The Practical Investor

7:45 am

Good Morning!

SPX futures declined to a morning low at 5814.50 thus far.  SPX is now beneath the Ending Diagonal trendline and Short-term support at 5820.00, reinforcing the aggressive sell signal in the past week.  An aggressive sell implies a lightening of the long exposure and a seeking hedges while they are inexpensive.  The Cycles Model suggests that the decline may intensify over the next few days, leading into a month-long rout for stocks.

Today’s options chain shows Max Pain at 5835.00.  Long gamma may begin above 5850.00 while short gamma dwells beneath 5820.00

ZeroHedge reports, “Futures are down small, reversing a modest overnight gain with small-caps underperforming. As of 8:00am ET, S&P futures are down 0.1%, near session lows, while Nasdaq futures are fractionally higher on the session with Mag7 names mixed while GOOG is higher ahead of earnings and semis are seeing a slight bid despite NVDA -60bps. The yield curve is bear steepening with the 10Y yield at 4.30%; the USD is flat. In commodities, oil prices climb along with industrial and precious metals after Reuters reported China is weighing approving over 10 trillion yuan ($1.4 trillion) in additional borrowing in the coming years to shore up the economy and address local governments’ debt risks. WTI is up 1% near $68 a barrel while copper rises 0.9%. Today’s macro data focus will be on JOLTS, Consumer Confidence, and Housing prices. GOOG is the first of 5 of the Mag7 that report this week which may present an inflection point for the group given the reduction in exposure since the summer which has not yet been offset by recent purchases.”

VIX futures have risen to a morning high at 20.10.  A potential breakout from the recent trading range lies above 20.50.  Note the potential Triangle formation, which offers a potential continuation signal.  It remains above the 50-day Moving Average, which is recognized as a confirmed buy signal.  However, few investors, with the exception of professional traders, have taken advantage of the rising VIX.  While the SPX has not made a new high since October 17, it is still perceived to be rising, leaving investors asleep at the wheel.  Commentators don’t know what to make of it.  That may be about to change today.

The October 30 options chain shows Max Pain at 19.00.  Short gamma resides at 17.00-18.00.  Long gamma begins at 20.00 and is populated to 30.00 with a couple outliers above.

The Shanghai Composite Index has declined today, resting on its Cycle Top support at 3281.44.  A breakdown beneath that support gives a confirmed sell signal, with a projected decline to early December.  The implied target may be the Cycle Bottom at 2700.38.  However, there is a substantial probability of declining beneath that level, triggering a massive Head & Shoulders formation.  H&S formations are very reliable, especially in the position shown in the chart.

TNX futures reached a morning high at 43.14, suggesting the cash market may be going higher today.  This correction is called an “expanded” formation, implying that the trend is too powerful for a normal pullback.  The Cycles Model suggests another possible week of expanded correction.  An alternate view suggests a possible “phase transition” which implies that a corrective pullback may be skipped altogether as TNX explodes higher.  Trouble is brewing in bonds and may begin to affect interest-sensitive stocks.  In the meantime, the Treasury is putting lipstick on the pig by trimming debt issuance in the fourth quarter and deferring it to the 1Q 2025.

ZeroHedge reports, “Back in July and exactly one quarter ago, when the US Treasury published its debt issuance forecast for the balance of 2024, we said that the “anticipated numbers came close to our estimates for Q3, but well above our forecast for Q4” with the highlight being the Q4 debt issuance number which the Treasury estimated at $565 billion, $115 billion above our estimate of $450 billion (in part due to the Treasury higher TGA estimate of $700 billion vs our assumption of $650 billion).”

Meanwhile, ZeroHedge comments, “90 minutes an ugly 2Y auction this morning, moments ago the Treasury sold its second coupon offering for the day, this one $70BN in 5Y paper in an auction that was even uglier.”

The Japanese Yen declined to 65.18 thus far this morning, on day 259 of the Master Cycle.  A normal Master Cycle would have ended at the mid-Cycle support at 66.06, but in times of high volatility, that support may be exceeded.  A potential rate hike may send the Yen soaring, with negative consequences for the Yen carry trade.

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 rose to 5848.10 in an apparent attempt to break out above Friday’s high at 5862.82, where it tested the Ending Diagonal trendline.  Remember, crossing beneath that trendline gave an aggressive sell signal last week.  An aggressive sell signal comes with the instruction to lighten up on long positions.  Selling on the bounce makes today s good day to do so.  The Cycles Model suggests this week may see an increase in trending strength.  Should the SPX remain beneath the trendline, the that translates into a strong decline.

Today’s options chain shows Max Pain at 5835.00.  Long gamma may begin above 5850.00 while short gamma lurks beneath 5820.00.

ZeroHedge reports, “As we enter the most hectic two-week period of the year, futures are stronger following the S&P’s first weekly loss in 7 weeks; both Tech and Small-Caps are outperforming with the yield curve bear steepening and USD flat reversing an earlier spike as a splunge in the yen also reversed following a shock outcome to Japan’s election this weekend which saw the ruling LDP lose its parliamentary coalition majority for the first time since 2009. A sense of relief swept through markets after Israel’s retaliatory strikes against Iran was just as performative as back in April, and avoided oil and nuclear facilities, with crude tumbling 5%. As of 8:00am ET, S&P futures were up 0.5%, but well off session highs; Nasdaq futures gained 0.6% with Mag 7 and semi stocks higher premarket. Oil/Energy commodities plunge, WTI down 6%, as the latest Israeli attack was another “straight to DVD” production and avoided energy facilities in Iran. Base metals have a bid but the balance of the commodity complex is lower. It’s an extremely busy week, with payrolls on Friday and over 40% of the S&P reporting earnings, but today’s macro calendar is light with only Dallas Fed calendar but keep any eye on Japanese politics and any potential read-through for the US yield curve and Credit demand.”

VIX futures continue to consolidate within recent trading ranges in a symmetrical Triangle formation (a continuation pattern).  VIX is on a buy signal and may be prepared to go higher until early December.  It is on a definite uptrend since July and is quite capable of exceeding the August 5 high.

The October 30 options chain shows Max Pain at 19.00.  Short gamma is limited to 17.00-18.00.  Long gamma begins at 20.00 and extends to 30.00 with an outlier at 80.00.  The outlier may indicate smart money taking an extreme position in the event of a blowout move.

The Shanghai Composite Index rose to 3321.22 today, unable to overcome the October 23 Master Cycle high at 3331.08.  A confirmed sell signal awaits beneath the Cycle Top at 3275.93.  The new Master Cycle may resume the decline until early December.  The Target may be the Cycle Bottom and Head & Shoulders neckline at 2701.27.  A decline beneath that level may have drastic consequences, including a possible market closure.

TNX futures rallied to 43.22 this weekend, while the cash market rose to 42.56 this morning.  Yields may go higher, as indicated by the weekend futures.  The Cycles Model indicates trending strength until Wednesday, suggesting a possible spike high in the TNX this week.  An alternate possibility may be a phase transition that allow the current Cycle to continue its uptrend with only a minimal pullback, since trending strength may return early next (election) week.

ZeroHedge remarks, “US 10 year is approaching the massive trend line that has been in place since October 2023. 4.3%, give or take, is the level to watch. Note RSI is at “extreme” levels, but on the other hand, we have traded in overbought land for a few weeks.”

The Japanese Yen futures may have bottomed out over the weekend at 65.175 while the cash market made a low of 65.46.  Today is day 258 of the Master Cycle, so we may see the low in the next day or so.  Change may be imminent in Japan’s political quagmire.  Runaway inflation may result in higher rates at the Bank of Japan and with it may come a dramatic strengthening of the Yen.

ZeroHedge observes, “In a surprising turn of events, Japan’s ruling Liberal Democratic Party and its coalition partner are set to lose their majority in Sunday’s election, according to a forecast from public broadcaster NHK, raising questions about the future of Prime Minister Shigeru Ishiba.

Amid voter discontent over a slush-fund scandal, not to mention Japan’s worst runaway inflation in generations, the LDP and Komeito appear likely to fall short of the 233 seats needed for a majority in the lower house of parliament, NHK forecasts. Ishiba had aimed to secure a majority with his coalition partner, recognizing that the LDP would not retain the 247 seats it held before the election.

Falling short of that goal would mark the first time the LDP has lost a coalition majority in an election since 2009.”

USD futures pulled back to 103.99 as it consolidates in a possible pullback to the mid-Cycle support at 103.65.  This week’s activities may be pretty calm, but next week’s trending strength shoots up for the entire week.  The Current Master Cycle may extend until the end of November (in strength).  Its target may be the Cycle Top resistance at 106.76.

Crude Oil futures dove to a morning low at 66.94 before a bounce to retest the Cycle Bottom (no resistance) at 67.89.  The neckline of the Head & Shoulders formation at 68.00 has been triggered, with potential consequences listed on the chart.  The current Master Cycle may last until the end of the year (in decline).  What does smart money know that we don’t?  Geopolitical risk plays a big part in this scenario.

ZeroHedge observes, “Oil at massive levels (again)

Oil is down big overnight. DB on the weekend Israel attacks: “The targeted scope of the attack and the absence of an immediate retaliation signal have seen markets price out some of the geopolitical risk premium”. Oil is trading at the massive $72 area again. We have dipped below on a few occasions, but these are make or break levels to watch.”

12:00am

Watch out!  BKX may be about to break down beneath its Cycle Top at 120.50, which gives investors an aggressive sell signal.  A confirmed sell signal lies beneath Intermediate support at 115.67.  The 10-year Treasury yield is back above 42.00, threatening bank investment portfolios.  Regional banks are closing branches in the Mid-West to lower expenses.  Warren Buffett may be right.

11:50 am

SPX has just completed its first mini-Cycle from the ATH.  The next week may see a stiff decline to the 50-day Moving Average at 5678.21.  It may be deeper.  In the meantime, commentators are claiming we aren’t long enough.

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 bounced back to the lower trendline of its 2-month Ending Diagonal near 5835.00 this morning.  The Cycles Model suggests the bounce may be over by mid-day.  From thee, the decline may extend to the   50-day Moving Average at 5668.44.  SPX is on an aggressive sell signal, suggesting lightening up the longs on the bounce.  The 50-day Moving Average is the most common recognition point that all is not well with the bull.

Today’s options chain shows Max Pain at 5835.00.  Long gamma may begin above 5850.00, while short gamma may prevail beneath 5800.00.  Today’s options are a mixed bag and same-day options may affect the outcome.

ZeroHedge reports, “US equity futures are higher for the second day in a row, trimming their weekly drop to less than 1.0%, and led by small caps as investors looked past a jump in borrowing costs that cooled market sentiment earlier in the week. As of 8:00am ET, S&P futures are up 0.3% with Nasdaq futures up 0.2%. Megacap tech are mostly mixed: META +1.0% and AMZN +0.7%, while TSLA -1.7% after its second biggest one day gain in history following blowout earnings, and AAPL is down 1% after China Q3 smartphone sales decline. Treasury yields drop for a second day, down 1-2bps, and leaving the rate on the 10-year note up about one tenth of a percentage point in the week at 4.18%; the USD is flat. Commodities are mixed with oil higher, base metals mixed, and precious metals lower. Today, the macro focus will be Durable/Cap Goods Orders, as well as the final revision to Mich. Sentiment.”

VIX futures continue to consolidate above the 50-day Moving Average at 18.02.  While the Master Cycle may have made its low on October 18, there is room for yet another low in the very near term (caution is advised).  In other words, there may be a “forced calm” in the VIX until after the election.  A possible target may be as low as the mid-Cycle support at 15.54, although the VIX has already “touched” that support twice since August.   Should that new low be made, the Cycles Model suggests an extended uptrend until early December.

The October 30 options chain shows Max Pain at 19.00.  Short gamma resides at 17.00 to 18.00, while long gamma may begin at 20.00.

TNX futures are challenging the 200-day Moving Average at 41.79 this morning.  The Cycles Model “allows” TNX to go lower for another day or two.  However, there may be a burst of strength by mid-week to elevate TNX to a new high.  This promises to make the next couple of weeks very confusing for traders, as bond volatility continues to rise.

The Japanese Yen is challenging its mid-Cycle resistance at 66.09 this morning.  The 200-day Moving Average is just above it at 66.35.  Those investors employing the Yen carry trade may be finding that the extremely low interest rate (.10%)  is a mixed bag, since the Yen has already risen 1.25% in two days.  While there is a (diminishing) probability of a lower low in the next few days,, the Cycles Model warns of a violent reaction in the Yen by mid-week.

USD futures declined to 103.80, in a pullback that may test the mid-Cycle support at 103.65.  While the USD may  correct to a lower level over the next week, the Cycles Model suggests a veritable explosion of strength in the first week of November.

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 bounced to 20269.30 this morning, reaching its retracement target at 20231.00.  It is poised for a third Wave decline that may take it to its two-year trendline at 18500.00.  Should it surpass that target, a potential Head & Shoulders formation awaits, with an even deeper target.  Currently, the Cycles Model suggests another 4 weeks of decline.  Surging rates are putting pressure on the highly leveraged tech sector.  That being said, the largest source of financing has been from the Bank of Japan with its deeply negative loan rates and growing instability in the Yen carry trade. (read my report on the Yen)

NDX is on an aggressive sell signal, suggesting lightening the longs.  There may be a potential confirmed sell signal at Intermediate support at 19825.00.  Hedging may be employed at this time while hedging is cheap.

Today’s options chain shows Max Pain at 20100.00.  Long gamma may begin above 20200.00 while short gamma starts beneath 20050.00.

The Shanghai Composite Index declined to its Cycle Top support at 3265.26 after having reached its Master Cycle high at 3331.08 yesterday on day 261.  A decline beneath 3265.00 may trigger a decline to its Cycle Bottom at 2703.16.  A further decline may trigger a massive Head & Shoulders formation with dire consequences.  Stay alert!  This could have political as well as economic consequences.

SPX futures rose to 5830.30 this morning, above yesterday’s target for a bounce.  It has overlapped its prior Wave structure, suggesting the next decline may extend to the 50-day Moving Average at 5659.48.  An aggressive sell signal lies beneath Short-term support at 5800.00.  An aggressive sell signal implies lightening the long positions at the very least.  Keeping profits is the first and foremost rule of the market.

Today’s options chain shows Max Pain at 5800.00.  Long gamma may begin above 5835.00 while short gamma lurks beneath 5750.00.

ZeroHedge reports, “.After three straight days of selling, US equity futures are higher with tech stocks leading gains as Tesla surged 13% in premarket trading after it posted its biggest quarterly profit in more than a year. Contracts on the S&P 500 rose 0.5% as of 8:00 a.m. in New York, while futures on the Nasdaq 100 advanced 0.8%, setting up the tech index to rebound from its sharpest decline in almost seven weeks as traders look ahead to earnings from the rest of the “Magnificent Seven,” kicked off by Tesla’s strong performance. The benchmark has yet to fully claw back a summer slump. Overnight, NVDA supplier SK Hynix posted record profit amid strong AI demand; BA fell 2.7% as its bid to end strikes fails while IBM slumped after the it posted underwhelming revenue in the third quarter. Bond yields are lower and the USD is weaker; 2-, 5-, 10-year yields are 3bp, 5bp, 5bp lower. Commodities, including oil, metals and Ags, are mostly higher: Oil +1.9%, Silver +1.8%, Aluminum +1.8% but Palladium is the standout, surging 10% on news the US may impose sanctions on Russian palladium exports (the country produces 38% of global palladium). The main data highlight will be the October flash PMIs from around the world. In the US, we’ll also get the weekly initial jobless claims, along with new home sales for September.”

VIX futures are consolidating above the 50-day Moving Average at 17.98 after yesterday’s surge.  Rising bond volatility may spill over into the VIX, as the traditionally close relationship has recently widened.

The October 30 VIX options expiration shows Max Pain at 19.00.  Short gamma prevails at 17.00 to 18.00.  Long gamma may begin above 25.00, but the strength of conviction is still not there.

TNX has pulled back from its Master Cycle high at 42.58, made on day 265.  The first line of defense for the pullback may be the upper trendline near 40.50.  However, trending strength returns next week, suggesting a possible expanded correction, where the TNX may make a new high before completing the retracement.  This may be a wild and confusing time for bond traders as Treasury liquidity deteriorates.

ZeroHedge observes, “n a day when stocks are dumping, having finally noticed the surge in yields, one would have expected today’s 20Y reopening auction (of 19Y, 10M Cusip UD8) to be solid. It wasn’t.

Stopping at a high yield of 4.590%, this was 55bps higher than last month’s 4.039%, the highest yield since May and also tailed the When Issued 4.574% by 1.6bps, the second consecutive tail in a row (if not as bad as last month’s 2.0bps tail).”

If you have read my blog this far, congratulations!  You will now see why equities and especially the NDX is in such danger of failure.

The Yen has reversed its decline this morning after making its Master Cycle low yesterday, day 253.  It rallied to 66.07.   There is a potential for lingering near the low for a few more days.  However, once it rallies above its mid-Cycle resistance at 66.09, the carry trade party is over.

1:32 pm

SPX has fallen deep into short gamma territory beneath 5830.00.  In addition, it has declined beneath short-term support at 5798.00.  Should it bounce above this new resistance , it may rise back to 5820.  However, the aggressive signal is clear…it’s time to unload those longs.  The next possible bounce area may be Intermediate support at 5723.42.  If the decline goes further, there may be a confirmed sell signal.

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 consolidated this morning within its very tight range.  A decline beneath 5820.00 breaks the pattern to the downside.  SPX is on an aggressive sell signal, having declined beneath the Ending Diagonal formation.  A confirmed sell signal lies beneath Intermediate support at 5706.0.

Today’s options chain shows Maximum Investor Pain at 5850.00.  Long gamma may begin above 5870.00 while short gamma lies beneath 5830.00.

ZeroHedge reports, “US equity futures are lower for the third day in a row on a busy earnings day with yield and the dollar both extending gains as the prospect of a Trump presidency sparking more inflation and leading to less aggressive rate cuts continued to weigh on markets. As of 8:00am ET S&P and Nasdaq futures are down 0.3%, with megacap tech names mostly lower: NVDA -0.4% and TSLA -0.6%. SBUX fell -5.3% as it missed revenue expectation; MCD is -6.0% lower given the E. Coli headlines. Global stocks trade mostly lower ex China with attention remaining on the micro before NFP next week and the Election/FOMC the week after. Bond yields are 2bp higher pushing the 10Y as high as 4.24%, the highest since July 26. USD surges while the yen plunges as low as 153 as yields on Japan’s 40-year notes reached the highest in 16 years. Commodities are mixed: base metals are higher, oil and precious metals are lower: oil fell 1.0%. Today, key macro data includes Existing Home Sales and Fed Beige Book. We will have a busy earnings schedule across sectors, including BA, IBM, KO, T, TMUS, TSLA, and VRT.”

VIX futures are consolidating at the high end of its trading range, but hasn’t yet broken out.  The Cycles Model indicates that VIX may get a dose of trending  strength over the next few days as it breaks higher.  It has already pulled back to the 61.8% Fibonacci retracement level with a completed declining Wave formation, so the likely direction is “higher.”  Thus far, VIX has been remarkably calm, given the exploding bond volatility.

The Shanghai Composite Index rose to 3331.08 today, a very weak bounce in an extended Master Cycle (261 days).  Time is running out for the retracement.  A normal minimum bounce would be targeted for 3350.00.  The Cycles Model suggests that, once the bounce is finished, the Shanghai Composite may resume its decline until early December.  Note the Head & Shoulders neckline at 2700.00.  Should it decline beneath it, the target may be 1500.00.

ZeroHedge remarks, “One week after China’s military launched massive encircling drills around Taiwan, widely dubbed in international press reports as ‘record-setting’, another round of smaller drills has kicked off Tuesday.

These new drills by the People’s Liberation Army (PLA) are ‘live fire’ exercises and are taking place in the disputed Taiwan Strait. Reports day they have been scheduled to last for four hours and are around China’s Niushan Island.”

TNX has reached a new high (thus far) at 42.46 on day 265 of the current extended Master Cycle.  It is above the mid-Cycle resistance and 200-day Moving Average at 41.85.  Should TNX reverse back beneath the mid-Cycle support, it may pull back to the trendline at 40.50.  However, an alternate view may emerge, called a phase transition, where rising rates may continue through the end of the year.  Wall Street is still in denial.  See below.

RealInvestmentAdvice claims, “The Mayo Clinic defines Post Traumatic Stress Disorder, or PTSD, as “a mental health condition that’s caused by an extremely stressful or terrifying event — either being part of it or witnessing it.” Within the field of PTSD research is a concept called “memory inflation.” Memory inflation occurs when memories of traumatic events become more intense over time.

Memory inflation of past events amplifies one’s emotions and behaviors. As we will discuss, distress from recent price inflation is causing many investors to overly fear that a similar situation will reoccur.”

The Japanese Yen sank to the 61.8% Fibonacci retracement level this morning and may be reversing as I write.  Today is day 253 of the new Master Cycle and the price target may have been met.  The prior Master Cycle landed on day 258.  Should the reversal materialize, the new uptrend may continue through late November.

Gold futures rose to 2772.55 this morning, above the Cycle Top resistance at 2750.96 on day 273 of its extended Master Cycle.  It has since reversed beneath the Cycle Top, giving a possible aggressive sell signal.    The sell signal may be confirmed beneath Intermediate support at 2644.01.  The Cycles Model suggests a decline that may last approximately 4 weeks.

Crude Oil was repelled from the 50-day Moving Average at 72.13 in the overnight market and has declined to 70.13 thus far in a day of strength.  Crossing the Head & Shoulders neckline at 68.50 may trigger that formation.  The Cycles Model suggests the decline may last until year-end.  This is no joke.

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 slid to a morning low of 20217.60 thus far.  IT lies beneath the two-month Diagonal trendline near 20400.00 and is on an aggressive sell signal.  Short-term support lies at 20113.50 where the aggressive sell may be intensified.  The sell signal is warranted, since the NDX has not made a new high since July.  An aggressive sell signal implies a reduction of long positions.

Q3 earnings are now in high gear.  Investors and hedge funds are extremely long (with margin).  This is where disappointment may be the greatest and sharp reactions may ensue.  The Cycles Model suggests that panic may arise in the next week.

Today’s options chain shows Max Pain at 20375.  Long gamma arises above 20400.00while short gmma dwells beneath 20300.00.

SPX futures declined to 5823.1o this morning.  It also is on an aggressive sell signal beneath the Diagonal trendline near 5865.00.  The next support lies at 5784.00, doubling down the aggressive sell beneath it.    The sell signal may be confirmed at Intermediate support at 5702.00.  The 50-day Moving Average is near 5650.00, which is universally recognized as a confirmed sell signal.

Today’s options chain shows Max Pain at a highly contested 5850.00.  Long gamma lies above 5890.00 while short gamma prevails beneath 5800.00.

ZeroHedge reports, “US futures are lower, extending yesterday’s losses, as treasuries extended their recent rout sending 10Y yields surging briefly above 4.22% before retracing some of the move as traders priced in the growing probability of a red sweep. The Treasury rout has gone global, pushing interest rates across the world higher. As of 8am ET, S&P 500 futures dropped 0.3%, pointing to the first back-to-back decline in about 30 sessions for the gauge. Nasdaq 100  futures underperformed, dropping 0.4%, as tech stocks start to groan against the weight of surging rates; megacap tech all showed declines: TSLA -0.8%, GOOG -0.5%, AMZN -0.5%. The yield on 10-year Treasuries added one basis point to 4.21% after an 11 basis-point surge at the start of the week; the USD is flattish after reversing a modest earlier loss. Commodities are mixed: Oil added 0.5%, base metals are lower, and precious metals are higher: silver rises +1% to $34.5, a new 12 year high. The only macro today are the October Philly Fed and Richmond Fed reports.”

VIX futures rose to 19.40 this morning, breaking above yesterday’s trading range.  Friday’s low may have ended the Master Cycle, indicating a possible new trend.  The Cycles Model indicates a burst of trending strength beginning today with effects lasting through the end of the month.  Commentators are pointing out that investors may be too obsessed with hedging due to the hotly contested election, rising rates and war drums beating in multiple locations.  They claim that hedging may be overdone.  The Cycles, on the other hand, show a rising trend in the VIX, which may become more evident this week.

TNX rose to a morning high at 41.92 thus far.  Today is day 264 in the Master Cycle.  The change in directionality of the Cycles may indicate a change in trend.  Should the Master Cycle end today, TNX may pull back to the 50-day Moving Average at 38.55 over the next two weeks before moving higher.  Be aware that the new rally that follows may last into January.

USD futures are consolidating above the mid-Cycle support at 103.65.  We may see a minor Cyclical pullback this week.  However, the trend may continue through late November.

11:35 am

SPX has declined beneath 5840.00 and beneath its Ending Diagonal trendline.  This may be considered an aggressive sell signal.  Confirmation may come at short-term support at 5780.34.  Past performance is no guarantee of future results.

10:55 am

BKX, our liquidity proxy, has begun its decline after making its Master Cycle high on Thursday.  The Cycles Model suggests a month-long decline that may reach the Head & Shoulders neckline at 73.00.  it is on an aggressive sell signal with a confirmation beneath the Cycle Top at 119.49.  The top five banks made their earnings reports last week.  Now we may see the reports from the regional banks, with possible downgrades.

ZeroHedge reports, “After the massive deposit inflows the prior week, US banks saw total deposits plunge in the week-ending 10/09 (latest data released today), down a stunning $69BN (on a seasonally-adjusted basis), erasing the prior two weeks deposit inflows…”

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 are down this morning, making a low of 5841.10.  Friday’s low was 5840.21, so a reversal may not be complete.  However, the Cycle inversion may be substantially finished, leaving Thursday’s high at 5878.46 as the all-time high.   Should the SPX open beneath 5840.00, the SPX may reveal a truncation within the Wave structure.  Otherwise it may rally to 5900.00-5924.00 in a final blow-off.  Hedge funds are “all-in” on a Trump win.

Today’s otions chain shows Max Pain at 5860.00.  Long gamma may begin above 5900.00 while short gamma may start beneath 5810.00.

ZeroHedge reports, “US stock futures drop to start the week, trading near session lows as investors looked to a busy week of company earnings for further signs on the strength of the economy. Oil climbed and gold touched another record on mounting tensions in the Middle East. As of 8:00am, S&P futures are down 0.3% after the index capped its longest run of weekly gains this year, while futures for the tech-heavy Nasdaq 100 fell 0.5% while Nasdaq futures slide 0.6%, with megacap tech stocks all mostly lower: TSLA -0.7%, AMZN -0.3%, AAPL -0.3% pre-market after last week’s furious rally. 10-year Treasury yields rise five four basis points to 4.13% and the dollar edged higher. Commodities are higher led by oil and base metals after a bigger-than-expected China LPR rate cut announcement. Over the weekend, BA achieved a tentative settlement of the strike; BA is up +3.8% pre-market. This week, the key catalyst will be PMIs on Thursday. On earnings,  more than a fifth of the S&P 500 is due to report this week with Tesla Inc., Boeing Co., General Motors Co. and Coca-Cola Co. in the lineup. Approximately 40% of Industrials (including GE, LMT, MMM, BA, UPS, HON, UNP) and 30% of Materials companies will report. In addition, VRT (Wed pre-mkt; focus on data center), IBM and TXN will provide further color on tech and semis. Also keep an eye on DHR (Tue pre-mkt; housing), KO (Wed pre-mkt; consumer trends), TSLA (Wed aft-mkt; first Mag 7 earnings).”

VIX futures have risen to a morning high of 19.19 after testing the 50-day Moving Average at 18.03 on Friday.  That action may indicate that a Master Cycle low may have been made on Friday, as well.  The VIX has maintained its buy signal, despite the pullback, making a 61.8% Fibonacci retracement.  This may be a good time to accumulate shares.

TNX leaped above its declining trend channel, making a new Cycle high.  Wednesday’s low at 39.95 was a precise hit on day 258, suggesting TNX may be capable of going much higher.  However, the mid-Cycle resistance and 200-day Moving Average lie at 41.63 offering the possibility of a more substantial reversal.  Either way, the Cycles Model strongly suggests higher 10-year rates through the end of the year.  Investors are very long treasuries after Powell announced the 50 basis point cut in rates at the very bottom of the Cycle.

ZeroHedge observes, “UNNY HOSTIN: Would you have done something differently than President Biden during the past four years?

KAMALA HARRIS: There is not a thing that comes to mind in terms of — and I’ve been a part of most of the decisions that have had impact.

On Friday, the Treasury Department released a report showing the kind of impact Harris is talking about. If nothing else does, it should cost her the election.”

Gold futures made a new all-time high at 2755.30 this morning.  It may be in its final thrust as it threw-over its Cycle Top at 2741.89.  The Cycles Model anticipates a possible month-long decline post-reversal.  Should that be the case, a possible target may be the October 31, 2022 low at 1618.30.  Considering that the Cycle is extended and a throw-over has occurred, a move beneath the Cycle Top at 2741.89 should be a signal to “lighten up” long positions (a possible aggressive sell signal).  Meanwhile, experts are calling for gold above 3000.00.

ZeroHedge comments, “Catherine Austin Fitts (CAF), Publisher of The Solari Report, financial expert and former Assistant Secretary of Housing (Bush 41 Admin.), gives her take on gold, Kamala, Trump, control, cash, murder and water. ”

The Shanghai Composite Index may have reached its Master Cycle high at 3300.66 today and may have begun its reversal lower.  A move beneath the Cycle Top support at 3249.85 may confirm the reversal with a sell signal.  Those who went long at this bounce may find that they were attempting to catch falling knives.

Crude oil futures bounced from its Cycle bottom at 68.27, attempting to reach Intermediate resistance at 70.60.  Intead, it reached 70.34 before turning back down.  Crude now runs the risk of falling beneath the Head & Shoulders neckline at 68.50 and the Cycle Bottom support at 68.27.  Should it do so, it may trigger the Head & Shoulders formation with consequent results.  The Cycles Model suggests the ensuing decline may run until the end of the year.

10:25 am

BKX, our liquidity proxy, made its reversal from the upper trendline of its 10-month trading channel yesterday while completing its extended Master Cycle.  A sell signal awaits it beneath its Cycle Top support at 119.22.  The Cycles Model suggests a decline may be in order until late November.  Note the Head & Shoulders neckline near 73.00.  While the major banks appear to be basking in their good fortune to be profiting from the markets, the regional banks are pulling back due to increased loan losses and lagging interest income.

ZeroHedge remarks, “94-year-old Warren Buffett’s Berkshire Hathaway offloaded even more Bank of America shares this week to sustain <10% regulatory threshold, a move triggered by the bank’s own share buybacks, which pushed Berkshire’s stake back above the 10% mark. Buffett’s strategy is clear: keep the stake below this threshold to avoid constant SEC reporting that results with every sale.

Bloomberg data shows Berkshire’s total proceeds from selling BofA shares topped $370 million this week. The selling abruptly began in mid-July.”

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 rose to 5859.00 this morning.  Chances are better than even of a new all-time high this morning.  Should the previous high be broken, there are indications of a rise to 5924.00 in a blow-off.  In the event of a reversal, an aggressive sell signal may be found beneath 5800.00.

Today’s options chain (pm) shows Max Pain at 5840.00.  Long gamma begins at 5850.00 while short gamma may start beneath 5800.00.

ZeroHedge reports, “US equity futures are higher with tech leading once again, thanks to results from Netflix which beat lofty expectations and sent its stock to all time highs. As of 8:00am, S&P futures were up 0.2% to 5,900 while Nasdaq futures gained 0.5%, with most MegaCap Tech named higher: NVDA +1.2%, AAPL +1.1%, and NFLX jumped 6% post earnings beat. Bond yields are mixed and USD is lower; 2-, 5-, 10-year yields are 0.45bp lower, 0.23bp higher, and 0.6bp higher, respectively. Commodities are mixed with oil higher, base metals lower, and precious metals higher after China macro data beat estimates but reaffirmed the downward trend of China’s economy. Today, the key macro focus will be housing data (Housing Start and Building Permit), as well as AXP and PG earnings.”

VIX futures consolidated this morning, awaiting the outcome of options expiration.  It may have made its Master Cycle low yesterday at 18.88 on day 248.  The Cycles Model indicates a surge in trending strength starting next week, so today may be the last day to attempt a lower low.

The October 23 options chain shows Max Pain at 18.00.  There is no appreciable short gamma.  Long gamma is also in short supply with a possible long gamma starting at 20.00 and fizzling out above 28.00.  It is this type of scenario that catches the most investors off guard.

The Shanghai Composite Index rose to 3152.82 today in a retracement bounce that may reach the 50% retracement level near 3400.00 early next week.  The Cycles now give the Shanghai to early December to reach the Cycle Bottom.  Investors, on the other hand, have turned bullish after a 50% decline from the spike top.  The China trade has become crowded with longs hoping for a repeat of the earlier rally.

ZeroHedge comments, “On the day the Biden admin decided to flagrantly misrepresent the last retail sales report before the election, and used the biggest ever September seasonal adjustment on record to make an unadjusted retail sales decline into a blazing hot print, once again misleading the Fed that the economy is doing much better than it is, something Powell lamented after the BLS recently “revised out” some 818K jobs …

… China decided to out BS the BLS, and moments ago reported economic “data” that was fake, goalseeked and, well, BS from top to bottom.”

TNX futures rose to 41.23 this morning prior to the cash open.  It is currently resting on trendline support at 40.70.  Should it break lower, it may briefly decline to 40.00 to complete the Master Cycle.  However, the long term trend is to go higher through the end of the year.

The Japanese Yen futures rose to 67.07 this morning after extending its Master Cycle low to 66.52 yesterday.  Hedge funds and institutions have been piling back into the Yen carry trade, as interest rates from the Bank of Japan are still .10%.  The Yen is due to reach the Cycle Top by the end of the month.

Gold futures made another all-time high at 2732.10 today at 2732.10.  It may attempt to reach its Cycle Top at 2737.68 yet before making its Master Cycle reversal.  Ahead of it is a month-long decline that may reach the Cycle Bottom at 1988.89.  Gold’s inverse correlation to the USD has taken a hit recently.

USD futures have pulled back from its mid-Cycle resistance at 103.66 this morning.  It may consolidate for as long as two weeks to digest the overbought condition.  However, the rally may continue through mid-November once the retracement is over.

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 above the former all-time high at 5871.41.  The next level of fractal resistance lies at 5924.00 with additional short-term Cyclical resistance at 5902.00-5920.00.  There are multiple reasons for this inversion, some of which may include:

• Money fleeing from Chinese and European markets.
• Trump’s  ascendancy in the polls
• Interest rates temporarily easing
• The Yen temporarily easing.
• Technical support (Cycle Top) at 5843.00.
• Buybacks coming back.

However, there are unknowns that may reverse the SPX on a dime which I will not enumerate.  The Cycle Inversion is an outlier that may fall apart at any time.

Today’s options chain shows Max Pain at 5245.00  Long gamma may begin above 5870.00 while short gamma strengthens beneath 5800.00.

ZeroHedge reports, “Futures are higher and on the verge of another all time high with Tech leading: NVDA is up +2.5% pre-market as TSMC reported strong upside on margin, along with comments on “extremely robust AI related demand”. As of 8:00am, S&P futures rose 0.4% to 5,910, just shy of the 5,918 all time high; Nasdaq 100 futures climbed 0.9%, led by an advance in chip stocks after TSMC posted a better-than-projected 54% rise in quarterly earnings. That helped reverse the impact of ASML Holding NV’s lowered 2025 guidance, which halted a rally that had pushed US-traded shares to a three-month high. Europe’s Stoxx 600 index gained 0.7% ahead of the ECB’s second consecutive rate cut. China stocks extended their post-euphoria slump and erased gains on disappointment over the outcome of a joint ministry press briefing about the property market which again lacked critical details on the stimulus package. Iron ore tumbled to a three-week low ahead of data on Friday which is expected to show the economy grew at its weakest pace in six quarters. Bond yields are higher and USD is lower; 10-year yields are 2bp higher to 4.03%. Commodities are mixed: Oil and base metals are higher, while precious metals are lower.”

The Shanghai Composite Index consolidated beneath the Cycle Top, on a confirmed sell signal.  Should the Shanghai not be able to regain support at the Cycle Top, it may decline to the Cycle Bottom in short order.  The Chinese equities market may be one of the “unknowns” that may spill over into the US market, since the government may install capital controls to stop the bleeding.  One little-known item is that the surge in bitcoin may have been influenced by money finding its way out of China.

VIX futures have declined to a new low at 18.88.  The 50-day Moving Average is at 18.32.  Should the Cycle Inversion linger, the VIX may have its Master Cycle low in the next week.  The 50% retracement level is at 19.08 while the 61.8% Fibonacci retracement level is at 18.14.

Next week’s options chain shows Max Pain at 19.00.  There is no discernible short gamma.  Long gamma begins at 20.00 and may go as far as 28.00.

TNX rose to 40.79 this morning, challenging the upper trendline of the (former) trend channel and mid-Cycle resistance at 41.83.  Yesterday’s low at 39.95 was on day 258 of the Master Cycle.  Should the resistance hold, TNX may probe lower to complete the Cycle. in the next few days.

USD futures are consolidating beneath the mid-Cycle resistance at 103.58 after challenging it.  USD may take a short-term rest after outperforming for the past two weeks.

Japanese Yen futures may have completed their minor retracement this morning at 66.91.  It may go higher until the end of the month.

Gold futures extended their rally to 2014.17 this morning, on their way to a new all-time high.  Today is day 267 of the current Master Cycle.  It is extended, but within normal bounds.  It is possible that gold may rally to the Cycle Top at 2733.93.  However, that is not an absolute necessity.  It is likely  that the high may be made this week.  Contrary to popular thinking, gold is not a hedge against inflation.  Instead, it may more likely be an inverse indicator of political confidence, worldwide.

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 are consolidating beneath Cycle Top resistance at 5837.58.  Crossing beneath it gave the first aggressive sell signal.  The next support is a short-term trendline (not shown) at 5780.00, which offers a second, more insistent aggressive sell signal.  Aggressive sell signals imply a lightening of long positions and employing partial short positions, with a possible risk of a retracement.  Intermediate support lies at 5665.77, giving the first confirmed sell signal.  No longs should be owned and short positions may be actively employed.  Beneath that is the 50-day Moving Average at 5593.80, broadly recognized as a confirmed sell signal.  The Cycles Model had suggested a top on September 26, which I had inferred to be the all-time high.  That was not so.  Instead, the Cycles demurred to the Wave formation, a Cycle Inversion that required a marginal new high.  This created a throw-over above the Cycle Top for a new all-time high.  Now that it is beneath the Cycle Top, there is a possibility of reaching the Cycle Bottom over the next 6 weeks.

Today’s options chain shows Max Pain at 5825.00.  Long gamma may begin above 4845.00 whjile short gamma lurks beneath 5800.00.

ZeroHedge reports, “Futures are mixed as chip stocks recover partially from Tuesday’s rout and as traders looked ahead to more major earnings. As of 8:00am ET, S&P futures are up 0.1%, a day after a profit warning from Dutch chip equipment maker ASML rattled sentiment, and boosted by an across the board beat from Morgan Stanley which jumps 3%, Nasdaq 100 futs are up 0.2% with Nvidia rising 0.8% after sinking nearly 5% on Tuesday. Global equities trade mostly lower on follow through after ASML’s booking miss weighed on Semis and in turn broader markets (ASML call 9am EST today // Tokyo Electron -9%/SK Hynix -2% etc/Taiwan Semi -2% overseas overnight // watch for TSM earnings tomorrow). FTSE +55bps/DAX -35bps/CAC -50bps/Shanghai +5bps/Hang Seng -16bps/Nikkei -1.83%. Bond yields are lower with the 10Y yield dropping to just above 4.00%, the Bloomberg dollar index is unchanged. Commodities are mixed: precious metals are higher, while base metals are lower; oil edged higher as Israel said it was keeping options open in how to attack Iran: UST10yr -3bps @ 4.00% // WTI -$0.35 @ $70.20 // Bitcoin +2.10% @ $68,055. Main event for now is still earnings with ABT, CFG, FHN, MS, PLD, SYF, USB reporting pre open // AA, CCI, CSX, DFS, FR, KMI, PPG, REXR, SLG, STLD post close. Focus today in US will be earnings (ABT, MS, PLD); ASML earnings call will be at 9am ET.”

VIX futures are consolidating within yesterday’s trading range.  There is a small risk of a new low near the 50-day Moving Average at 18.48 today.  The Cycles Model then calls for strengthening trend over the next week.  There is a potential for a new high above the August 5 high by the end of the month.  Other experts (see below) imply that the VIX may stay rather range-bound.

The October 23 options chain shows Max Pain at 20.00.  There is a dearth of short gamma as today’s options expiration takes out the shorts.  However, long gamma is not highly subscribed.

RealInvestmentAdvice opines, “The financial media frequently opines on what the daily gyrations of the VIX (implied volatility index) signal regarding investor sentiment. Despite how often it is quoted and discussed, many investors do not truly appreciate what implied volatility measures.

We take this opportunity to help you better understand implied volatility. Furthermore, we discuss other lesser-followed measures of implied volatility that help better assess whether implied VIX readings infer bullish or bearish sentiment.”

The Shanghai Composite Index fell to 3167.64 in the overnight market, reinforcing its confirmed sell signal.  The Cycles Model suggests a possible panic decline to the Cycle Bottom in the next week or so.  In fact, should it fall beneath the neckline at 2700.00, it may trigger that formation.  Currently, there is still a 50-50 possibility of a bounce at the neckline.

ZeroHedge remarks, ” Two weeks ago, when the world was still enamored with Jim Cramer’s idiotic idea that Chinese stonks can magically double in just a few weeks simply because Beijing had some soothing words to say and because when it comes to greater fools, China has more than anyone else, and when Goldman laughably upgraded Chinese stocks after the 30% runup had already taken place,we warned that the party was about to end.”

TNX may have made its Master Cycle low this morning at 40.10. The futures dipped to 40.00 before reversing.  If so, it should waste no time rising back above the trading channel trendline at 40.70.  The mid-Cycle resistance and 200-day Moving Average lie at 41.73 to 41.84.  Above that, traders will have no doubt that yields may be on a secular rally.  The target may be the Cycle Top at 47.25.  In fact, the Cycles Model projects the rally in yields to continue to the first week of January.

Gold futures rose to a morning high at 2701.05 as it nears its Cycle Top resistance at 2730.30.  While gold appears to be on a gravity-defying, never-ending rally, the fact is both Cycles and the Wave analysis say it is on its last legs.  Today is day 266 of the Master Cycle.  This implies the rally in gold may end this week.  The implied target for the decline to follow may be the October 31, 2023 low at 1618.00.  The Cycles Model suggests the first leg of this decline may not terminate until late November.

Crude oil futures dipped to 70.06 this morning before a bounce.  The wild swings in price hides the long-term decline in oil.  Oil volatility is even leaving the VIX behind.  Note that crude is often a leading indicator of what may come in equities.  The Head & Shoulders neckline lies at 69.56, in conjunction with the Cycle Bottom.  Should that be broken, the Head & Shoulders formation may be activated, sending prices to a possible low near 40.00.