The Cycles Model suggests a strong bounce today.  However, it also infers a possible panic decline starting Friday as quarter-end rebalancing kicks in.  Earnings season does not look promising as initial reports may increase downside momentum in October.

Today’s options chain shows Max Pain at 6655.00.  Long gamma may strengthen above 6675.00 while short gamma dominates beneath 6625.00.

ZeroHedge reports, “US equity futures are lower after giving up overnight gains with bond yields reversing earlier losses and rising by 1-2bp and the USD is at session highs; yesterday was the best USD performance since Sep 2. As of 8:10am ET, S&P futures are down 0.4% after concerns over stretched valuations and the pace of interest-rate cuts dragged the main gauge back from a record high. Nasdaq futures are down 0.6% with Mag7 and TMT stocks weaker pre-market, with Oracle falling more than 2%. Intel is higher on reports that it is seeking an investment from AAPL. Defensives are leading Cyclicals pre-market. Commodities are mixed with silver +2% and coffee +1.5% the standouts. US launches a Section 232 (sectoral tariffs) probe on Machinery, Med Devices, and Robotics. Today’s macro data focus is on Q2 GDP data, Durable / Cap Goods, Jobless data, Existing Home Sales, Adv. Goods Net-Exports, and Inventories. While none of these macro releases is expected to be market-moving, they may provide a holistic view of a stable / resilient economy that may be inflecting higher.”

VIX futures rose to 17.44 this morning.  It is on a buy signal above the 50-day Moving Average at 15.85, but may come back down to test it in a correction, offering a possible discount on hedges.  The Cycles Model suggests a possible rally into early October.

The October 1 weekly options chain shows Max Pain at 17.00.  Short gamma resides at 15.00-16.00.  Long gamma becomes strong at 20.00 with increasing favor in calls.

ZeroHedge comments, “The White House budget office has instructed federal agencies to prepare to fire a ton of people (aka ‘reduction-in-force’ plans) that could permanently eliminate jobs in the event of a government shutdown – the latest twist in the latest shutdown groundhog day – effectively challenging Democrats to a game of chicken.”

10-Year Treasury Yield futures rose to 41.97 this morning, testing intermediate resistance at 41.88 as TNX probes higher.  Resistance at the 50-day Moving Average lies at 42.44.  The rally may continue to the week of October 20 with a breakout possible. Q2 GDP has been revised sharply higher to 3.8%, damping the fear of an impending recession.

ZeroHedge reports, “After a rather forgettable 2Y auction yesterday, moments ago the Treasury sold $70BN in yet another subpar coupon auction.

The auction stopped at a high yield of 3.710%, down from 3.724% in August and the lowest since last September. It also tailed then When Issued 3.709% by 0.1bps, the 4th consecutive tailing 5Y auction in a row.”

USD futures rose sharply above the 50-day Moving Average, creating a buy signal.  Dollar shorts are panicking as the Cycles Model calls for a strong trending day.  The trend may continue to mid-October as overseas money, especially from Europe, flees to the US>

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.

9:45 am

The Ag Index is correcting after its rally from its Cycle low in August.  It may continue to decline to mid-October, but may provide an opportunity to “buy the dip.”  The price of foodstuffs may rally dramatically due to global unrest and weather-related shortages.

ZeroHedge observes, “American farmers and ranchers who have sold or exchanged livestock due to drought conditions are eligible for tax relief, the IRS said in a Sept. 22 statement.

Generally, livestock sold due to drought must be replaced within four years. Under the latest extension, farmers and ranchers who had sold livestock due to drought, with replacement periods scheduled to expire by the end of 2025, will now have until the end of the 2026 tax year to make replacements.”

TheEpochTimes comments, “You have doubtless seen the price of beef at the store. It is shocking, outrageous really, ticking up higher and higher each week. When all this began four years ago, many people assumed that prices would settle back down after the crisis ended. That has not happened. The problem is getting worse, not better.

Checking in on the CPI for ground beef, we were shocked to see double-digit rates of inflation. The price of beef steaks in five years has gone up fully 50 percent and keeps rising.

8:00 am

Good Morning!

SPX futures made a 50% retracement of yesterday’s decline thus far.  The absence of a new high may be an early sign that the uptrend may be over.    Rejection at the Cycle Top resistance currently at 6720.21 was anticipated at this late stage in the Master Cycle.  The trendline supporting the uptrend lies near 6500.00.  It may be too early to call the top, but the conditions are there for a strong reversal.  The Cycles Model calls for growing strength of trend for the balance of the month.  Should the reversal take place, the Model  infers a decline into early October.  The conditions are right for a serious decline with the corporate buyback blackout and end of quarter rebalancing either selling or abstaining from new purchases during the earnings reports.  Retail investors have been steadily losing confidence witnessed by the record-breaking use of call options instead of direct participation in the market.  Markets thrive on confidence and decline on the fading belief that markets can be trusted.

Today’s options chain reveals Max Pain at 6670.00.  Long gamma comes in above 6685.00 while short gamma rules beneath 6650.00.

ZeroHedge reports, “US futures are once again higher after taking a brief pause yesterday, led by Tech, with all of Mag7 higher pointing to a stronger open as Alibaba’s spending promise and Micron’s upbeat outlook lift sentiment on AI. Global stocks resumed their rally after a pledge by China’s Alibaba for more spending (now the mere promise of more capex is sufficient to send your stock ripping) and Micron’s upbeat forecast lifted sentiment on AI (even higher… if that’s possible). As of 8:00am ET, S&P and Nasdaq futures rose 0.2% after big tech’s slide in the prior session broke a streak of records; Mag 7 are all green led by AMZN, +1.6% while TMT is boosted by Micron rising +1.5% after strong earnings underscored the boom’s ongoing momentum. Semis were bid after Alibaba jumped 9% in typhoon-hit Hong Kong on plans to boost AI spending beyond an initial $50 billion target. According to JPM, the AI-theme should perform well today (when does it not), including Critical Metals. Cyclicals are leading Defensives. The curve is steepening as 2Y yields are -2bps and the 10Y rises 3bps to 4.13% as the USD is bid up for first time this week. Trump said that Ukraine, with NATO help, has the tools to win back all of its Russian-occupied territory, included continued US weapons sales to NATO, and should shoot down Russian planes that enter its airspace. Gold held near all-time highs. Today’s macro data focus is on Home Sales, Building Permits and Mortgage Apps.”

VIX futures consolidated within yesterday’s trading range, remaining above the 50-day Moving Average at 15.86.  VIX gave an early buy signal which should not be ignored.  Trending strength may be due for a pickup this week, which may be accompanied by a breakout above the trading channel and more substantial recognition of the new trend.  The Cycles Model suggests a possible rally into early-mid October.

Today is (weekly) options expiration for the VIX, so this report is on the October 1 expiration.  Max Pain resides at 17.00.  Short gamma is strong at 15.00-16.00 while long gamma ig gaining adherence above 20.00 with conviction fading above 25.00.

TNX has stalled near the Triangle trendline at 41.25.  It may be due for a burst of energy that allows it to test the 50-day Moving Average at 42.48 in the next few days.  Subsequently, it may be due for a correction lasting about 3 weeks.  The recent plunge in rate volatility has been painful for institutions that have purchase hedges against rising rates.  This may cause them to drop their hedges (at a loss) in time for rates to start rising again.

ZeroHedge observes, “At the start of a new week of coupon issuance, the market (the bond market at least) has been remarkably stable, with yields today barely budging and trading where they closed last Friday, just around 4.13%. Which is why the market barely moved after today’s 2Y auction passed without a glitch.”

Bitcoin is consolidating beneath its 50-day Moving Average at 114254.00.  The Cycles Model offers a triple dose of trending strength through the weekend, suggesting a strong decline ahead, lasting to early-to-mid-October.

Gold futures are consolidating above the Cycle Top support/resistance at 3737.00.  A decline beneath that level may precipitate a sell signal as the rally completes its final probe to an all-time high.  The Cycles Model suggests that, once the reversal is made, a decline may follow to mid-November.