The Practical Investor

8:00 am   2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures rose to 19897.20 this morning as it strives to reach the Cycle Top resistance at 20399.51.  Today is day 265 of the current Master Cycle, as it runs into overtime.  The market seems to be almost boringly regular.  Unfortunately, there is no sign of an impending cliff arriving at any time.  The signs are all there…

Today’s options chain shows Maximum Investor Pain at 19890.00.Long gamma may begin (weakly) at 19900.00.  Short gamma appears at 19880.00.  Fortunately,, there is not a lot of conviction in either direction.

Zerohedge observes, “It’s delightfully fitting that on the day the entire financial world was holding its breath for Biden’s highly politicized and grossly incompetent Bureau of Labor Statistics to admit it had massively fucked up the jobs data over the past year, that Biden’s highly politicized and grossly incompetent Bureau of Labor Statistics fucked up even more.

At exactly 10am ET this morning, the BLS was supposed to publish its annual CES Preliminary Benchmark Announcement revision, an update on how many jobs in the past year were, for lack of a better word, made up (as we reported earlier, it just so happened that the number was 818,000, which was the second biggest annual overestimation of job creation in US history… something that surely was pure coincidence in an election year).”

Followed up by, “We are too speechless to even offer any snarky, sarcastic commentary because, frankly, this is beyond idiotic.

Asked about today’s near record downward jobs revision, Biden’s Commerce Secretary Gina Raimondo – who we repeat, is the Secretary of the Department of Commerce which is responsible among other things, for the Bureau of Economic Analysis – said she “doesn’t believe” the revision because, somehow Trump was behind it. But when she was informed that the data comes from her own administration, namely the Labor Department’s Bureau of Labor Statistics, Raimondo’s response was simply legendary: “I am not familiar with that.””

SPX futures eked out a 2-point gain this morning at  5634.20, with the Master Cycle running a week later than average.    One by one, the associated Cycles are pivoting, clearing the way for a globally syncopated panic.  Powell’s announcement at J-Hole tomorrow may offer the last hurrah to this rally.

Today’s options chain shows Max Pain at 5630.00.  Long gamma may begin at 5650.00.  Short gamma may begin at 5600.00.

ZeroHedge reports, “Just over two weeks after the VIX almost touched 70, the market’s freakout is completely forgotten as futures continue rising and a global gauge of stocks approached a record high as traders are now convinced the Fed will deliver its first interest-rate cuts in more than four years, which will take place with both stock and housing prices at all time highs. One can only imagine what happens next. The MSCI’s All Country World index ticked up 0.1%, trading near its all-time record close on July 16. As of 7:45am, S&P futures were 0.2% higher with the index on pace to be up 10 of the past 11 days, while Nasdaq futures gained 0.3%. Europe’s Stoxx 600 index advanced 0.5% as Deutsche Bank AG rallied after predicting a boost to third-quarter results. US futures edged higher. The Bloomberg dollar index is up after rebounding from a 5 month low, while 10Y TSY yields are higher by 3bps to 3.83% after dropping 4 days. Oil is also higher after tumbling to the lowest price of 2024 yesterday. The macro calendar is busy with Initial and jobless claims, Chicago Fed and and existing home sales for July. The Jackson Hole symposium begins tonight with Powell’s highly expected speech due tomorrow at 10am.”

VIX futures eased back, still above the 50-day Moving Average at 15.90.  Today is day 253 of a very calm Master Cycle, so it needs to be carefully observed over the next few days.  A retest of the low is not out-of-the-question.  However, the risk of a market shock is rising.

The August 28 op-ex shows Max Pain at 16.00.  Short gamma starts weakly at 15.00-14.00.  Long gamma may begin at 18.00.

TNX has risen above the Cycle Bottom support at 37.93 after making its Master Cycle low at 37.63 yesterday, on day 258, showing potential strength beginning tomorrow and extending through next week.  .  It is now on a buy signal.  While on a technical buy signal, today’s move is not sufficiently large enough to signal that a change in trend is  taking place.

ZeroHedge reports, “In a day when the markets have tried to make sense of today’s near record downward revision to payrolls, moments ago the US sold $16BN in 20Y paper, and despite the prevailing confusion (does the dire BLS data confirm a 50bps rate cut, or do we stick with 25bps), there were plenty of buyers, even if the auction metrics were not remarkable by any stretch.

The auction, which passed without a hitch, sold at a high yield of 4.16%, which was 30bps below last month’s 4.466%, and the lowest yield since last July; it also stopped through the When Issued 4.161 by the smallest possible margin: 0.1bps, and follows last month’s identical 0.1bp stop through. In fact, this was the 6th consecutive stopping through auction in a row, and 9th of the past 12.”

USD appears to have reversed off its Master Cycle low at 10.78 yesterday, day 266.  A buy signal may be made upon a break above the Cycle Bottom at 101.45.  The Cycles Model suggests trending strength to begin tomorrow and extend into next week.

Euro futures ramped to 111.90 overnight, then began their reversal back down this morning, ending its current Master Cycle.  I had mentioned that the Euro Cycle was extended both in time (268 days) and price and is due for a strong reversal.  In fact, (downside) trending strength kicks in tomorrow and extends into next week.  The financial Panic may begin in Europe.

9:50 am

BKX, our liquidity proxy, may have made its Master Cycle high on Monday, day 249 of its Master Cycle.  The powers that be may be hiding the real condition of our banks, but the tide may be leaving, exposing those who are swimming naked,  The First support lies at 109.82, beneath which an aggressive sell signal may be found.  The 50-day Moving Average is at 107.34, beneath which a confirmed sell signal may be obtained.

7:30 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures have stayed flat in the overnight market. Yesterday’s pause has given encouragement to BTFDers.  We may see the NDX pull back to the 50-day Moving Average at 19458.36 before moving higher.  That may give incentive to rally to the Cycle Top, the last resistance.  Todays FOMC minutes are eagerly being awaited, but there is no incentive to lower rates.

Today’s options chain appears to be tightly wound.  Long gamma may begin at 19800.00 while short gamma may begin beneath 19780.00.

ZeroHedge remarks, “With 93% of S&P 500 companies reporting, Goldman analysts have found a sharp increase in earnings calls mentioning election uncertainty, likely dampening capital expenditure growth for companies through the end of the year. There are currently 76 days (as of Tuesday) until the November 5th US presidential elections.”

SPX futures are holding steady this morning as the release of  the FOMC minutes are due this afternoon.  The desire for a rate cut persists, despite the forces that may keep rates high.  At the same time, bad news causing a pullback may be all investors need to pile on to the next rally higher.

Today’s options chain shows Max Pain at the hotly contested 5600.00 level.  Long gamma may start at 5630.00 while short gamma is close by at 5590.00.

ZeroHedge reports, “lobal markets and US equity futures rose as investors awaited the annual BLS payrolls revisions – where as many as 1 million jobs can be eliminated – due at 10am ET, as well as the FOMC meeting minutes for further clues on interest rate cuts. US equity futures pointed to small moves at the Wall Street open as Europe’s Stoxx 600 edged 0.2% higher amid thin volumes while Asian stocks snapped a 3-day winning spree. As of 7:45am S&P futures were up 0.2% at 5,629 having fully recovered from the early August swoon; Nasdaq futures also gained 0.2%. The yield on 10-year Treasuries was steady at 3.81%, while the dollar paused a three-day run of declines. Oil was flat, halting the recent rout.’

VIX futures rose to a morning high at 16.25, above the 50-day Moving Average at 15.83 and giving a potential buy signal.  Today is day 252 of the current Master Cycle, so there may be room for another dip lower.  The “taming of the VIX” may lead to asymmetry in the markets, where risks are ignored while investors pile on to more risk.

Today’s options expiration shows Max Pain at 16.00-17.00.  Short gamma lies beneath 15.00 while long gamma is building above 20.00.

TNX is testing the Cycle Bottom support at 37.98 and may be making its Master Cycle low on day 258.  Granted, the FOMC minutes and press release may “plunge” the TNX lower. However, it is more likely that the FMC may leave the status quo in place.

RealInvestmentAdvice says, “Profitable bond trading opportunities arise when your expectations about Fed policy differ from those of the market. Therefore, with the Fed seemingly embarking on a series of interest rate cuts, it behooves us to appreciate how many interest rate cuts the Fed Funds futures market expects and over what period. Equally important, Fed Funds futures help us assess the market’s economic growth and inflation expectations.”

USD futures may have hit its Master Cycle low at 101.17 this morning on day 265 of its Master Cycle.  If correct, it may be setting up for an explosive move higher by the weekend.  The USD may sync up with the TNX moving higher.  CTAs turned short the USD last week, but they appear late to the party.

In the meantime, the Euro futures may have hit their Master Cycle high today, after breaking through the Triangle formation.  This may be a signal to go short the Euro as it has been over-exuberant as of late.

ZeroHedge remarks, “Closing in on huge levels

The EURUSD longer term chart (weekly) shows the EUR approaching the big negative trend line that has been in place since “forever”. We have traded inside the 1.06/1.12 range since 2023. Note the 200 weekly moving average comes in around these levels.”

8:15 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures advanced to 19837.20 this morning before pulling back.  Today is day 263 in the aging Cycles Model.  There are three elements of the Cycles.  The first is time.  A Master Cycle may take 258 days, on average.   The second is price.  In this case, the price may exceed the prior all-time-high.  The third is relationship to outside forces, such as the Yen carry trade.   The Cycles Model suggests all of these are coming to a head, possibly in the next week.  In the meantime, CTAs have now joined the buyers of equities.

Today’s options chain shows Maximum Investor Pain at 19690.00.  Long gamma may begin at 19700.00.  Short gamma may prevail beneath 19600.00.

ZeroHedge comments, “Earnings are alright

With much of the earnings season behind us, the story is clear. Analysts remain optimistic about earnings in late 2025, but continue to revise near-term estimates lower (by a tiny 1%).”

SPX futures continue their probe higher, reaching 5617.80 this morning.  This is frustrating the buy-the-dippers, who are determined to be all-in.  Weaker hands often surrender to the siren song (FOMO) at this point, as emotions become heightened.  Did you know that virtually anyone with a credit card has been participating in the carry trade?  Where do you think all the “free” money has come from?  The door to free money may be about to shut, with far-reaching consequences.

Today’s options chain shows Max Pain at 5585.00.  Long gamma may start at 5600.00 while short gamma may begin at 5550.00.

ZeroHedge reports, “US equity futures are flat after another narrow overnight range, following another euphoric session on Wall Street amid bets the Fed chair Powell will signal it’s ready to start cutting interest rates as soon as this Friday’s Jackson Hole symposium. As of 7:30am ET, S&P futures were up 0.1% to 5,634 while Nasdaq futures also gained 0.1%. MSCI’s all-country stock index headed for a ninth day of increases, its longest winning streak since December. Oil halted its latest rout, treasury 10-year yields held steady around 3.87%, the Bloomberg dollar index was unchanged after sliding to the lowest since March, while gold exploded to a new record high, trading at $2525. It is a quiet session with just the Philly Fed non-mfg activity index on deck.”

The Japanese Yen is correcting its August spike high.  Key support lies at the mid-Cycle line at 66.11.  Short-term, the Yen is likely to test that support.  A close beneath 66.11 suggests the Yen carry trade may be still alive.  However, should the test find support, the Yen may advance to new highs, ending the carry trade.

Inveting.com observes, “We discussed the prospect of a low on the Japanese Yen currency several weeks ago.

The Japanese Yen did rally off important price support and many assets worldwide got a little goofy, the VIX Volatility Index blasted off while the Nikkei dropped more than 20% in a day.

But, at mid-month, the Yen created a monster bearish reversal pattern after testing important price resistance.”

VIX futures did not make a new low in the overnight market, suggesting the Master Cycle may have pivoted on day 250 of its Master Cycle.  An advance above the 50-day Moving Average at 15.75 may give a buy signal.  Should it do so, it may give investors an early warning of an impending reversal in equities.  It may be time to start thinking about hedging instead of FOMO.

TNX is declining, with the potential of testing the testing the long-term trendline at 36.75.  The Cycles Model implies that there may be another week of weakness in TNX, followed by a potentially explosive reversal in the following week.  The uptrend may remain intact.

ZeroHedge opines, “In 2022 there was considerable debate among alternative economists what the Federal Reserve was likely to do in the face of rising stagflation. There were people who argued that the Fed would capitulate to stock market demands, stop raising interest rates and return to QE. These analysts operated on the assumption that the central bank WANTS to save the US economy from substantial deflationary crisis and that they will happily print money forever in order to delay such an event.”

Gold futures rose to 2570.20 this morning, as it tests the Cycle Top resistance at 2565.94.  Today is day 260.00 of the Master Cycle.  The Cycles Model suggests that, should gold remain above its Cycle Top (throw-over), the rally may last another week.  Car must be taken of the extended nature of this rally, both in time and price.

7:40 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures paid a visit to the 50-day Moving Average at 19423.00 over night.  Having found support there, it has advanced back above Friday’s close at 19508.52.  The Cycle Top  is at 20360.13, suggesting heavy resistance there.  Should it break through, further resistance lies at the next round number, that is, 21000.00.  After  nearly two weeks of daily advances, there are indications that NDX may not make a new all-time high.

Today’s options chain shows possible Maximum Investor Pain at 19570.00.  Long gamma may begin at 19600.00 while short gamma may start at 19550.00.

SPX futures advanced to a morning high at 5571.10, showing the advance to be intact.  Having surpassed the 50-day Moving Average at 5477.95, the next resistance appears to be the Cycle Top at 5705.16.  Should it emerge above the Cycle Top, the average target may be near 5775.00.  The Cycles Model shows a potential week left in the rally.  Today is day 262 in the current Master Cycle, so the time element has already been met.  However, the DJIA and SPX both must make new all-time highs this week.  Once this is accomplished, all bets are off.

Investors are still stuck on fear, as they have not recoupled losses from the August 5 sell-off.  In fact, retail investors have only added back 50% of their unwind.  Hedge funds have paused their selling late last week, while CTAs, corporations and pensions have been buying an estimated $10 billion per week until September 6.

Today’s options chain shows Max Pain near 5540.00.  Long gamma may start at 5550.00 while short gamma may proceed beneath 5500.00.

ZeroHedge reports, “Futures are flat after trading in a narrow overnight range, with small-caps outperforming. As of 7:45am ET S&P futures are up 0.1% at 5,581, after last week’s face-ripping rally which pushed the S&P to within 2% of the all time highs, while Nasdasq futures are unchanged as Mag7 and Semis start the week lower but broad-based strength is limiting losses. Bond yields are 1-2bps lower while broad dollar weakness sees USD/JPY re-test 145 level before rebounding back above 146, while WTI crude oil futures drop around 1%, underpinning Treasuries.  Commodities are lower with Energy and Metals weaker while Softs are catching a bid. This week is expected to be a low liquidity week with events centered around the DNC and Jackson Hole with NVDA earnings looming next week. The macro data focus is on Flash PMIs, Housing Data, and Regional Activity updates. Fed Minutes are not expected to be catalytic with Jackson Hole kicking off on Aug 22. Q2 earnings season approaches its close with consumer-related / Retailers earnings this week and NVDA next week.”

VIX futures have risen to a morning high at 16.07, above the 50-day Moving Average at 15.71.  This move may give us a potential buy signal.  So, while the SPX may be making a new all-time high, the VIX is signaling that hedging may be taken seriously.

This will be a very busy week in the VIX options expiration.  Max Pain is at 16.00.  Short gamma is heavily subscribed between 12.00 and 15.00.  Long gamma now prevails between 20.00. and 47.50.  This may be a very difficult dealers’ market.

TNX rose to the trendline near 39.20 and pulled back.  While it has reversed from its Master Cycle low and may be on a buy signal, trendline resistance appears to stymie the advance.  The Master Cycle has two weeks left.  It is possible that TNX may test the low to end the Cycle, should Yellen’s strategy of selling short-term notes work.  This will be a busy week for Treasury Auctions.

9:00 am  2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!  I am recovering from the flu and running late.  Please excuse me.

SPX futures have come down to a morning low of 5513.00.  Intermediate support lies at 5475.00, so we may see a further pullback.  Once SPX completes its pullback, overhead resistance liews at the Cycle Top at 5702.12.  Yesterday I estimated the running target for this rally at 5780.00.  Usually the Cycle Top resistance may prevail in ending this trend.  The Cycles Model suggests about a week to 10 days may be left to make a top.

Today’s options chain suggests Maximum Investor Pain at 5530.00.  Long gamma may begin at 5550.00 while short gamma may start beneath 5500.00.

ZeroHedge reports, “US equity futures erased earlier gains and were trading with modest losses as dollar, oil and yields all slumped entering the US session. As of 7:45am, S&P futures traded down 0.1% around 5,562 as consistent selling pressure emerged around the European open, even as Asian stocks had another solid session. Nasdaq futures were unchanged, with megacap tech mostly higher led by NVDA +56bp, and AMZN +60bp. Bond yields and USD are both lower; 2-, 5-, 10-yr yields are 2bp, 5bp, 10bp lower, pulled down by a sharp drop in oil as the Harris oil trading desk resumes shorting. Other commodities were mixed with base metals higher. Today, the key macro focus will be U of Mich Sentiment and housing data (Housing Starts and Building Permits).”

VIX futures challenged the 50-day Moving Average at 15.67 this morning before pulling back beneath it.  Should it close above that level, a buy signal may be confirmed.  From this point on, the VIX may be the only index in which to buy the dip.  While the Master Cycle low may have occurred early, it may set into motion a rising VIX phenomenon until the end of September.  The Cycles Model suggest a surge of trending strength may begin this weekend.

TNX is in  pullback mode after testing the trading channel trendline at 39.50.  It is on a buy signal (sell UST) and may continue rising during the next 3-4 weeks.  Fireworks may develop as trending strength multiplies near the end of August.  Next week’s Treasury auctions may better inform us as to the the direction of TNX.

7:45 am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

NDX futures continued their inexorable march higher to 19123.70 this morning.  It has risen above Short-term resistance at 18993.00 (not shown) and may test the double resistance at 19416.17 before moving higher.  Its intended target may be 21150.00.  There are no guarantees of its success by the end of the month.  Individual investors, stock buybacks and now pension contributions are fueling the rise in stocks.  Qualified pension plans have until October 15, 2024 to make their final contribution extension for the plan year 2023.  It appears that they are doing so with gusto.  At the same time, whale investors like Warren Buffett are culling stocks in companies that are overpriced.

Today’s options chain shows Maximum Investor Pain at 19125.00  There is not long gamma, while short gamma resided beneath 19110.00.

ZeroHedge remarks, “Who owns America?

Is it the government? The politicians? The corporations? The foreign investors? The American people?

While the Deep State keeps the nation divided and distracted by a presidential election whose outcome is foregone (the police state’s stranglehold on power will ensure the continuation of endless wars and out-of-control spending, while disregarding the citizenry’s fundamental rights and the rule of law), America is literally being bought and sold right out from under us.”

SPX futures have risen to 5466.60 this morning, above the 50–day Moving Average at 5448.42.  Its intended target by the end of the month may be near 5780.00.    The Cycles Model suggests the rally may continue to the end of the month, with rising volatility.  This may send the BTFD speculators into a buying frenzy.  We will know the trend is over when the last fool is parted with his money.  I know many such people.  They now think they are bulletproof.

Today’s options chain shows Max Pain at 5450.00.  Long gamma may arise above 5500.00 while short gamma dwells beneath 5400.00.

ZeroHedge reports, “US equity futures are following European and most Asian stocks higher, with traders’ attention turning to today’s retail sales report (full preview here) which may support the case for the Federal Reserve to cut rates at its September meeting. As of 7:45am, S&P futures are up 0.2%, higher for the fifth day in a row, as the burst of 13-F releases overnight helps to boost some individual names; Nasdaq futures also gain 0.1% led by tech with Mag7 and Semis leading pre-mkt though NVDA is lower to start the day. Bond yields are flat to up 1bps, and USD is flat. Commodities are bid across all 3 complexes though base metals are lagging and Silver over Gold. PPI/CPI data shaped the inflation story and now Retail Sales/Jobless Claims will do the same for the Growth story, while Walmart boosting its profit outlook will help ease recessionary fears. That said, the Fed may not reveal its hand until the Sep 6 NFP print.”

VIX futures continue their descent toward the 50-day Moving Average at 15.63.  I am illustrating the nearness of the Master Cycle low, which may happen this week.  Rising volatility in a rising market is a sign of changes to come.  The Cycles Model suggests VIX may gain strength as early as this weekend.

The August 21 options chain shows massive short gamma beneath 16.00 and equally massive long gamma above 17.00.  If the Master Cycle low occurs today, the shorts may be taken out to the woodshed.

TNX rallied to its trading channel trendline at 39.35 this morning.  A breakout here gives a very clear buy signal for TNX /sell signal for UST.

ZeroHedge remarks, “For once, consensus is in line with BofA’s omnipotent forecast for retails today (July data) with an expectation of a 0.4% MoM rise in nominal spending. They were both wrong… as retail sales shot up 1.0% MoM – well above the highest forecast.

That is the biggest MoM rise since Jan 2023 – so to hell with your soft landing narrative, right…”

8:30 am   2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures have been flat this morning, as it absorbs the new money flows.  Short-term resistance is overhead at 19006.43, which may cause a brief pullback.  Some readers have pointed out that volume increases on down days, suggesting we should be bearish.  However this can be explained by measured selling by some “whales” who are early to cash in due to their size.  As I mentioned last week, panic down days must come in multiples, not giving the market a chance to recover before the next onslaught of selling.  We have not yet experienced that phenomenon.  The Cycles Model suggests that the rally may continue to the end of the month.  Stock buybacks end on September 6.

Today’s options chain shows Maximum Investor Pain at 18850.00.  Long gamma starts at 19000.00.  Short gamma may begin at 18800.00.

ZeroHedge remarks, “Following last month’s ‘deflationary’ print (-0.1% MoM), analysts expected headline CPI to rise 0.2% MoM and they were spot on, shifting the YoY CPI print to 2.9% (from 3.0%) – the lowest since March 2021…”

SPX futures rose to a morning high of 5447.70 thus far, as core consumer prices rose for the 50th consecutive month.  It has crossed the 50-day Moving Average at 5444.19, confirming the buy signal.  The Cycles Model suggests the rally may last until the end of the month.

Today’s options chain shows Max Pain for investors at 5415.00.  Long gamma may begin at 5425.00 while short gamma starts at 5400.00.

ZeroHedge reports, “Futures are flat, after trading in a narrow range overnight which saw Asian stocks gain and European bourses trade mostly higher, with tech down small and small-caps/Russell leading with bond yields up 1bps in the front of the yield curve. As of 7:45am, S&P futures are unchanged at 5,459 after soaring 1.7% on Tuesday, fueled by cooler-than-forecast PPI data while Nasdaq futures are down 0.1% with the Mag7 mixed as NVDA boosts Semis. 10Y yields are down again, sliding to 3.83%, and pushing the USD lower. Commodities are mixed with Energy/Precious higher and Base lower; China’s largest steelmaker warns of 2008-like downturn given the slump in domestic consumption. The macro focus is on CPI (our full preview is here) and Retail Sales tomorrow.”

VIX  futures continue their decline as the Cycles Model shows an upcoming pivot by the end of the month.  The decline may be targeting the 50-day Moving Average at 15.57.

VIX Aug 21 options shows short gamma prevails between 12.00 and 17.00.  Long gamma begins at 20.00 and stretched over nearly the entire spectrum of strikes.  There is the liklihood of a lot of speculators getting wrong-footed.

While TNX futures dipped lower, TNX reversed at the Cycle bottom support at 38.28.  This may be a positive sign for the uptrend to resume.  The US Treasure upcoming Auctions Schedule showws $245 billion of short term bills being auctioned today and tomorrow.  A 20-year Bond issuance may be announced tomorrow for later auction this month.  Yellen’s practice of auctioning short-term bills rather than long term debt may backfire soon.

ZeroHedge comments, “A recent article co-authored by Stephen Miran and Dr. Nouriel Roubini, aka Dr. Doom, accuses the U.S. Treasury Department of using its debt-issuance powers to manipulate financial conditions. They liken recent Treasury debt issuance decisions to stealth QE. Per the first paragraph of the article’s executive summary:

By adjusting the maturity profile of its debt issuance, the Treasury is dynamically managing financial conditions and through them, the economy, usurping core functions of the Federal Reserve. We dub this novel tool “activist Treasury issuance,” or ATI. By manipulating the amount of interest rate risk owned by investors, ATI works through the same channels as the Fed’s quantitative easing programs. 

Is their accusation reasonable?”

8:15 am      2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures have risen to 18720.00 this morning.  Confidence in equities is rising again with the proportion of US household owning equities nearing its all-time high, last seen in 2021.  In addition, the corporate buyback window is open and flush with cash.

Today’s options chain shows short gamma beneath 18600.00.

SPX futures hit a high of 5376.00 this morning, approaching short-term resistance at 5390.00.  The saying that, “The market climbs a wall of worry.” is relevant here, as investors are still licking their wounds from a week ago.  The Cycles Model suggests a choppy but rising market for the next three weeks.

Today’s options chain shows Max Pain at 5365.00.  Long gamma may begin at 5390.00 while short gamma may start beneath 5350.00.

ZeroHedge reports, “US futures are slightly higher, although well off session highs following disappointing guidance from Home Depot while rising tension in the Middle East weighed on risk appetite. Tech leads modest gains as we receive the first batch of the week’s macro data today when PPI drops at 830am ET. As of 7:45am ET, S&P futures are 0.2% higher, paring a gain of 0.5%, after yesterday’s flat close on Wall Street; Nasdaq futs are up 0.3% with NVDA rising 1.5% as Mag7 are all higher and Semis catch a bid, following yesterday’s outperformance. European markets are lower even as Asian stocks erased last week’s sharp declines led by a bounce in Japan thanks to a drop in the yen. Bond yields are 1-2bps higher which is boosting the USD. Commodities are mostly lower with WTI reversing losses to trade around $80 and Brent at $82 as the US sees an Iranian attack against Israel as increasingly likely; Ags/Precious metals are under pressure. Fed’s Bostic speaks today, and disappointing earnings from HS may shape the market narrative. Tomorrow’s CPI and Thurs’ Retail Sales are the key catalysts.

VIX futures declined to 19.57 this morning.  It is due to go lower.  The 50-day Moving Average at 15.57 may be the target for this decline.

8:  am    2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures roes to 18586.00 thus far this morning, showing some stability, if not strength.  Investors and hedge funds are eagerly buying Mag 7 and AI stocks at a “discount.”  While equities may retest the lows, both the Cycles Model and Wave structure indicate a possible blow-off top in the making, provided the 200-day Moving Average at 17727.31 holds.  After Monday’s drubbing, the fear of missing out is becoming prevalent again.  This may set up the conditions for a very nasty sell-off starting in September.

Today’s options chain shows Maximum Investor Pain at 18590.00.  Long gamma may begin above 18500.00 while short gamma resides beneath 18580.00.

ZeroHedge remarks, “That AI love affair did not die

It looks like, in the end, it was AI that saved the markets this week. That love affair from investors toward the AI space (and tech in general) is what brought in the buyers.

1. Hedge funds bought the AI TMT space consistently over the past 7 sessions
2. The L/S ratio (of AI TMT) is rising and high on a LT basis (91st %-tile), but below highs seen earlier this year
3. Hedge funds are also going back to the general US Tech space and mainly Mag7. US tech saw 2 sigma buying this week.”

SPX futures rose to an overnight high at 5361.90.  It closed on Friday above the 100-day Moving Average at 5312.60, creating a buy signal.  The modest bid continues this morning.  There is a probability of a retest of the 1987 trendline at 5119.25.  However, time is running out for new lows.

Today’s options chain shows Mas Pain at 5325.00.  Long gamma may begin at 5350.00 while short gamma resides beneath 5300.00.

ZeroHedge reports, “US equity futures are seeing a slight bid, tracking Asian and European markets higher, as the week starts off more muted than last week but with a preference towards Quality. As of 7:45am, S&P 500 and Nasdaq 100 contracts are about 0.3% higher as Mag7 names are mixed but net higher and Semis are bid, while Europe’s Stoxx 600 index erased most of a 0.5% advance. Bond yields are flat as is the USD while the yen continued dropping as more jawboning from an ex-BOJ member suggested that rate hikes in Japan are effectively over, giving a green light to restart carry trades . Commodities are stronger led by Energy, WTI is higher after adding 4.5% last week. Copper is higher after 5 consecutive weekly losses and 11 of last 12 weeks, -20% from highs. Today’s macro focus is the NY Fed’s 1-year inflation expectation (3.02% prior). This is a heavy macro data week with both growth and inflation measures and the market is waiting on that data to determine the next market narrative. Earnings are almost complete but DE, HD, and WMT will provide important updates on the Consumer.”

VIX futures have been flat over the weekend.  Hedging activity has trailed off, giving the green light to longs for a short while.  However, liquidity has crashed in the VIX, limiting possible short-term moves.

The August 14 op-ex shows only a modest amount of activity.  However, the August 21 options chain is heavily laden with long predominantly above 20.00 and shorts heavily populated beneath 16.00.

TNX has risen above the trading channel trendline near 39.45.  It may be due for a burst of trendline strength as it may find support at the trendline.

7:45 am   2 Chronicles 7:14 

“If my people, which are called by my name, shall humble themselves, and pray, and seek  face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”

Good Morning!

NDX futures rose to 18551.00 in the overnight market, but have receded since then to the flat line.  It may be winding up its 3-day correction in a complete round trip from last Friday’s close.  Structurally, the NDX may have yet another decline ahead of it.  The amplitude of the declines/bounces is growing, adding to market instability.  Despite these massive bounces, the NDX Hi-Lo has remained below 0.00 the entire week, closing at -137.00 yesterday.

Today’s options chain shows Maximum Investor Pain at 18500.00.  Long gamma may begin at 18600.00 while short gamma may start at 18460.00.

ZeroHedge remarks, “Bear markets

The quicker they are, the faster they recover.

Source: Barclays

Tactical bounce

Citi strategy writes: “we find that US equities are apt to rebound… a tactical timing tool based on implied vs realized volatility is showing an abundance of caution in the market; this has typically led to short-term positive (if volatile) returns.”

SPX futures rose to 5346.40 in the overnight session, then pulled back into the red.  A negative open beneath 5300.00-5310.00 may be actionably short.  The Cycles Model for the NYSE shows the Master Cycle ending next week.  However, there are indications of yet another panic decline, should the market begin making new lows.  Despite the positive bounce, the NYSE Hi-Lo Index closed at -13.00, showing very weak internals.

Today’s op-ex shows Max Pain at 5330.00.  Long gamma may start at 5400.00 while short gamma kicks in beneath 5300.00.

ZeroHedge reports, “With both Goldman and JPMorgan asking the question on everyone’s lips, namely whether the market has bottomed, so far the answer remains elusive with futures flat on the last trading session of the day, but erasing earlier gains as sentiment remains on edge thanks to a VIX around 24 and the yen, the currency at the basis of the carry trade, failing to drop. Perhaps the only good news is that the wild week is ending on a subdued note, with Friday trading seeing light equity volumes and small moves across stocks, bonds and currencies as even traders are exhausted from the week’s fireworks. Remarkably, US stocks are close to wiping out all the losses from the Monday’s market meltdown, with S&P 500 futures unchanged as of 7:45am, fading an earlier gain of 0.5%, after markets roared back on Thursday as data showed much fewer American filed for jobless benefits, alleviating fears of a looming recession. Nasdaq futures were modestly in the green led by Mag7 and semi stocks. European stocks are already positive on the week as investors hunted for bargains from the selloff. Treasury yields dipped and the dollar weakened. The VIX Index hovered around 23. Otherwise it will be a quiet data on the data front with no macro releases scheduled as investors now wait for next week’s data, which includes reports on the all important CPI and retail sales.”

VIX futures dipped to an overnight low at 23.12, but has since become positive.  Investors may be forgetting that August and September constitute the weakest season for stocks.  Yet they are crowding back into their old haunts.

The August 14 op-ex shows investors crowding back into short gamma between 13.00 and 22.00.  There is little conviction to the upside.  Hedging has already been forgotten.

TNX has pulled back after a clear breakout propelled by yesterday’s debacle of a 30-year bond auction.  The intended target for the pullback may be the Cycle Bottom support at 38.45.  The upcoming T-bill auctions early next week are massive (over $200 billion).  Yellen’s attempt at managing yields by shortening maturities is bound to backfire.  The Cycles Model suggests yields may “pop” over the weekend.

ZeroHedge reports, “After yesterday’s dire 10Y auction, which sent yields surging and stocks tumbling, the last thing the market needed was another debacle of an auction, but that’s precisely what it got moments ago when today’s 30Y auction tailed by 3.1bps, the exact same as yesterday’s 10Y sale, and predictably yields spiked after both.

Stopping at a high yield of 4.314%, today’s sale of $25 billion in 30Y paper saw the lowest yield since January’s 4.229% and was down sharply from the 4.405% in July. And, like last month, today’s auction tailed and by a substantial amount: with the When Issued trading at 4.283%, this was the biggest tail since November.”

USD futures show it rising from an overnight low at 102.92.  The Cycles Model shows the USD rising for yet another week, or possibly longer.  It also shows a possible double dose of trending strength starting this weekend.