The Practical Investor

10:07 am

BKX may have brought the Cycle Inversion to a close and an early Master Cycle high at 135.50.  With that in mind, the trendline support for the throw-over may be found near 128.00, offering an aggressive sell signal.  Another aggressive sell signal may be found beneath the Cycle Top near 125.00.

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!

SPX futures declined to 5984.60 after several attempts to overcome the 3-month trendline near 6020.00.   Today is day 249 of the current Master Cycle, leaving an approximate week for the reversal.  The rally is beginning to lose strength, so the turn may come sooner than expected.  A decline beneath the Cycle Top at 5942.00 offers an aggressive sell signal.  Confirmation may come beneath Intermediate support at 5803.00.  While a sell signal may not have been given at this time, it may be wise to reduce long exposure, since a reversal may be rather abrupt.  Investors are exuberant, leaving them vulnerable to a quick dose of reality.

Today’s options chain shows Max Pain at 5985.00.  Long gamma may begin at 6000.00 while short gamma may emerge beneath 5970.00.

ZeroHedge reports, “The torrid five-day rally that pushed the S&P 500 to its 51st record close above 6,000 on Monday has finally reversed amid unease over nosebleed equity valuations and the composition of Trump’s incoming cabinet. As of 8:00am, contracts on the S&P 500 and Nasdaq 100 indexes slipped about 0.2% with Mag7 and semiconductors under pressure, while Tesla also dropped in after a post-election surge that lifted its valuation past $1 trillion; healthcare names among the notable gainers. Europe’s Stoxx 600 gauge lost 1% as the rout in Asia continued and the MSCI Asia Pacific Index dropped as much as 1.3%, with chipmakers TSMC and Samsung among the biggest drags. Bond yields are 3-6bps higher as the curve twists flatter; yields are pulling the dollar higher. Commodities are weaker with Energy outperforming. Other Trump trades remained in play, however, with Treasuries falling, the dollar hitting a one-year high and Bitcoin hovering just below $90,000. Today’s macro data focus is on SLOOS, 1-year inflation expectations, and Small Business Optimism, as well as five Fed speakers.”

The Shanghai Composite Index reversed down from the 61.8% Fibonacci retracement level at 3486.98.  The world-wide surge in liquidity may have reached its end, with a potential sell signal for the Shanghai at 3344.00.

ZeroHedge observes, “It was almost one year ago, when we first reported that in the third quarter of 2023, China’s foreign direct investment had turned negative for the first time on record. Fast forward to today, when capital flight from China has become relentless as foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth.”

VIX futures consolidated within yesterday’s trading range, although easing higher.  A buy signal may be made above the mid-Cycle resistance at 15.98.   Should the new Master Cycle be underway, it may last until early December.  It may be possible for the VIX rally to extend into February 2025.  Is that a portent of trouble ahead?

Tomorrow’s options chain shows Max Pain at 15.00, with no short gamma.  Long gamma may begin at 18.00 and extend as far as 50.00.

TNX is rising again, as trending strength returns.  The Cycles Model suggests an ongoing, higher trend through the end of the year.  Since Yellen has issued short term debt to fund the deficits this year, all of it will come due early next year along with any new deficit spending that may need financing.  Potential levels of resistance to the rally are: 53.16, 68.23 and 81.62.

ZeroHedge remarks, “Former Wall Street money manager Ed Dowd is a skillful financial analyst who said in May the economy was skidding.  Now, Dowd predicts the economy is poised to “roll over” and soon. “

Gold futures have made an overnight low at 2595.95 and may be bouncing to test the underside of the 50-day Moving Average and the  8.5-month trendline at 2659.48.  It is on a confirmed sell signal with a possible decline for another 1-2 weeks.  A possible support may be the mid-Cycle support at 2427.44.  The next support may be found at 2300.00.  Gold has been looked upon as an inflationary hedge.  However, it is a better indicator of political instability, especially the prospect of war, which is being dialed back.

ZeroHedge opines, “As economic risks escalate, gold has become a crucial safe-haven asset for investors fearing inflation and even the potential for hyperinflation. ”

Crude oil futures dipped to 67.75 before a mild bounce to test the Head & Shoulders neckline at 68.55.  Crude is on a confirmed sell signal beneath the Head & Shoulders neckline.  The Cycles Model suggests a continued decline through the end of the year.

7:00 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!

SPX futures are nominally higher this morning to 6018.40 thus far.  Today is day 248 in the current Master Cycle.  The SPX is struggling against the 3-month trendline near 6025.00.  Despite the resistance, animal spirits abound.  Should it remain above it, the next resistance is the year-long trendline at 6100.00.  Today is a high volatility day, which may be translated into either strength to go higher or a reversal.  A swift rally such as the one experienced in the SPX last week, may be fragile and may lack staying power.  An aggressive sell signal may be made beneath the Cycle Top support at 5933.00.

Today’s options chain shows Max Pain at 5980.00.  Long gamma becomes strong above 6000.00 while short gamma may prevail beneath 5950.00.

VIX futures rose to 15.35 this morning after Friday’s (Master Cycle) low was made at 14.66.  A rising VIX and rising equities market is an unstable combination and should be carefully monitored.  The Cycles Model suggests that volatility may spike today and again by mid-week, possibly jump-starting the next move higher.

The November 20 options chain shows Max Pain at 18.00-19.00.  Short gamma prevails between 13.00 and 17.00.  Long gamma becomes established at 20.00 and remains strong to 55.00.

TNX futures have risen to 43.57 thus far this morning.  It may be emerging from a shallow correction.  If so, growing strength may propel it to a new high this week.  The Cycles Model suggests rising yields through the end of the year.

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!

SPX futures came down to 5961.90 from yesterday’s all-time high at 5983.84.  The SPX is pulling back from the three-month trendline defining the successive new highs since mid-August.  While the final fractal appears complete, confirmation may be needed.  The Cycles Model tells us that today is day 245 of the  current Master Cycle.  While it may be early, the reversal window is open.  In addition, today may be a high volatility day, followed by a high strength day on Monday.  This suggests either another spike higher or a possible strong reversal.

Today’s options chain shows Max Pain at 5950.00.  Long gamma may begin above 5980.00.  Short gamma is in short supply.

ZeroHedge reports, “The record election rally has finally fizzled and futs are slightly lower after China’s stimulus package revealed this morning disappointed investors. As of 8:00am ET, S&P futures were trading at exactly 6,000, down 0.1% from the first ever closing high above 6,000 but still on track for its best week in a year on the prospect of tax cuts and deregulation under Trump. Nasdaq futures are down 0.3%. Bond yields are 3bp lower after the Federal Reserve delivered a quarter-point interest-rate cut and left the door open for further easing next month; the dollar reversed some of yesterday’s sharp losses when markets fretted they had taken Trump trades too far (they haven’t). Oil is down but base metals are higher. Overnight, Chinese stock futures and the yuan are lower having extended declines after authorities announced a total 10 trillion yuan ($1.4 trillion) program to refinance local government debt, which was disappointing as (1) There was no lift to the Central Govt debt ceiling, and (2) There was no direct support for consumption or the property market, (3) The only announced a debt swap, not incremental stimulus. Today, the macro focus will be on Univ. of Michigan survey, where consensus expects an increase to 71.0 from 70.5 in October, although the rebound in mortgage rates could weight on sentiment. Later tonight, we will receive China PPI and CPI releases at 8.30pm ET.”

The Shanghai Composite probed above the 61.8% retracement value at 3486.96, then slipped beneath that level to 3454.00 today.  This action may have ended the extended Master Cycle.  What follows may be a very sharp decline to the Cycle Bottom at 2697.80 by early December.

VIX futures made a new Master Cycle low at 14.92 this morning on day 269 of the extended Master Cycle.  The Cycles Model suggests today may be a high volatility/reversal day with strength in the new trend developing next week.  The “tail” of the Triangle formation may be complete.

The November 13 options chain shows virtually no short gamma.  Long gamma may begin at 20.00 and currently runs strong to 25.00.

TNX futures pulled back to 42.94 in the overnight session before easing higher.  Should TNX continue to behave in a phase-shift, it may resume its trek higher and in strength over the next several weeks.  The Cycles Model suggests that rates may rise through the end of the year.

Gold futures slipped to 2687.50 this morning after challenging Intermediate support/resistance at 2703.11.  It is on a Cyclical sell signal that becomes confirmed beneath the 50-day Moving Average and trendline at 2655.22.  The next level of support lies at 2600.00.  The 50-day and trendline are a potent combination, signifying a loss of the uptrend since February.  Ending Diagonals tend to make complete retracements.

3:38 pm

SPX has hit the upper trendline of its trading channel near 6000.00.  The top  may be complete.

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!

SPX futures rose to a new all-time high this morning at 5947.20.  It has surpassed the Cycle Top resistance at 5915.00 and appears poised to reach the upper trendline of the 3-month trading channel at 6000.00 as it nears the terminus of its current Master Cycle. Today is day 245 in the Master Cycle, leaving less than 2 weeks to complete the uptrend.   Should the SPX reverse in that time, an aggressive sell signal may be had beneath the Cycle Top at 5915.00.

Today’s options chain shows Max Pain at 5915.00.  Long gamma may begin above 5950.00 while short gamma lies beneath 5885.00.

ZeroHedge  reports, “US equity futures extended their post-election gains, as S&P futures traded near session high with both Tech and small caps outperforming as the dollar eased and yields were flat, as traders continued to map out Trump’s return to the White House and what it holds for the Fed’s interest-rate path. As of 8:00am ET, S&P 500 futs traded 0.2% higher after surging in the previous session on bets that the newly elected President will boost corporates through pro-growth policies; Nasdaq futures rose 0.4% after hitting a new all time high on Wednesday; Mag7 names were mixed premarket with semis bid despite NVDA dipping -21bps. An index of the dollar retreated 0.3% following its best day since Sept 2022. Moves in US Treasury yields were muted after Wednesday’s seismic selloff; bond yields are 1-2bps lower as the curve steepens. The commodity complex is mixed with Ags higher, Energy lower, and Base metals outperforming Precious. Today’s macro data focus is on the Fed’s decision (2pm ET) and the BOE (7am ET); both CBs are expected to cut by 25bps.”

VIX futures are lingering near yesterday’s proposed Master Cycle low at 15.44.  The Fractal may not be complete and the Cycles Model suggests a high volatility presence on Friday.  Thus, the Master Cycle may terminate with a final low and a possible reversal on Friday.

Short VIX positions may disappear today as the November 13 options chain only shows a meager 1047.00 contracts at 16.00 while long gamma may begin at 20.00 and remains strong to 30.00.

TNX futures are consolidating in the overnight session after yesterday’s ramp.  There may be yet another surge above 45.00 before pulling back.  The bond market anticipates another .25 rate cut with a 99.8% certainty.  What may move the markets is the commentary after the announcement.  There is the real possibility of another policy error as the Fed attempts to moderate interest rates in the face of rising inflation.

ZeroHedge observes, “With global markets in chaos in the aftermath of the Trump victory – and what appears to be a Republican sweep – and bond yields soaring by the most since the covid crisis, some were worried that today’s 30Y auction would be a historic disaster and may even fail, as technically improbable as that may be. In the end, with 30Y yields blowing out by more than 20bps, the biggest rout since 2020, such fair proved to be groundless because today’s sale of $25BN in 30Y paper ended up being very solid for the most part.”

Japanese Yen futures may have reached their Master Cycle low yesterday, day 267 of its Master Cycle. This morning’s futures show a rise to 65.195 in early signs of a reversal.  Overhead resistance lies at 66.00, above which a buy signal may be found.  The initial rally may take the  Yen back to its Cycle Top at 70.56 by the end of the month.  A rally above 71.55 may set off the Head & Shoulders formation.  No one is expecting a reversal of that magnitude, yet the Cycle Model trending strength for that period.

USD futures have pulled back to 104.39 this morning, as it may be consolidating or correcting its recent ramp higher.  The current Master Cycle may be complete in the next two weeks.  Normally the contraction would continue for the duration of the Master Cycle.  However, a Fed policy error may cause the USD to surge even higher.

Gold futures have bounced from the 50-day Moving Average and Diagonal trendline at 2652.32 to test Intermediate resistance at 2701.25.  The bounce may not last as it may resume the decline beneath the above-mentioned supports.  The next support beneath that is the mid-Cycle at 2416.76.

Crude oil has declined to 70.69, beneath its 50-day Moving Average at 71.04.  The may create a confirmed sell signal for oil.  Be aware that the Cycles Model indicates a possible decline to the end of the year.  The Head & Shoulders target may be the appropriate target for this move.

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!

US 30 futures rocketed to 43630.50 in the post-election market, making a new all-time high.  This is a highly unusual formation which has multiple outcomes due to its complexity.  The first of two possibilities suggests a final peak being made this morning with a reversal this afternoon.  That leaves a 2-3 week decline into the last week of November.  The second potential outcome implies a continued rally until the last week of November.  In that case, the final top may be as high as 45000.00.  Both scenarios have issues that may be resolved later today.

ZeroHedge remarks, “Trump won in 2016, he also won in 2020 (but it was stolen from him thanks to 20 million “vapor” votes which magically failed to make a re-appearance in 2024), and he just won again in a landslide, not just the electoral but the popular vote as well… and boy are markets rocking!”

SPX futures have risen to 5924.70 in the post-election market.  The same scenario as the Industrials occurs in the SPX.  Either the surge ends today (between 5900.00-6000.00) or the inversion continues until later this month (above 6000.00).  Inversions are unstable, so due care is needed to defend against a sudden outcome.

Today’s options chain shows SPX clearly in long gamma above 5800.00.  Short gamma resides beneath 5700.00.

NDX futures have risen to 20630.90 in the post-election market.  It has not made a new all-time high.  NDX is interest sensitive, so the TNX may have the key to the non-performance in the NDX.  This behavior favors a prompt reversal, bringing down the Blue Chips along with the NDX.

VIX futures plummeted to 15.44 this morning, creating a potential Master Cycle low.  Last week I had introduced the idea, but withdrew it when the VIX challenged the upper trendline of the Triangle formation.  My error was not taking into account the potential move created by the election outcome.  Sometimes formations (especially Triangles) take more patience than most people allow.  The tail to the Triangle appears complete, or nearly so.  Today is day 267 in the current Master Cycle, which doesn’t allow more time for the formation to develop.  The VIX may begin its new (upward) Cycle momentarily.

Today’s options chain shows the puts (under 20) have grabbed the brass ring.

TNX  futures surged to a morning high at 44.89, then eased back.  The Phase Transition is working as explained in prior blogs.  The Cycles Model suggests the trend may continue into January.  This does not bode well for interest sensitive stocks and home mortgages.

The Japanese Yen has fallen to a morning low of 64.74.  It may be making its Master Cycle low today, on day 267.  A reversal in the Yen may begin to put pressure on the Yen carry trade.  This may eliminate a major source of liquidity.

Gold futures tumbled to 2330.75 this morning, testing the 50-day Moving Average and Diagonal Trendline at 2649.82.  It has declined beneath Intermediate support at 2699.54, creating a possible sell signal.  Should it break through the 50-day, the Cycles Model suggests a three-week decline that may challenge the mid-Cycle support at 2413.14.  A potential series of panic down days threaten to bring gold down even further to its Cycle Bottom at 2033.23.

1:30 pm

SPX challenged Intermediate-term resistance (now at 5772.68) and reversed back beneath it, fulfilling both time and price for the retracement.  The market has now become fragile.

ZeroHedge remarks, “In yesterday’s Global Daily we speculated that the rapid tightening in prediction markets for the US presidential race might have been a head fake. Over the course of yesterday, we saw momentum shift in those markets with probability on a Trump win again building. As of this morning President Trump leads by 18pts on PolyMarket, 8pts on Kalshi and 1pt on PredictIt. The PredictIt figure is especially interesting, given that it awarded a lead to Vice President Harris this time yesterday.”

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!

SPX futures made an overnight high at 5730.20.  The Cycles Model suggests a possible bounce to Intermediate resistance at  5768.21, as the need for retracement in the market corresponds with the need for calm during the election.  The 50-day Moving Average lies at 5699.43 and is the line in the sand for traders.  Beneath that lies a confirmed sell signal.  Today’s bounce may be the last chance to lighten the longs.

Today’s options chain shows Max Pain at 5750.00.  Long gamma may begin above 5800.00 while short gamma lies beneath 5700.00.

ZeroHedge reports, “Futures are higher led by tech as voting gets underway in a very tight presidential race between Donald Trump and Kamala Harris (full election day guide here). As of 8:00am S&P futures are up 0.1%, off session highs; Nasdaq futures are 0.3% higher with Mag7 names mostly higher as Semis also have a bid. DJT is +6% pre-mkt; BA is +2% after the company secured a labor deal ending an 8 week strike. Palantir surged 13% on record profit and high demand for its artificial intelligence software. The dollar was steady, while 10-year Treasury yields advanced four basis points to 4.32%. The commodity complex is stronger today led by Energy and Base Metals; brent trades aroun $75.50. The macro data focus is on ISM Services and the Election, although we may have to wait for the results: in 2016, Trump was declared winner early Weds but in 2020, Biden was declared winner on Sat.”

The Shanghai Composite Index rose to 3385.92 today.  By its action, one might say, the whole world is watching the US markets.  However, The Cycles Model suggests the retracement bounce may soon be over near 3430.00-3450.00, igniting Chinese speculative fever.   Following the short squeeze, the decline may resume.  The Cycles Model suggests the current Master Cycle may last until early December, where it may land near the Cycle Bottom at 2705.37.  The neckline of a massive Head & Shoulders structure also lies at the Cycle Bottom.  Should the decline exceed that low, the H&S formation may be triggered.

VIX futures are consolidating inside yesterday’s trading range, waiting for some resolution of today’s election.  Implied volatility going into the election is one of the lowest on record.  Usually volatility is high prior to the election and calms down afterwards.  The Cycles Model anticipates the exact opposite of market expectations.  What makes this election different?

Tomorrow’s options chain shows there is no Max Pain.  Short gamma resides from 15.00 to18.00.  Long gamma lies between 23.00 and 25.00.  There is little anticipation of a large move in either direction.

TNX is edging higher, but hasn’t yet broken out.  Once it does, it may go on a rampage higher through the end of the year.  The current activity may be called a “phase shift,” where the trend suddenly ramps into high gear rather than pausing for a consolidation/correction.  This action will certainly change the outlook for bonds and the Fed’s ability to manage or control them.  Since 1949, the Fed has carefully cultivated the image of being “in control” of the bond market.  However, a close examination has shown that the Fed has never anticipated changes, only reacted to them.  The September rate reduction was a major blunder that now has implications that the Fed is no longer in charge.

ZeroHedge observes, “Why so many go so wrong on public debt.

I have been involved in the study of economics for about 30 years. What spurred my interest was the discovery of a major blunder in the field of Public Finance that has caused centuries of misery, poverty and tyranny. The strange thing is that we all know of this blunder in various ways, but inexplicably refuse to incorporate the information into reasoning on this most important subject. It is beyond me why the learned and lettered people of Finance and economics allow this fundamental and dubious premise, passively accepted for millennia, to persist.”

The Japanese Yen is edging higher, toward the mid-Cycle resistance at 66.02.  However, the Master Cycle may not be complete.  The Cycles Model calls for another 2-3 weeks of decline before a major reversal.

9:35 am

BKX, our liquidity proxy, has declined beneath its Cycle Top support at 121.78, creating an aggressive sell signal.  The Cycles Model points to a three week decline, with possible targets at the Cycle Bottom at 92.15.  Should a panic develop, a possible target may be the neckline of a very potent Head & Shoulders formation.  This has implications for both banking and non-banking institutions.

ZeroHedge observes, “The transformation of banking and financial services away from traditional public markets and the banking system itself has been dramatic since the Global Financial Crisis (GFC) of 2008.

This shift has reshaped the financial landscape, as more activities that were once dominated by banks and public markets have moved into private and non-bank financial sectors.

In 2008, when the GFC struck, the financial world experienced a severe breakdown. Banks, which had been the backbone of lending and liquidity, stopped trusting one another, ceasing to lend in overnight markets, which are crucial for short-term liquidity. Simultaneously, public markets suffered immense losses, with the S&P 500 plunging by roughly 50%.

As a result, both the banking system and public markets effectively froze, becoming illiquid and dysfunctional almost overnight. What had once been highly liquid, smoothly functioning financial ecosystems ground to a halt.

ZeroHedge reports, “Money market funds saw yet another week of inflows (+$40BN), taking the total AUM to a new record high of $6.508 TN…

Source: Bloomberg

The inflow into MM comes as bank deposits (on a seasonally adjusted basis) dropped a modest $13BN to the week-ending 10/23…

Source: Bloomberg

But, on a non-seasonally-adjusted basis, total deposits plunged $133BN (the biggest weekly decline since April)…”

Source: Bloomberg

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.”

SPX futures are probing lower over the weekend, but still above the 50-day Moving Average at 5697.67.  The 50-day Moving Average is recognized by most traders as a major support and violating it may create a sell signal.  Last Thursday we recognized an early confirmed sell signal at Intermediate term support/resistance at  5765.91,, which may be briefly tested a final time this morning.  Should the 50-day Moving Average be broken, the Cycles Model claims a three week decline may lie ahead.  Should the red trendline at 5550.00 be broken, the initial target may be the Cycle Bottom at 4889.25.  Keep in mind, however, that a larger Cycle may be at play with its target at 4103.00, the October 23, 2023 low.

Today’s options chain shows Max Pain at 5750.00.  Long gamma becomes strong above 5800.00, while sort gamma is strong beneath 5700.00.

ZeroHedge reports, “US equity futures are higher with Mag7 names mixed but NVDA higher on its Dow inclusion with semis also ticking higher; the dollar and yields are lower as the Trump reflation trade took a hit after several polls over the weekend showed a rebound for Kamala Harris. As of 8:00am ET, S&P futures are up 0.1%, while Nasdaq futures are flat; small caps are underperforming as the yield curve bull flattens with the USD weaker on a reversal in the Trumpflation trade. Commodities are catching a bid, led by Energy as OPEC+ decided to delay its production increase again. Today’s macro data is likely to be ignored but given the weaker than expected NFP, investors may want to know the state of the economy as we get past the Election and the Thursday’s Fed mtg. ISM-Services tomorrow is the most important print this week with Sentiment updates on Friday.”

VIX futures appear to be consolidating over the weekend after breaking through the Cycle Top at 23.08.  The Cycles Model shows rising volatility this week, with a virtual explosion of strength in the following week.  Peak values may occur in early December, although the current SPX Master Cycle is due to mature earlier.  There may be a couple of fractal variations that may accommodate that pattern.

While there is an accumulation of puts at 15.00 and 18.00, the calls are beginning to dominate above 20.00-23.00.

TNX slid down to 42.81 this morning, but that may be short-lived as the Cycles Model proclaims a day of strength.  The action of the last week shows a possible phase-shift in which normal retracements are suspended due to unusual strength in the Cycle.  The Cycles Model supports that observation.  The new Master Cycle may las up to 2 months, with serious implications.

ZeroHedge remarks, “TLT.US, the long-dated US treasury ETF, is back trading below its 200-day moving average, and on current form is looking at its fourth year running of negative price returns.

Not that this sell-off reflects any lack of retail investor enthusiasm for US bonds. Quite the contrary.

As US treasuries pulled back, flows into TLT.US went parabolic – and the ETF’s market cap rose from US$10bn in 2019 to US$60bn today.

But long-dated bonds continue to sell off. And like successes, sell-offs usually have many fathers.”

USD futures declined from Friday’s high at 103.89 to a morning low at 103.49.  However, the Cycles Model shows today having a double dose of strength, suggesting a possible breakout above the USD previous high.  The current Master Cycle has about three weeks left as the USD forges higher.

Japanese Yen futures are continuing to climb, having reached 66.08 over the weekend.  The advance is showing growing strength, with a possible Cycle high by the end of November.  Should a panic develop, the Yen may target its September high.  The neckline of a potent Head & Shoulders formation lies at 71.55.

Crude oil futures are coming off a period of strength, having reached a retracement high at 71.81 this weekend.  Should crude fall back beneath the Head & Shoulders neckline at 66.72, that formation may be triggered with consequences shown on the chart.  The Cycles Model suggests that a decline may resume through the end of December.

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!

SPX futures have risen to 5732.50 thus far, but has not exceeded Intermediate support/resistance at 5763.10.  This action suggests a possible resumption of the decline beneath the 50-day Moving Average at 5695.13, due to a likely negative payrolls print.  The next support may be the 100-day Moving Average at 5589.03.  Beneath that is the year-long Ending Diagonal trendline near 5550.00.

Today’s options chain shows Max Pain at 5770.00.  Long gamma may begin above 5800.00.  Short gamma lies beneath 5750.00.

ZeroHedge reports, “Futures are higher on the first day of the month and ahead of what may be a very poor jobs report, with MegaCap tech leading. As of 8:00am ET, S&P futures were 0.4% with the benchmark on track for its worst weekly performance in more than a year amid unease over the outlook for artificial intelligence and cloud computing following results from Microsoft and Meta;  Nasdaq futures gained 0.5%, as AMZN and INTC surged 5.8% and 5.7%, respectively, after strong earnings while AAPL is down -1% after its guidance disappointed; NVDA is rebounding and is up +2.0% this morning. Bond yields are flat, and the USD is fractionally higher. Commodities are mixed, with oil higher (WTI +2.9%) amid renewed tension in the Middle East, base metals lower, and precious metals modestly higher. The main event today is the jobs report, but we also get the Mfg ISM, US Mfg PMI, and Construction Spending.”

NDX futures rose to 20009.00 this morning, short of Intermediate term resistance at 20051.32.  Last night’s earnings reports were a mixed bag.  Apple slid after guiding beneath consensus.  Intel shares jumped after upbeat guidance.  AMZN jumped on record profit report and solid guidance.  The problem is, everyone is all in, yet NDX is not making a new ATH.

Today’s options chain shows Max Pain at 19880.00.  Long gamma may begin above 19900.00 while short gamma resides beneath 19850.00.

VIX futures pulled back to 22..17 thus far, after breaking out above the Cycle Top resistance at 22.87.  The Cycles Model suggests a likely resumption of the rally should the VIX rise back above its Cycle Top.    The key to a huge volatility swing may be the upcoming payrolls report.  Pundits advise that VIX should fade after the elections.  The Cycles model suggests otherwise.  VIX intensity may increase during elections week and trending strength remains strong through the end of the month.

The November 6 options chain shows Max Pain at 19.00.  Short gamma resides between 15.00 and 18.00.  Long gamma begins at 23.00, but doesn’t have a lot of follow-through.  This may possibly be in anticipation of “calm” seasonality through the end of the year.  It may be anything but calm.

TNX reacted to the payrolls report by declining to 42.34 thus far.  There is support at the mid-Cycle level at 41.92.  Should it breach that support, it may continue its decline to the trendline near 40.00.  The alternate view is that, should support hold, TNX may launce a possible panic rally starting over the weekend.

ZeroHedge comments, “In our nonfarm payrolls preview last night, we said that the October payrolls report may show the first negative print since 2020. Well, moments ago the BLS reported the highly anticipated number and… it was close: the monthly print was only 12K, a huge drop from the pre-revision 254K in October (revised naturally lower to 223K), and just 13K away from a negative print.

The print was so low it was only above the two lowest estimates (those of Bloomberg Econ for -10K and ABN Amr0 for a 0 print). That means it was a 3 sigma miss to estimates.”

Japanese Yen futures climbed to 65.98 this morning as it emerges from a Master Cycle low.  A buy signal may be found above the mid-Cycle resistance at 66.03.

12:39 pm

SPX declined beneath the 3-month median at 5770.53 to a low of  5718.18, near the 50-day Moving Average at 5697.95.  It has triggered a confirmed sell signal at 5770.00.  Should it bounce, there may be a 2-day attempt to take back losses.  However, if SPX  cannot rebound past the median, then a resumption beneath the 50-day may be in order.

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.”

NDX futures declined this morning to 20154.70, just above the diagonal trendline and Intermediate support at 20040.28.  A casual observer would conclude that recently the NDX was making a new all-time high.  A closer look, however, tells us otherwise, since the ATH was made on July 11 at 20672.10.  In other words, the NDX has been struggling to re-take a high made over 3 months ago!  While individual stocks may have made new all-time highs, the big picture shows a loss of strength in the index.  So, 20040.00 is the line in the sand.  As I have been warning that it is unwise to be long, crossing this line (20040.00) creates a confirmed sell signal.  

Today’s options chain shows Max Pain at 20425.00.  Long gamma may begin above 20450.00 while short gamma resided beneath 20400.00.

ZeroHedge reports, “Futures fell ahead of the busiest day of the earnings season, dragged down by META and MSFT which are both down about 4% following last night’s earnings releases. As of 8:00am ET S&P futures are down 0.6%, but off session lows; Nasdaq futures retreat about 0.7% after Microsoft and Meta growth outlooks fail to impress investors, with the pair together representing half of the losses in Nasdaq futures. The rest of Mag7 is also lower: AMZN, GOOG, NVDA are all down 1% – 1.4%. AAPL, which had been used as a funding source is -33bps. Bond yields are flat to down 1bps; the USD is flat. Cmdtys are getting hit with the global risk-off tone, but WTI is higher while Brent is lower. The macro data focus today is on ECI, Income/Spending, jobless claims, and the monthly PCE numbers. Mag7 earnings conclude (ex-NVDA which is Nov 20) with AAPL and AMZN.”

This morning the Industrials futures made a new low at 41916.20.  In doing so, it also may have triggered a confirmed sell signal beneath Intermediate support at 42320.00  The Dow Jones Industrials have made their all-time high on October 18 at 43325.00.  Commentators have been ignoring the DJIA simply because the NDX and SPX had resumed their advances.

Note that the SPX made its ATH on October 17.  The SPX sell signal may be confirmed beneath Intermediate support at 5760.76.  Thus far, its low was made at 5767.00.

Today’s SPX options chain shows Max Pain near 5820.00.  Long gamma may begin above 5835.00 while short gamma lies beneath 5800.00.

VIX futures ramped up to a morning high at 21.85, possibly confirming the Master Cycle low on October 18.  The VIX has been making higher lows since the August 5 spike high, establishing its new trend.  A breakout above the Cycle Top at 22.75 would be the icing on the cake.  Don’t buy the seasonality story.  This is a famous meme that has a mixed history.

The November 6 options chain shows Max Pain at 19.00.  Short gamma hovers between 15.00 and 18.00.  Long gamma becomes established above 20.00 with growing interest at 35.00.  An explosion in the VIX may catch the majority of options traders off guard, as there is little hedging.

Yen futures made a new high this morning at 65.94, confirming the Master Cycle low made this Tuesday.  The Cycles Model shows trending strength which may assist the Yen’s advance.Those in the Yen carry trade may find themselves falling behind as the advance in the Yen may cause higher repayments of loans originally taken out due to a low interest rate (.10%).

TNX futures rose to 43.10 this morning.  Should TNX advance beyond its prior high at 43.39, it may be considered to be in a phase transition, where the fractals overlap higher.  The Cycles Model shows a possible explosion of strength beginning over the weekend which may confirm that observation.  Lax attitudes about debt and increasing debt levels affect volatility, while major investors become increasingly wary about their investments in sovereign debts.  The Cycles Model suggests increasing rates through the end of the year.  here are two possible targets indicated.   The first is near 5.3%, a likely near-term target.  The longer-term (2025) target may be 8.2%.

Zerohedge comments, “Meditations In An Emergency

It’s now less than a week to go until the USA decides who is going to be their next President. The state of the political discourse recalls the ‘dramatic crossroads’ meme, where the respective labels attached to the sunny uplands and the grim castle of doom is a Rorschach test to confirm our political priors.

I’ve chosen my words deliberately to say that the USA will be deciding on their next President – rather than the next ‘leader of the free world’ – because one of the options on the table is a more isolationist approach to trade and foreign policy where the USA may decline to perform the leadership role, instead prodding oftentimes recalcitrant allies into shouldering more of the global security burden.

That could draw the curtain on the ‘Team America World Police’ neocon phase, or even Woodrow Wilson’s “making the world safe for democracy” idyll, if you prefer to cast your view further back. What’s now clear is that the bond market and the DXY is becoming sensitized to the potential implications of another Trump win.”

8:45 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!

SPX futures made an attempt at a new ATH, but stopped short at 5857.30.  The .5% rate cut in September has flooded the market with cash looking for a home.  However, smart money knows that it is temporary.  The normal Cycle may be inverted, but it is skating on thin ice.  A nominal new high near 5900.00 is possible

Today’s options chain shows Max pain at 5825.00.  Long gamma may begin at 5835.00 while short gamma lingers beneath 5810.00.

ZeroHedge reports, “US equity futures are flat, reversing modest overnight gains ahead of the next batch of earnings. As of 8:00am ET, S&P futures were flat while Nasdaq 100 futures are up 0.1%; GOOG was the second of the Mag7 to beat earnings, and the stock is +5.4% pre-mkt after beating across the board on strong cloud growth. AMZN, META, MSFT are all trading up at least 1.7% pre-market. Semis are lower with AMD -8.5% and NVDA -80bps. Bond yields are lower as the curve bull steepens ahead of ADP numbers and US Q3 GDP/Price releases. A Bloomberg gauge of the dollar snapped a three-day advance, and the commodity bid returned led by Energy. META and MSFT are the next Mag7 earnings today. Today’s macro US economic data calendar includes October ADP employment change (8:15am), 3Q advance GDP (8:30am) and September pending home sales (10am).”

VIX futures continue to consolidate at a higher level.  The Triangle in the VIX may be a continuation formation, but may not be complete without a rogue Wave (E) breaking beneath the lower Triangle trendline in the next few days.   This would be a perfect fake-out to bring longs back into equities.

The November 6 options chain shows Max Pain at 19.00   Short gamma lies from 15.00 to 18.00.  Long gamma may start above 20.00, but does not have conviction above 23.00.

TNX has pulled back from yesterday’s Cycle Inversion high.  It now has two options to complete the correction.  The first is to decline to the mid-Cycle support at 41.990 in a flat correction.  The alternate is to decline as far as the trendline at 40.50 in a strong push-back in conjunction with the VIX.  This sets up a maximum confusion for traders as they try to make sense out of the whip-saw.

The Japanese Yen rose to 65.60 this morning as it emerges from its Master Cycle low at 64.99.  A buy signal may be found above mid-Cycle resistance at 66.04.  The Cycles Model shows potential strength in the Yen today and again in the first week of November.  Those in the Yen carry trade got a 3% bonus by staying in the trade the past three weeks.  That may disappear quickly at the turn of the month, beneath critical support at 3286..

The Shanghai Composite fell today to 3244.91, beneath critical support at 3286.28.  It is now on a confirmed sell signal.  The Cycles Model suggests a decline to early December with a possible target at or beneath the Cycle Bottom at 2700.44.   Should it decline beneath it, the Head & Shoulders formation may be triggered, with consequences listed on the chart.

Crude oil futures tested its Head & Shoulders neckline at 68.50, then retreated beneath it this morning.  The formation has been triggered, with potential consequences listed on the chart.  The Cycles Model implies that the decline may last until the end of December.