The Practical Investor

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:30 am

SPX futures have pulled back to 6446.00 this morning as it consolidates prior to another probe toward 6500.00 to 6552.00.  The current Master Cycle is extending on day 262 and may consume some or all of this week to complete its fractal.  The SPX may explore new highs with volume and volatility to bring in the last holdout to the party as it sucks the liquidity dry, leaving no one to buy the dip.  The Labor Day weekend is typically a seasonal high point before September comes crashing down.  The ensuing decline may take the entire month to complete with the April 7 low as the possible target.

Today’s options chain shows Max Pain at 6455.00.  Long gamma may begin above 6470.00, while short gamma appears beneath 6420.00.

ZeroHedge reports, “Markets are mixed this morning, with US stock futures ticking lower as euphoria over the prospect of a Fed rate cut fizzling out after Friday’s rally. Attention turns to one of the biggest market tests ahead of the central bank’s September policy meeting: Wednesday’s Nvidia earnings. As of 8:15am, S&P futures are down 0.3% after the best day since May and the index finishing the week 2pts below its all time high. Media are pointing to a lack of Fed consensus to cut based on comments from Goolsbee / Musalem. Pre-market Mag7 names are all lower with Defensives outperforming Cyclicals, reversing some of the gains from Friday. Intel shares rose in premarket trading after the US agreed to take a 10% stake in the chip maker. The yield curve is bear steepening and the USD is strengthening. Commodities are rallying led by Energy. The keys this week are NVDA earnings but also a number of macro data releases that can clarify the US econ growth situation, e.g., Durable / Cap Goods, Consumer Confidence, regional Fed activity indicators, jobless data, PCE, and Personal Income / Spending.Looking at today’s calendar, we get new home sales and Dallas Fed manufacturing index. Fed Voter Williams and non-voter Logan are also scheduled to speak.”

VIX futures are consolidating near Friday’s low.  The proposed Master Cycle may also be extended this week.  Any semblance of calm may be destroyed once the reversal is in.  The Cycles Model suggests Wednesday as a high volatility day and a possible reversal.

The August 27 options chain shows Max Pain at 16.00.  Short gamma is taking on a diminished role under 15.00 while long gamma rules above 18.00.

TNX is approaching the final days in which it may make a low near the Cycle Bottom at 40.98.  It remains in a shallow decline that may be conducive to a further decline to Bottom Support.  Unfortunately, more and more home buyers are financing their purchases with adjustable rate mortgages, expecting long-term rates to decline.  The Cycles Model says that the opposite may be true.  This may be a disaster waiting to happen.

USD futures bounced from an extended Master Cycle low on Friday.  The low may be confirmed with the crossing of the 50-day Moving Average at 98.09, offering a potential buy signal.  Dollar bears rejoiced at the Powell speech, anticipating lower yields and a lower USD.  However, the USD has already broken out of its downtrend and may cause a fresh batch of short covering.

Bitcoin futures reversed down from the 50-day Moving Average at 116543.00 on Friday and is now testing the 100-day Moving Average at 115575.00.  It is on a confirmed sell signal.   The Cycles Model suggests another week of decline before a bounce to retest overhead resistance.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

1:08 pm

SPX has paused as it reaches for a new all-time high.  A potential target may be in the range of 6485.00 – 6500.00.  Most strategists were caught by surprise at Powell’s speech.   Retail investors are throwing caution to the wind as they speculate whether Powell will make a .25% or .50% rate cut in September.

9:00 am

Good Morning!

SPX futures bounced from Intermediate support at 6340.90 this morning.  Investors are waiting for the outcome of Jerome Powell’s speech at 10:00 am.  Whether Powel focuses on inflation or employment may give investors the direction of the path forward.  The Cycles Model tells us that the current Cycle has either ended on August 15 or may go to a new all-time high in a final flourish of volatility.  The aftermath may be a decline to the end of September.

What we have witnessed is a month-long Cycle inversion that may be more of a result of runaway investor expectations than outright attempts at manipulation.  Valuations have now exceeded those of the 2000 high.  Critical support lies at 6346.06.

Today’s options chain shows Max Pain at 6400.00.  Long gamma may begin at 6425.00 while short gamma becomes strong beneath 6375.00.

ZeroHedge reports, “After five days of selling – the longest stretch since Jan 2 – US stock futures halted this week’s run of losses in muted trading ahead of Jerome Powell’s Jackson Hole speech, even as markets scaled back bets on imminent interest rate cuts following very strong economic data on Thursday. As of 8:00am ET, S&P 500 rose 0.2% erasing an earlier decline, while Nasdaq futures rose 0.1% as Nvidia shares fall 1% in premarket after the Information reported the chipmaker had instructed component suppliers to stop production related to the H20 AI chip.  European stocks advanced 0.2%, nudging toward an all-time high. US Treasuries held steady after Thursday’s pullback, with the 10-year rate at 4.33%. The dollar was little changed. there are no scheduled events on the US economic data calendar; Fed Chair Powell is set to speak at 10am ET at Jackson Hole with a slew of other central bank comments expected from the event. The Fed speaker slate also includes Boston Fed President Collins at 9am and Cleveland Fed President Hammack at 11:30am; hawkish comments by Hammack on Thursday pushed yields to session highs. Swap contracts linked to future Fed rate decisions fully price in one quarter-point rate cut this year in October and a second one by year-end.”

VIX futures are consolidating inside yesterday’s range.  It is due for a pullback today. The Cycles Model supports a possible new low in a complex Ending Diagonal Fractal.  The chart suggests a target near 14.00.

TNX is poised for the delivery of Powell’s speech.  Both time and price dictate the final low may arrive today , or early next week.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00 am

Good Morning!

SPX futures consolidated beneath the trendline after bouncing off Intermediate support.  The bounce may develop further, with a potential target at the 61.8% retracement at 6428.00, or to the trendline, now approaching 6450.00.  A new, all-time high is possible, due to the structure of the fractal.  However, it may not last.  The Cycles Model allows one last blast of trending strength today before the downtrend may take hold.  The buyback blackout begins after Labor Day.  Critical support lies at 6338.00.

Today’s options chain shows Max Pain at 6400.00.  Long gamma may begin above 6430.00 while short gamma resides beneath 6350.00.

ZeroHedge reports, “US equity futures dropped, extending the recent selloff into its fifth day, as traders stayed guarded ahead of the Federal Reserve’s gathering at Jackson Hole. As of 8:00am, S&P 500 futures fell 0.2%, while Nasdaq 100 futures were flat after a two-day selloff that erased 2% off the index. In premarket trading, Nvidia rose 0.8% while most Magnificent Seven peers posted losses. Retail giant Walmart brought Q2 earnings season to an unofficial close after reporting an EPS miss (68c vs exp. 74c) and even though it lifted guidance (now expects net sales to rise 3.75% to 4.75% this year, versus previous forecast of a 3% to 4%) that wasn’t enough for the market, however, and the stock dropped in premarket trading. European stocks dropped 0.3%, erasing an earlier gain, and snapping a three-day winning streak. US treasuries fell, pushing the yield on the 10-year higher to 4.31%. The dollar strengthened and reversed all of yesterday’s losses while Brent crude rose to the highest in two weeks even as the rest of the commodity complex was mixed. It’s a busy economic calendar: we get weekly jobless claims and August Philadelphia Fed business outlook (8:30am), S&P Global US PMIs (9:45am) and July leading index and existing home sales (10am). The Fed speaker slate includes Atlanta Fed President Bostic at 7:30am, the last central bank official slated to speak before Chair Powell’s discourse at Jackson Hole Friday.”

VIX futures ae consolidating inside yesterday’s trading range.  VIX has issued a buy signal and the pullback offers the opportunity purchase cheap hedges.  The Cycles Model suggests that trending strength may appear next week.

The August 27 options chain shows short gamma at 15.00-16.00.  Long gamma begins at 17.00.  While sentiment is swinging long, there is not a lot of conviction, yet.

TNX is easing down, in anticipation of a Powell rate cut in September.  The 10:00 am speech tomorrow may be used to announce upcoming policy changes.  Money markets are pricing in an 80% chance of a .25% rate cut in September.  Should the speech be nuanced in favor of a rate cut, we may see TNX  pay a visit to the Cycle Bottom at 40.99.

ZeroHedge  reports, “With bond yields sliding thanks to the ongoing stock drawdown, there wasn’t many concerns about demand for today’s 20Y auction. And rightly so, because the sale of $16 billion in 20 year bonds went through without any difficulty amid solid, if hardly stellar, demand.

The auction prices at a high yield of 4.876%, down from 4.935% in July and stopped through the When Issued 4.877% by 0.1bps, the second consecutive stop through after 2 tails.”

USD futures are rising above the 50-day Moving Average at 98.10, giving a buy signal.  Dollar shorts are in for more pain as the rally gains momentum.

Bitcoin has slipped beneath the 50-day Moving Average at 115,763.45, reinforcing the sell signal.  The 100-day is not far away, at 111,147.00.  Keep in mind that Bitcoin is a pure speculative play, with no intrinsic value beneath it.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

12.45 pm

The Banking Index has lost support at the Intermediate level, giving a sell signal.  It has pulled back to test Intermediate resistance at 143.26.  Further erossion beneath the 50-day Moving Average at 139.95 adds confirmation to the sell signal.

12:40 pm

VIX has challenged the 50-day Moving Average at 16.88, offering a buy signal.  It’s time to buy the pullbacks.

12:33 pm

SPX has bounced from the Intermediate support at 6341.93 this morning.   Crossing beneath the trendline has created a sell signal, allowing investors to short the bounces.  The trendline may now act as resistance.  The next probable bounce may be the 50-day Moving Average at 6250.90.  Some trading desks are telling their customers to buy the dip.  The youngsters working there haven’t seen a real sell-off.

8:00 am

Good Morning!

SPX futures declined to 6390.30 this morning, as it flexes beneath the Ending Diagonal trendline near 6420.00.  The trendline may be broken.  Further confirmation lies beneath Intermediate support at 6333.27 while the 50-day Moving Average gives final support at 6235.60.  The Cycles Model suggests the uptrend may be finished by the end of the week, evidenced by the loss of key supports.

Today’s options chain shows Max Pain at 6425.00.  Long gamma may begin at 6440.00 while short gamma lies beneath 6400.00.  Short gamma may intensify beneath 6375.00.

ZeroHedge reports, “US equity futures are down and headed for a 4th day of losses, but trade well off session lows as markets assess if the sharp momentum selloff we have discussed for the past week will extend into today’s session: the JPM Momentum Basket (JPMPURE Index) is down more than 7% since the CPI print while Goldman said it’s time to resume buying momentum factor. As of 8:00am S&P futures are down 0.2%, after dipping 0.5% earlier in the session; Nasdaq futures are also down 0.2% after the index logged its second-biggest decline since April on Tuesday, with Mag7 names lower premarket ex-NVDA/MSFT; Defensives are outperforming Cyclicals. According to JPM “today feels like a test for the dip-buyers, as Flash PMIs tomorrow and Powell at Jackson Hole on Friday may prove to be market movers/narrative changers.” The yield curve is twisting flatter with the USD not flat. Commodities are seeing a bid across all 3 complexes highlighted by WTI. The macro data today is mortgage applications and Fed Minutes with tomorrow delivering Flash PMIs, jobless data, leading index, and existing home sales.”

VIX futures rose to 16.13 thus far, testing Intermediate resistance at 16.23 after having made its Master Cycle low on August 13.  The 50-day Moving Average provides further resistance at 16.99.  While technicians may recognize either of these levels as critical, most investors are likely to wait for the  breakout above 21.90 to begin hedging.  Last week’s monthly options expiration in equities showed dealers owning a record $10 billion in long gamma.  Today’s monthly options expiration in the VIX is likely to release a massive short gamma dealer position, allowing the VIX to rise from the “floor” where it has been suppressed for the last several months.   The Cycles Model suggests a rally in the VIX to early October.

The August 27 options chain shows virtually no short gamma.  Long gamma may arise at 15.00 and extends to 25.00.  Conviction in long gamma appears modest.

TNX is pulling back this morning from a test of the 50-day Moving Average at 43.43.  The Cycles Model allows for an extension of the Master Cycle in time and space.  This week may prove the limit in time, while the Cycle Bottom support at 41.00 may give the final target.  Jackson Hole may provide some solace for those seeking further rate cuts, but it may not last.

USD futures are hovering near the 50-day Moving Average at 98.12 this morning after a potential breakout.  The Cycles Model suggests the USD may resume its uptrend through mid-September.  While the Cycles Model offers no immediate insight, there are always outside catalysts that may bring about a reaction.

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

2:38 pm

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

8:30 am

Good Morning!

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

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

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

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

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

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

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

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

10:15 am

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

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00 am

Good Morning!

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

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

7:45 am

Good Morning!

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

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

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

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

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

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

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

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

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

”

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:30 am

Good Morning!

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

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

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

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

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

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

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

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

8:15 am

Good Morning!

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

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

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

8:30 am

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

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

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

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

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

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

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

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