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.

2:38 pm

SPX has ventures down to 6402.00and may now be underneath the three-month trendline.  This may be recognized as a sell signal, especially should it close beneath 6400.00.

8:30 am

Good Morning!

SPX futures made a new low at 6434.10 this morning as support erodes.  Critical support lies at 6400.00.  A break pf the trendline near there gives a sell signal.  Further support lies at the Intermediate level at 6327.00 while the 50-day Moving Average is at 6227.13.  The Cycles Model suggest the uptrend may be broken by Thursday with a decline lasting to the end of September.

Today’s tightly- wound options chain shows Max Pain at 6450.00.  Long gamma becomes strong above 6460.00 while short gamma prevails beneath 6440.00.  This suggests a slip in either direction may set off a chain reaction.

ZeroHedge reports, “Futures are flat ahead of consumer-sector earnings kicking off today, starting with a miss by Home Depot this morning. As of 8:00am ET, S&P futures were unchanged while Nasdaq futures drop 0.1% as Mag7 names are mostly lower ex-NVDA. Semis are mostly weaker ex-INTC which gained more than 6% on news SoftBank would invest $2 billion in the chipmaker and the US would take a 10% stake. Defensives are slightly outperforming Cyclicals. Europe’s Stoxx 600 rose 0.5% as signs of progress toward a peace settlement in Ukraine lifted sentiment. The dollar nudged lower. Treasuries eked out gains after S&P Global Ratings affirmed its AA+ long-term rating for the US, with the 10-year rate falling one basis point to 4.32%. Commodities are weaker dragged lower by energy despite strength in precious and Ags. BBG flags a trade escalation from Friday where Trump expanded the metals tariffs to more than 400 consumer goods, including baby gear, and there is no exemption for goods already in transit; the article states this impacting $328bn of goods based on 2024 trade levels vs. $191bn before the expansion and is more than 6x levels from 2018. Today’s macro data focus is on housing starts and building permits; XHB has lagged SPX YTD by 138bp but has outperformed the SPX by 912bp over the last month.”

VIX futures are hovering near their Master Cycle low made on August 13.  The Cycles Model suggest that the VIX fractal may turn impulsively bullish by the end of the week.

Tomorrow’s options chain shows massive short exposure beneath 20.00, indicating the retail preference.  However, long gamma begins above 20.00 and shows heavy institutional participation every 5 points up to 60.00.

TNX futures rose up to the 50-day Moving Average at 43.51 in the overnight session.  It has since pulled back and may retest the recent low near 41.88, or the Cycle Bottom at 41.01.    Meanwhile, rate cut expectations are faltering as J-Hole approaches on Friday.  Jerome Powell is expected to give his last speech on Friday at 10:00 am.

Bitcoin is challenging the 50-day Moving Average at 115602.00, falling to a low of 114441.44 this morning.  The Cycles Model anticipates a possible sharp correction until the first week of September.  What follows may depend on the depth of the impending correction.

USD is challenging the 50-day Moving Average at 98.13.  Should it remain above it, a possible buy signal may be made.  However, the fractal guidelines suggest a deeper low may be developing.

10:15 am

The Banking Index is hovering above its Intermediate support at 143.30 this morning.  A decline beneath it may induce a sell signal.  Further support of a sell signal lies beneath the 50-day Moving Average at 139.66.

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 went lower this morning, to 6436.30, as the SPX obtained release from the massive options positions which expired on Friday.  While Friday’s options day closed near Max Pain at 6440.00, the dealers had to maintain hedges against the possibility of a melt-up.  The release of these hedges allows the index to “relax” and possibly decline.  Some analysts are calling for a pullback.

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 have risen to 6487.40 thus far this morning, above its August 13 high.   Cycle Top resistance lies at 6507.36.  The Cycles Model indicates  that time is running out for this uptrend.  Investors prefer stocks over cash despite the all-time highs.  That means there are fewer buyers, or maybe none at all, to cushion the inevitable correction.  The Cycles Model posits this is the last possible week for the uptrend.  In addition there is an indication of rising volatility associated with reversals.  Should that be so, there is a high probability of a decline to the end of September.  The uptrend trendline is at 6400.00, beneath which a sell signal may be made.

Today’s options chain shows Max Pain at 6440.00.  Long gamma resides above 6500.00 while short gamma lies beneath 6400.00.

ZeroHedge reports, “US equity futures are slightly higher , hovering near all time highs as traders bet that data on Friday will bolster the case for interest rate cuts even as the latest BofA card data hints at a big beat in today’s retail sales print (see preview here); tech stocks lag. As of 8:00am S&P futures are 0.2% higher following back-to-back record closes earlier in the week, with Nasdaq futures modestly in the red after incremental headlines since yesterday’s close which were net negative, with soft guidance from AMAT on uncertain macro environment in Semis and weaker China activity data. Pre-market, NVDA fell 0.3%, with the rest of Mag 7 moving higher; Health Care and Financial are outperforming. Intel rose more than 3% in premarket trading on a report that the US government may buy a stake in the struggling chipmaker. US Treasuries are mixed, with the yield on two-year notes falling one basis point to 3.72%. The yen led gains among major currencies against the dollar as the greenback weakened 0.3%. Commodities are mixed, with precious metals higher and base metals lower. Today, key macro focus will be Retail Sales and Trump-Putin Summit.”

VIX futures are consolidating near the low at 14.30.  Today is monthly options expiration for the SPX in the largest August expiration ever.  SPX calls outpace puts by a wide margin, suggesting that their expiration may release the VIX from its floor.  0DTE traders may dominate today’s trading, chasing after momentum moves into the close.

The August 5 options chain shows Max Pain at 19.50.  Short gamma is heavily weighted beneath 18.00, while long gamma strengthens above 25.00.

TNX is hovering beneath resistance at 43.30 – 43.53.  There is a risk of an imminent breakout above that level.  The Cycles Model indicate a high probability of rising rates through the end of September.  Should that be so, the Head & Shoulders formation may be engaged.  Retail sales are coming in strong, snuffing the hopes of an imminent rate cut.

USD futures are testing the 50-day Moving Average at 98.16 this morning.  The Master Cycle has made its low on August 13, suggesting a breakout may be imminent.  Note: A further low is possible, with a reaction/reversal to follow.

Bitcoin futures may have made their all-time high at 124,532.70 yesterday.  It has since pulled back, but stopped short of a key support at 117672.63.  An aggressive sell signal may be made beneath that level.  Note that the 50-day Moving Average lies at 114897.00, where a confirmed sell signal may reside.  Should a sell signal be  triggered, a decline to early September may occur.  The Cycles Model suggests a double dose of strength/volatility may be imminent.

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.

7:45 am

Good Morning!

SPX futures made a new all-time high at 6488.50 this morning.  It is on time to meet or (temporarily) exceed the Cycle Top , currently at 6501.10.  The market has narrowed considerably, while growing exponentially.   Only two stocks,  NVDA and MSFT make up over 15% the the valuation of the SPX.   The Cycles Model suggests today is a high strength, high volatility day.  It may be a perfect setup for a reversal.  Should that be the case, we may see a full-on decline to the end of September.

Today’s options chain shows Max Pain at 6455.00.  Long gamma becomes strong above 6490.00 while short gamma dominates beneath 6440.00.

ZeroHedge reports, “The global market rally stalled and US equity futures are flat with small caps underperforming (SPX and NDX made new ATHs yesterday while the Russell still sits ~5% below its ATH) into this morning’s PPI print, where the market may confirm CPI’s trend as well as solidifying PCE estimates. As of 8:00am, S&P 500 futures were flat changed after the benchmark notched a record close for a second straight session; Nasdaq futures dropped 0.2% after Cisco shares fell after issuing a cautious full-year revenue outlook.  Europe’s Stoxx 600 rose 0.3%. Pre-mkt, Mag7 names are mostly higher with Semis weaker; Defensives looking stronger than Cyclicals with healthcare leading. Bond yields are lower as the curve bull flattens: the yield on 10-year notes dropping two basis points to 4.21%. Bitcoin retreated 1.7% from an all-time high and the USD is flat. Today’s macro data focus is on PPI and Initial Jobless Claims; an in-line print in both should support stocks. JPMorgan says that should the rally resume, look for RTY to close the gap to tech/large caps.”

VIX futures are consolidating in a narrow range just above yesterday’s low.  Today is day 251 of the current Master Cycle.  The Cycles Model suggests it may be a high volatility day.  ‘

The August 20 (monthly) options chain shows short gamma strong between 16.00 and 18.00.  Long gamma is strong above 20.00.  Large institutional positions are filling in above that.

10-year Treasury yield futures show a decline to 42.01 this morning.  The likelihood that TNX may reach the Cycle Bottom at 41.01 this week is high.  The yield drift lower may be about to end dramatically as a high volatility reversal may be due this weekend.  Things don’t look good for President Trump’s meeting with Putin.

USD futures may have reversed out of a possible Master Cycle low at 97.47 this morning.  Overhead resistance is at 98.05-98.17, above which is a buy signal.

ZeroHedge observes, “Following the ‘mixed’ message from CPI earlier in the week (which the market perceived as dovishly cooler than expected), Producer Price Inflation was expected to accelerate in July’s data released today.

…and accelerate it did – dramatically with headline PPI rising 0.9% MoM (massively more than the +0.2% expected and the biggest jump since June 2022) sending PPI up 3.3% YoY (highest since Feb 2025)..”

”

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.

8:30 am

Good Morning!

SPX futures reached an overnight high at 6462.50, possibly on its way to 6500.00, near the Cycle Top.  The Cycles Model suggests more strength in the rally, at least to the end of the week.  However, this Master Cycle is running out of time as today is day 250.  In addition, the Cycle Top is at 6493.00 today, suggesting resistance at 6500.00.

ZeroHedge reports, “US equity futures are higher led by small caps (again) as the CPI print induces further short covering ahead of a now certain September rate cut, and a beta chase. As of 8:15am, S&P 500 and Nasdaq 100 futures were 0.2% higher after both indexes closed at fresh record highs on Tuesday, but were comfortably outpaced by the Russell 2000 index, as smaller companies were lifted by a largely benign inflation reading. Pre-mkt, Mag7 and semis are higher with Cyclicals outperforming Defensives, ex-Energy. Bond yields are lower as the curve bull flattens and USD weakens; the market strengthens its view on rate cuts in Sep, Oct, and Dec. Bessent calls for a 50bp cut in Sep. Today’s macro data focus is on mtge apps ahead of tmrw’s PPI which should help solidify PCE views.”

The Question is, where is the money flow coming from?  The answer may be Europe.  Note that any analysis of the market omits the influence of the turmoil in Europe.

The EuroStoxx 50 rose in  sync with the SPX from the April 7 low to the July 8 high.  Then the Stoxx reversed, making a bearish low on August 1.  Smart money is leaving European stocks and coming to the US.  Not only is the European economy in shambles, but NATO is preparing for war.  US stocks are considered a safe haven because of the strong US economy and the distance from the war zone.

VIX futures made a new low at 14.36, extending Wave (2).  This action may also bring in the terminus of the current Master Cycle by the end of the week.

TNX futures declined to 42.44 this morning,  while the Cycles Model considers a further decline to the Cycle Bottom at 41.04, extending the Master Cycle.  The bounce in Federal revenue may have been too little, too late as spending in July increased by almost 10%.  So, while the thought of further rate cuts offer encouragement to the markets, increased spending and the threat of war in Europe are moving things in the opposite direction.  The realization may soon catch up to reality.

Bitcoin continues its march higher, with the Cycle Top at 124811.00 a possible target.  In fact, it may touch 125000.00 briefly this 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.

8:15 am

Good Morning!

SPX futures consolidated beneath yesterday’s retracement high at 6407.25, leaving a complex fractal formation.  Regardless of the reactions to the CPI print this morning, SPX is poised for an imminent, sharp decline by the end of this week.  The uptrend may be broken and the support at the 50-day Moving Average may be tested or broken, as well.  After a 5-day ride on the escalator, the elevator may be engaged for the trip down.

Today’s options chain shows Max Pain at 6390.00.  Long gamma resides above 6400.00 while short gamma becomes strong beneath 6350.00.  Conviction is not strong in either direction.  However the 0DTE traders may pick up on any directional swing.

ZeroHedge reports, “US equity futures are flat into today’s CPI print, which is expects to show a modest increase in YoY prints (full preview here) with bond yields reversing an earlier drop. As of 8:00am ET, S&P and Nasdaq futures were down 0.1%, with Mag7 names mixed in premarket trading: NVDA is lower as China asks firms to not use the H20 chips; Intel gains after its CEO met Trump last night with Trump posting positive comments after the meeting. European stocks erase early gains of as much as 0.4%. The dollar gains for the second day while US Treasuries trade flat, with the yield on 10-year notes at 4.29%. Commodities are higher led by Metals; gold is flat at $3350 as is bitcoin which trades just under $119K. Trump announced he would nominate labor stats critic EJ Antoni for head of BLS. US economic data slate focuses on the CPI print at 8:30am; we also get the July federal budget balance at 2pm.”

8:30 am

VIX futures made a new low (15.21 thus far) at the announcement of the CPI this morning.

ZeroHedge observes, “With a new boss looming at The BLS, one wonders what the ‘old boss’ has in hand for today’s CPI data (with consensus seeing both headline and core YoY price changes ticking higher) after June’s consumer prices came in cooler than expected, disappointing the Trump Tariff Tantrum crowd. Will this time be different… Will the dreaded tariff-flation show up this time?

Headline CPI rose 0.2% MoM in July (as expected) and +2.7% YoY (cooler than the 2.8% expected) and in line with the June print…”

TNX is heading lower this morning.  The probability of reaching the Cycle Bottom at 41.05 in the next couple of days is very high, extending the Master Cycle low.

ZeroHedge comments, “Central banks have become the dominating force in financial markets.

Easing and tightening decisions move all assets from bonds to private equity. Their role is supposed to be to control inflation, provide price stability, and ensure normal market functions. However, there is little evidence of any success in achieving their goals. The era of central bank dominance has been characterised by boom-and-bust cycles, financial crises, policy incentives to increase government spending and debt, and persistent inflation. Recently developed economies’ central banks have taken an increasingly interventionist role.”

USD futures have declined beneath the 50-day Moving Average at 98.22, extending the Master Cycle a few more days.  Thus far it has bounced off Intermediate support at 98.02.  However, it may yet decline to the 97.00 area by the end of the week.

Gold futures may have declined beneath the 50-day Moving Average at 3347.33 this morning.  This may confirm the sell signal in gold.  The Cycles Model suggests a decline may last through early September.

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 rose to 6405.70 over the weekend and are currently stalled at round number resistance (6400.00).  The Cycles Model anticipates the first possible major break in the uptrend about to occur with an acceleration of the decline by mid-week.  While commercials continue to buy, hedge funds became sellers last week and retail participation has thinned.

Today’s options chain shows Max Pain at 6385.00.  Long gamma comes in strong above 6400.00, while short gamma rules beneath 6350.00.

ZeroHedge reports, “US equity futures are up small with Russell/small caps outperforming, and yields dip at the start of a data-heavy week that will be pivotal for the Fed’s rate cuts later this year. As of 8:00am ET, S&P 500 contracts rose 0.2% after the index ended Friday just shy of a record high; Nasdaq futures were flat. In premarket trading, AMD fell 2.3% and NVDA was 1% lower after the chipmakers agreed to remit to the US government 15% of their revenue from AI chip sales to China in exchange for export licenses. Bond yields are lower as the curve flattens and the USD rises. Cmdtys are lower with Energy/Metals weaker but Ags stronger. Meanwhile, Trump asked China to increase soybeans purchases 4x ahead of tomorrow’s trade deadline although Lutnick last week said another extension is likely. Geopolitics is also in focus with a larger impact on EMEA and the Trump/Putin summit this Friday. Bitcoin rises back to $122K and Ethereum surge to $4350 overnight, hitting the highest since 2021. There are no major macro data prints today but market will focus on CPI on Tuesday.”

VIX futures are holding steady above Friday’s low.  Overhead resistance is at 16.68.  A probe above that level reinforces the buy signal.  The Cycles Model agrees that the uptrend is about to resume, with strength, this week.

The August 13 options chain shows  short gamma at 15.00-16.00.  Long gamma begins at 17.00 and remains strong to 25.00.

TNX is trading mid-range between its Master Cycle low, made last Monday, and Intermediate resistance at 43.37.  A rise above that level gives a buy signal that may extend to late September.  Note the Head & Shoulders formation that hints of higher rates ahead.

ZeroHedge remarks, “Mainstream economists were surprised last week after Donald Trump closed two massive trade and tariff deals, the first with Japan and the second with the EU. And this happened without triggering an economic crash.

The deal with Europe in particular has made a number of critics look rather foolish; there’s an army of mainstream economists who might reasonably acknowledge they misjudged the situation. But we all know that economists never admit their mistakes.”

USD futures have risen above the 50-day Moving Average at 98.24 this morning, giving a very strong buy signal.  There is still a massive dollar short contingent that may start feeling the pain of a squeeze.  The Cycles Model indicates a possible rise in the USD to mid-September.  Trending strength may appear by mid-week.

Euro futures are pulling away from being repelled from the Intermediate resistance at 116.60 and may be about to test the 50-day Moving Average at 115.84.  The Euro is currently on a sell signal and a further decline beneath the 50-day Moving Average offers reinforcement to that signal.  The Cycles Model suggests the Euro may decline with strength into early September as the War drums beat louder and investors flee the danger zone.

Gold futures may have declined beneath the 50-day Moving Average at 3346.56 today, creating a potential sell signal.   If correct, the Cycles Model anticipates a decline until early September.   A possible target may be the trendline near 33100.00.  A secondary target may be near the mid-Cycle support at 3036.54.

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.

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.

3:26 pm

SPX has been challenging Sort-term support at 6314.00 this afternoon.  While t is possible that support may hold yet today, the Cycles Model suggests the decline may imminently reassert itself leading to a series of waterfall declines starting next week.  Best to be prepared sooner than later.

8:10 am

Good Morning!

SPX futures have risen to an overnight high at 6401.80.  The former “buy the dip” investors are now buying the top, as they have lost all fear of the elevated risk.  The NYSE Hi-Lo index closed at -24.00 yesterday, setting off warning bells for those that are aware that decliners have now outpaced advancers.  There is serious liquidation under the surface, while the number of advancers become smaller and smaller.  The SPX is trading above support at 6300.00.  Should that level break, the sell signal changes from aggressive to confirmed.  Further confirmation lies beneath Intermediate support at 6247.00 while the 50-day Moving Average waits at 6146.00.

Today’s options chain shows Max Pain at 6340.00.  Long gamma strengthens above 6370.00 while short gamma prevails beneath 6300.00.

ZeroHedge reports, “US equity futures are – what else – higher, and rapidly approaching a new all time high, boosted by exemptions in Trump’s plans for 100% tariffs on chips that are seen as bullish ways for most big tech firms to avoid levies. The mood was also cheered by a report that Trump and Putin are expected to meet for summit talks in the next few days while
hopes for a rate cut rise some more as additional  Fed officials have dovish pivots. As of 8:15am ET, S&P futures are up 0.6% and Nasdaq 100 futures gain 0.7% with Mag7 higher led by AAPL while Semis are the global standout. Eli Lilly & shares plunged after the drugmaker reported underwhelming study results for its weight-loss pill. Shares of its main European rival, Novo Nordisk A/S, soared. Cyclicals are poised to rip, although as JPM notes “today appears to be setting up for an ‘Everything Rally’.” Bond yields are down 1bp across the curve but 10Y is +1bp; USD is flat but has erased ~25bp of overnight losses. Today’s macro data focus is on Jobless Claims, 1Y Inflation Expectations, Nonfarm Productivity, Labor Costs, Consumer Credit, and Inventories. While none, ex-Claims, are market moving it will help sharpen the macro picture on the labor market and consumer. At 12pm, Trump will sign an executive order that aims to allow private equity, real estate, cryptocurrency and other alternative assets in 401(k)s.”

VIX futures declined to 15.98, giving a nod to the short gamma crowd at options expiration.  Note that a buy signal has been issued, offering a chance at highly discounted hedge.  However, the offer is being ignored by the crowd, who believe they are invincible.  The Cycles Model suggests we may see the VIX resume its ascent by the weekend, with trending strength becoming evident next week.

The VIX August 13 options chain shows short gamma at 15.00-16.00.  Long gamma may begin above 17.00, but shows a singular lack of conviction as all eyes are on the bounce.

The 10-year Treasury Yield is consolidating this morning above its provisional Master Cycle low on Tuesday.  There is an outside chance that TNX may yet probe lower in the next few days.  The Cycles Model suggests that there may be a strong reversal day early next week, so we wait patiently for a signal that the uptrend is resuming.

ZeroHedge reports, “After yesterday’s dismal 3Y auction, markets were on edge ahead of today’s $42 billion reopening of the 10Y benchmark auction. And they had a good reason to be: the just concluded 10Y auction was not pretty.

Starting at the top, the auction stopped at a high yield of 4.255%, down from 4.362% in July, and the lowest since December. So far so good, however, the yield also tailed the 4.2440% When Issued by 1.1bps, the first tail since February, and follows 6 stop throughs.”

USD futures made a morning low at 97.75, possibly fulfilling its Master Cycle low.  Should that be so, a reversal may be imminent.  Once the correction is complete, the USD may resume its uptrend with strength by mid-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.

8:45 am

Good Morning!

SPX futures rose to 6332.90 this morning, but eased lower for the open.  The fear of missing out on the next big surge is trapping more investors as serious money may be leaving.  The anticipation of future rate cuts may be foolhardy in the face of systematic de-risking by commercials and hedge funds.  A further decline beneath Intermediate support at 6246.43 may give pause to the dip buyers, while a decline beneath the 50-day Moving Average at 6146.75 may open the floodgates with more selling.  The Cycles Model calls for further deterioration until the weekend, when trending downside strength may appear.  Should that occur, it may introduce a series of waterfall declines over the following week.

Today’s options chain shows Max Pain at 6315.00.  Long gamma resides above 6330.00 while short gamma becomes strong beneath  6300.00.

ZeroHedge reports, “US futures rebound from yesterday’s modest drop as the market shakes off stagflationary concerns raised by NFP/ISM, although spoos trade well off their early session gains. As of 8:00am ET, S&P 500 futures and Nasdaq 100 futures were  0.2% higher. In premarket trading, McDonald’s and Shopify jumped after earnings beats; Mag7 names are mostly higher while Semis are dragged with downbeat AMD/SMCI earnings (see below). DIS/UBER highlight pre-mkt earnings releases; the former is lower on disappointing TV revenues, while the latter is flat despite solid results. Energy, Industrials, Healthcare and Utilities are stronger, too. Yields are bear steepening and the USD is flat for the second day. The Swiss President arrived in DC yesterday to meet with Trump, even as the US president preps new sanctions against Russia’s shadow tanker fleet unless Putin agrees to a cease-fire by Friday; WTI did not react to this news. Witkoff to meet with Russian officials today. Macro data releases are light with only mortgage apps but keep an eye on 10Y bond auction today at 1pm. EPS still a top priority for investors with another slew today.”

VIX futures have declined to 17.15 this morning in a nod to the put buyers.  Today is options expiration may release the hold that short gamma may have on the VIX.  0DTE speculators are piling on to the latest move, increasing the volatility until it breaks.  A bounce above the 50-day Moving Average at 17.61 may reinforce the buy signal.  Today’s pullback offers the next best hedging opportunity.

The August 13 options chain shows short gamma occupying the space between 15.00 and 17.00.  Long gamma takes over at 18.00, but there is little conviction on the long side.

TNX is hovering above its (possible) Master Cycle low at 41.98.  While TNX has fulfilled its time requirement for the Master Cycle, price may be questionable.  The fractal may need a final probe to the Cycle Bottom at 41.08 to be complete.  Should it be so, the fractal may be complete by the weekend.

ZeroHedge comments, “One week after the Treasury’s refunding announcement unveiled no major changes to the coupon auction schedule for the next few months, instead punting everything to Bills and leading to the following headline this morning:

• *US TREASURY TO AUCTION $100 BILLION IN FOUR-WEEK BILLS

… moments ago we got the first actual refunding auction of the week when the Treasury sold $58BN in 3Y paper in a very mediocre auction.”

USD futures declined to 98.16 this morning as it probes toward Intermediate support at 98.00.  It is likely that the USD may reach its target, completing the current Master Cycle, by the weekend.

The Ag Index has reached its lowest point since April 2024.  With it, the Master Cycle may be complete.  The Cycles Model calls for a short but sharp rally out of the low.  We may anticipate a rally to the 50-day Moving Average at 366.58 by month end.

ZeroHedge remarks, “Farmland is one of the oldest asset classes, rivaling precious metals in its ability to preserve generational wealth.

Unlike stocks or fiat currencies, farmland and cropland are tangible, finite, and highly productive. As the global population continues to grow and demand for healthier food intensifies, arable land per capita is shrinking due to urban sprawl and environmental degradation. This makes farmland not just a low-volatility store of value, but also a necessary hedge against rising global instability and inflationary pressures.”

ZeroHedge further reveals, “Ground beef prices are at record highs, while the U.S. cattle and calf herd has fallen to its lowest level in 50 years. Understanding these dynamics, we’ve been carefully watching for a cyclical low in the 12-year herd cycle, a bottom that now appears to have been reached.

New comments from Tyson Foods CEO Donnie King during Monday’s earnings call point to a long-awaited herd rebuilding cycle set to begin “in earnest” next year, though any meaningful supply recovery likely won’t materialize until 2028.”