The Practical Investor

3:07 pm

SPX has crossed beneath its prior lows at 3060.95 and short-term support at 5572.24.  This places it on an aggressive sell signal.  An aggressive sell indicates it may no longer be profitable to own the SPX, but a short position may be subject to an occasional blow-back.  The Cycles Model had indicated that the decline was due to begin last week.   However, the powers that be obviously wanted August to end on a high note.  Cycles are not mechanical, so they may be temporarily overridden by extraneous circumstances.  At the same time, the double (quadruple by some measures) top indicated that the SPX was simply unable to go higher.  Unfortunately, most investors were unable to recognize the stone-cold resistance to the SPX just beneath the July 16 high and many were caught today on the wrong side of the market.  It appears that the next support is the 50-day Moving Average at 5507.00, where a bounce may be generated.

12:58 pm

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NDX has fallen beneath its Intermediate support at 19152.00 and last week’s low of 19221.40  this afternoon.  This may change the signal to a confirmed sell signal.  By the  way, the consensus on Wall Street is that NVDA ia a “strong buy.”

10:24

BKX, our liquidity proxy may have made an on0time Master Cycle high on Friday at 116.05, hitting the trading channel trendline.    It has already declined beneath the Cycle Top support (now resistance) at 114.64, giving a possible aggressive sell signal.  That signal becomes confirmed beneath Intermediate support at 111.17.  Hedge funds have been the main source of liquidity as they rotated out of tech into financials.  The potential advantages may only be short-term.

7:45 am   2 Chronicles 7:14 

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

Good Morning!

NDX futures drifted down to 19397080 this morning, with selling pressure edging out buyers.   The 50-day Moving Average is at  19486.71, so the NDX is straddling this important level.  This action is rather directionless and the Cycles Model is unclear for the next two weeks.  Based on that information, a possible sell signal may be made should the NDX decline beneath last week’s low at 19221.40.  Otherwise, the chances of the rally resuming for the next two weeks are growing.  The Cycles Model tells us that the current Master Cycle ends on the week of September 16.  Should the NDX break above its  August 22 high at 19938.89 it may approach it Cycle Top at 20426.32.

I find it difficult to imagine the NDX remaining stationary for the next two weeks.  Hedge funds have reduced their exposure to tech, but retail and corporate buybacks remain exceptionally high.  Corporations may end buybacks as early as next week, but still gives enough time and buying power to spark a final surge higher.

The NDX options chain has finally turned positive above 19440.00.  Options investors appear to be ponying up for another rise in prices.

SPX futures have declined to 5613.20 this morning in what appears to be another consolidation.  There may be an aggressive sell signal beneath 5560.00.  Otherwise, the outlook appears to be sideways or higher.  While SPX may have peaked on Monday, August 26, it has not made a clear break in the rising pattern.  Should it go higher, the next target may be the Cycle Top at 5737.86.  However, should the market break out, sentiment may push the results as high at 5770.00-5800.00.

Today’s options chain shows Max Pain at 5625.00.  Long gamma may take over above 5650.00 while short gamma may begin at 56.15.00.

ZeroHedge reports, “US equity futures are trading near session lows, tracking Monday’s slide in global markets which sent Chinese stocks to 7 month lows, after US markets were closed for Labor day yesterday. As of 8:00am, S&P futures are lower by 0.5% trading around 5630 and unchanged since mid-August even as they nearly hit a new all time high on Friday, while Nasdaq futs lag, down 0.6% with both Mag7 and Semis are under pressure (NVDA -2.4%). Bond yields are ~2bps higher with the USD trading near session highs. Commodities are weaker with all 3 complexes coming for sale; gold and natgas are relative bright spots. Today’s macro data focus is on ISM-Mfg and construction spending as we have a heavy data week capped with Friday’s NFP which is likely the determinant for the Fed cutting 25bps or 50bps. Friday also has the last 2 Fedspeakers before the Fed’s blackout window.”

VIX futures show today’s action challenging the 50-day Moving Average at 16.40.  Today is day 265 in the Cycles Model, leaving a very short window for a possible  new low.  However, the gap between historical norms and current circumstances is very wide.

TNX challenged the declining trendline at 39.00, but dropped back beneath it.  The Cycles Model suggests rates may pull back for yet another week before surging higher.  This may be equities-friendly as we await the FOMC announcement  on September 18.  The money supply is being eased globally which brings rates down temporarily.

USD futures appear to be consolidating after the breakout above the Cycle Bottom resistance.  It may now test that level (101.14) for support seeking reassurance for the next upturn.  This may be accomplished in the next week or so.

Crude oil sank to a morning low of 79.45 as the new Master Cycle takes hold.  Crud is on a sell signal which may be reinforced beneath the Cycle Bottom at 69.76.  Be forewarned that there is a Head & Shoulders formation beneath it and the Cycle Model suggest the decline may continue to mid-October.

ZeroHedge observes, “Brent crude has extended its recnt losses (sparked last week by the Reuters trial balloon that OPEC+ would boost output due to the Libyan oil production snafu) and tumbled sharply below $75, because the same Libyan oil snafu that allegedly was about to prompt OPEC+ to pump more is about to be resolved (doesn’t matter if it is all circular, as long as oil is sliding ahead of the election: algos will try to make sense of the lack of logic later).

Brent slumped below $75, erasing all YTD gains…”

2:45 pm  This will be my last entry until September 3.  Happy Labor Day!

SPX has just gone negative after a valiant, but failed attempt to better Monday’s Master Cycle high.  At the same time, the DJIA made yet another ATH, as predicted.  This may be considered an aggressive sell signal.  NDX has also failed its rally attempt after NVDA’s fizzle.  They say hope springs eternal.  However, NDX is on a confirmed sell signal beneath its 50-day Moving Average at 19493.00.  SPX may have an aggressive sell signal beneath 5560.00.  The SPX 50 DMA is at 5498.90, beneath which a sell signal may be confirmed.

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 bounced after making a new overnight low at 5545.70 after the NVDA announcement.  However, it sprang back to 5600.00, which is where the dealers in the options market has maintained Max Pain since last Friday.  Critical support at 5560.00 has been broken and the bounce may attract weaker hands into the sell-off that follows.  The Master Cycle high was made on Monday and the Cycles Model suggests the market may weaken until the next FOMC meeting on September 17-18.  In the meantime, the situation has become more fragile.  The buyback bid may end in another week.

Today’s options chain shows Maximum Investor Pain at 5600.00.  Long gamma may begin at 5650.00 while short gamma may start at 5550.00.

ZeroHedge reports, “Tech stocks recovered from the knee-jerk selling of Nvidia, which plunged as much as 8% after the company’s Q3 guidance disappointed some even as Q2 results met or beat analysts’ estimates on nearly every measure and showed that revenue more than doubled in the quarter, reinforcing the earnings power of artificial intelligence. As of 7:50am ET, Nasdaq 100 futures added 0.1% after sliding as much 1.4% earlier as Nvidia, which had tumbled sharply in trading after the close of US exchanges, trimmed losses to just down only 2% in pre-market trading. Intel Corp., Apple Inc. and Microsoft Corp. all posted small gains; S&P 500 futs rose 0.2%, fully reversing an earlier drop as Germany’s DAX Index hit a new record. Treasury 10-year yields and the dollar was steady. West Texas Intermediate crude rose to $75 after sliding back under $74 yesterday.  On the macro calendar, we have the second 2Q GDP estimate, July trade balance and wholesale inventories and initial jobless claims (8:30am) and July pending home sales (10am).”

VIX futures appear to be consolidating near the 50-day Moving Average at 16.20.  The consolidation may not last, as trending strength returns this weekend.  Today is day 260 in the Master Cycle.  There is a slight chance of a lower low in the next day or so.

The September 4 options chain shows Max Pain at 16.00.  There is a solitary crowd of puts at 15.00, while long gamma may begin at 18.00, strengthening at 20.00.

TNX has probed higher this morning to 38.79 thus far.  The trendline is at 39.00, which may offer an aggressive buy signal.  Someone is selling treasuries in a significant amount to have this effect.  Perhaps the BLS???  This could be a matter of unexpected consequences.

ZeroHedge remarks, “Just two hours after (ultra) discount retailer Dollar General reported catastrophic earnings, moments ago the Biden Bureau of Economic analysis decided to pull a BLS, and reported in its first revision of Q2 GDP that the US actually grew much stronger than expected on the back of – drumroll – an unexpected surge in personal consumption.

According to the BEA, Q2 GDP was revised to 3.0% from the 2.8% advance estimate, and beat estimates of a 2.8% print.”

ZeroHedge observes, “After yesterday’s solid 2Y auction, moments ago the US Treasury sold $70BN in 5 year notes, in an auction which saw yields tumble 46.8bps, to 3.642% – the lowest since April 2024 – from 4.110%. However, unlike yesterday’s stopping through 2Y auction, today’s sale tailed the When Issued 3.642% by 0.3bps, which was the 4th tail in the past 5 auctions.”

11:55 am

We may legitimately put NDX on a sell signal, having made a lower low beneath the 50-day Moving Average.  SPX isn’t far behind.  It must decline beneath Thursday’s low at 5560.95 to earn a sell signal.  Finally, the DJIA has made its new all-time high and may have completed its rally on Monday.  Now we find out what effect NVDA has with its earnings announcement.

7:45 am   2 Chronicles 7:14 

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

Good Morning!

NDX futures dipped to a morning low of 19491.00.  Two announcements may have an impact on the markets today.  The first is the PCE, due to be announced at 8:30 am on Friday August 30.  The second is the earnings announcement for NVDA, due at 4:20 pm followed by a conference call at 5:00 pm.  The results may prompt a move in NVDA of ~9.5% in either direction, prompting potentially large index moves.  This has the appearance of a make or break move for the NDX.

Today’s options chain shows Maximum Investor Pain at 19630.00  Long gamma may start at 19670.00 while short gamma may begin at 19620.00.

SPX futures are consolidating within yesterday’s trading range after an overnight high at 5633.00.  The Master Cycle high may have been made on Monday, day 269.  This is a very stretched Master Cycle.  The Cycles Model identifies today as a high volatility/high strength day, a potentially lethal combination to the bull market.

Today’s options chain shows Max Pain at 5630.00.  Long gamma may start above 5650.00 while short gamma may begin beneath 5600.00.

ZeroHedge reports, “US futures flat ahead of a key earnings release from Nvidia, the $3 trillion stock at the forefront of the global artificial-intelligence frenzy and the culprit for most of the market’s upside in the past two years. Viewed a barometer for AI spending across much of the technology industry, Nvidia – viewed by many as this bubble’s CSCO – is expected to project revenue growth of more than 70% for the current quarter when it reports after market close on Wednesday (full preview here). Any disappointment is certain to roil markets, given the company’s heft in US indexes. As of 8:00am S&P futures are flat, trading largely unchanged for the past week; Nasdaq 100 futs are barely in the red as NVDA erases an earlier gain in the green pre-mkt with the balance of Mag7 performing similarly and Semis are also bid. Bond yields are lower, tracking another sharp drop in oil. The USD is extending on yesterday’s gains while commodities are lower, led by Energy though Base Metals are continuing their recent bull run. The macro data focus will be on Fedspeak, bond auctions, and mortgage applications which gained 0.5% after last week’s double digit plunge (-10.1%).”

VIX futures have risen overnight to 15.85, as investors become more aware of risk.  VIX has been testing the 50-day Moving Average at 16.21.  A confirmed buy signal resides above it.  However, there is a possibility of a probe lower than the August 19 low.

Today’s op-ex shows Max Pain at 17.00  Short gamma resides at 15.00 while long gamma may begin above 20.00.

TNX futures probed down to 38.08 while the cash market made a low (so far) at 38.22.  The Master Cycle low may have been made on August 21 (day 258).  If so, TNX may be due for a resumption of the uptrend.

ZeroHedge reports, “After a sharp reversal in yields, which in August tumbled to a fresh 2024 low, some traders were eyeing today’s 2Y auction nervously to see if the move higher in yields would lead to some indigestion. In the end, it turned out there was no reason to be worried because moments ago the Treasury sold $69BN in paper to stellar market demand.

The auction stopped at a high yield of 3.874%, the lowest since August 2022 and down sharply from the 4.434% last month, a 56bps drop which was the biggest since the December recession scare (when we saw a 57bps drop), which in turn was the biggest since the March 2023 bank crisis. In short: any time you have a 50bps+ drop in sequential 2Y bond yields, you get a powerful recession scare. And yet, aside from March 2020 when the entire world shut down, the past two such recession scares ended up being a false start. We’ll see if this latest one is the same.”

ZeroHedge cautions, “Reading the excellent article by Brian Meehan of Bloomberg Intelligence, “Basis Trade Growth Is Massive”, I was reminded just how stupid clearinghouses really are. If you ever meet a head of a clearinghouse, I can assure it was not brains that got them to this key position in global finance.

As the article points out, there is now a $1.1 trillion notional short position in US treasury futures. You should not read this as the market being bearish on treasuries. It is a levered trade to make a “risk free” return on the difference in price between off the run treasuries and treasury future positions. For every short position in the treasury futures, there should be a long position in the physical market.”

Gold futures are in decline from the Master Cycle high made last Tuesday, August 20, after losing its best momentum in March.  This morning’s low was 2528.25.  The Cycles Model suggests that gold may show trending strength on the downside this week.  This is a good time to lighten one’s exposure to gold.  A sell signal may be issued beneath Intermediate support at 2467.21.

Crude oil futures crossed beneath its Triangle trendline near 76.00 this morning to a morning low at 73.86.  It may have made its Master Cycle high on Monday, day 257 of the Master Cycle The next support may be found at the Cycle Bottom at 69.69.  The likelihood of oil prices dropping beneath that level is very high, as the new Cycle may last until late October.

USD futures have rallied off their Master Cycle low made on Tuesday.  A buy signal may be obtained above the Cycle Bottom resistance at 101.22.

10:00 am

BKX, our liquidity proxy, has retreated from its Master Cycle high and trendline at 114.50. Today it has declined beneath its Cycle Top support at 114.15.  This may create an aggressive sell signal on day 256 of the Master Cycle.  The reason for the strong recovery in August is that hedge funds rotated out of AI into financials.  That may be regrettable as a strong decline may be imminent.

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 consolidated under yesterday’s correction high at 5651.62, declining to 5604.40 this morning.  Today is day 267 of the Master Cycle, being stretched by Powell’s pivot and the potential NVDA earnings  The Cycles Model suggests a high volatility day today and tomorrow.  Considering the lateness of the pivot, the volatility may be actuated in either direction.  Traders estimate that NVDA may have a potential 10% move in either direction at the earnings announcement.  SPX, which came within 20 points of its all-time-high, has the potential of rising above its July high, whereas, NDX may not have that capability.

Today’s options chan shows Maximum Ivestor Pain at 5610.00.  Long gamma may begin at 5625.00 and strengthens at 5650.00.  Short gamma may start at 5600.00.

ZeroHedge reports, “Ahead of tomorrow’s Nvidia earnings fireworks, it’s another quiet session with most asset classes close to unchanged and US equity futures flat in a muted overnight session. As of 8:00am, S&P futures were unchanged after trading in a narrow range, and erasing modest earlier gains, while Nasdaq futures rose 0.1% with tech leading as NVDA/TSLA edge higher after lagging the Mag7 yesterday. Bond yields continued to rise amid a steeper curve, pushing the 10Y 3bps higher to 3.85%, while the USD is weaker and commodities are lower ex-base metals and natgas. Today’s macro data focus is on Consumer Confidence, Housing Price updates, and regional activity indicators. There is a 2Y bond auction.”

The DJIA futures fell to 41109.10 after making its new A-T-H yesterday.  The so-called rotation out of tech stocks to blue chips may be over.  There is a potential aggressive sell signal beneath the Cycle Top support at 40961.27.

VIX futures are rising again above the 50-day Moving Average at 16.10, placing it on a potential confirmed  buy signal.  Traders are repeating the same mistakes made before the August 5 sell-off, making the vol landscape more dangerous than ever.  Only 3 of 11 hedge fund strategies are short the market.  The rapid recovery may lead to short memories of the risk embedded in the market.

Tomorrow’s op-ex show Max Pain at 17.00.  Short gamma resides between 14.00 and 16.00.  Long gamma may begin at 20.00 and strengthens at 23.00.  Unfortunately, NVDA earnings are reported after the Market close on Wednesday.

TNX futures rose to 38.70 this morning after finding support at the Cycle Bottom at 37.73.  This action implies at least an aggressive buy signal after the August 21 Master Cycle low.  The next hurdle is the trendline near 39.00.

ZeroHedge explains, “According to some commentators, to counter inflation interest rates in the US must increase to a level that effectively restrains the economy. It is held that this increase in interest rates does not have to cause a recession if Fed’s policy makers could orchestrate a “soft landing.” The economy is portrayed as a spaceship that occasionally deviates from a path of “stable” economic growth and “stable” prices. All that is required to fix the problem is for the central bank to give a suitable “push” to the economy (i.e., the spaceship) to bring it back to the right growth path.”

USD futures may be consolidating after its strong reversal from it Master Cycle low at the trendline.   The Cycles Model shows a surge in strength may be imminent.  Dollar bears have had their heyday.  What happens next may be a universal surprise to investors who have been counting on a cheaper USD.

2:12 pm

NDX has exited its rising trading channel and sank beneath the 50-day Moving Average at 19500.00.  While investors are waiting until Wednesday for the NVDA earnings report, the loss of traction is hard to ignore.  The subsequent lower high since last Thursday may seal the deal.  It’s time to exit longs in the NDX.  The probability of a higher high is fast disappearing.  There may be a back-test of the trendline at 19750.00 before the decline.

8:15 am   2 Chronicles 7:14 

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

Good Morning!

NDX futures rose to 19769.00 this morning, short of Thursday’s Key Reversal high.  Friday’s attempt to make a new high failed miserably.  It is noteworthy that while retail customers have been buyers of tech, hedge funds have been net sellers.  In addition, this is the last week of corporate buybacks, leaving an already thin liquidity even thinner.  The 50-day Moving Average at 19495.68may offer a line in the sand on the direction of the market.

Today’s options chain shows Maximum Investor Pain at 19800.00.  Long gamma may start at 20000.00 while short gamma may begin beneath 19770.00.

SPX futures rose to a weekend high at 5645.10, edging out the Thursday high and potentially nullifying Thursday’s Key Reversal.  Should stocks go higher, the next resistance is the Cycle Top at 5723.19.  Fractal analysis puts the potential high at 5770.00-5800.00.  Today is day 269 of the Master Cycle, stretching it thin.  The Cycles Model suggests a strong reaction in the market Tuesday and Wednesday.

Today’s op-ex shows Max Pain at 5630.00.  Long gamma may begin at 5660.00 while short gamma may start at 5600.00.

ZeroHedge reports, “US futures edged fractionally higher to start the week with small-caps outperforming as last week’s rally, when euphoric investors bought stocks after Fed Chair Jerome Powell’s dovish tilt at Jackson Hole, fizzled. As of 8:00am ET, S&P 500 futures gained 0.1% while and Nasdaq 100 futures turned red after both indexes notched gains of more than 1% on Friday when Powell’s J-Hole speech cemented the case for an interest-rate cut next month; the debate has now shifted to the size of the cut and what that would say about the state of the economy. Pre-market, NVDA which reports earnings this week, was up about 1% leading both Mag7 and Semis higher. Bond yields reversed losses and rose 3 bps tracking the nearly 3% spike in oil after Israel launched a pre-emptive strike involving 100 warplanes on Hezbollah in Lebanon and declared a 48-hour state of emergency while Libya’s Eastern government said on Monday morning it will stop all oil production and export. The yen erased all gains after earlier rising to its strongest level since January as it took reacted to the rise in US yields; the dollar edged up while gold held near a record high. Bitcoin touched $65,000 for the first time in about three weeks. The macro data focus is on Durable/Cap Goods but NVDA earnings on Weds is the key event. Powell’s dovish Jackson Hole speech should give a tailwind to risk assets this week.

VIX futures have been testing the 50-day Moving Average at 16.01 this morning, on day 257 of its Master Cycle.  The 50-day offers a line in the sand confirming long or short positions.  Thus far, the Master Cycle low may have occurred on August 19 (day 250).

Wednesday’s op-ex shows potential Max Pain at 17.00.  Short gamma reigns between 14.00 and 16.00.  Long gamma may begin at 20.00.  The September 18 op-ex appears loaded for bear.

 TNX appears to be testing its Cycle Bottom support at 37.77 this morning.  It has the capability of making a new low beneath Wednesday’s 37.63 (day 258).  Today is day 263, so there is time to stretch the Master Cycle to the trendline.

3:33 pm

SPX has been unable to rise above yesterday’s high.  In addition, yesterday’s action qualifies as a key reversal on on day 265 of the Master Cycle it would be fair to say that the Cyclical highs may have been made.   Take appropriate action.  This rally can no longer be trusted.

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 back over 5600.00  this morning after closing near its low at 5560.95.  This may be the last hurrah of the bull market, as fractal analysis suggests its target may be in the range of 5770.00 to 5800.00 over the next few days.  The much-anticipated Powell speech at 10:00 am may provide the fuel for the exuberance to come.  The rally after August 5 caught many investors off guard, leading to low participation.  Yesterday’s setback may provide the incentive to go all-in for investors who missed the early part of the rally.  As always, they will be late to the party.

Analysis of the options chain shows Maximum Investor Pain at 5565.00.  Long gamma may start at 5575.00 while short gamma may begin at 5550.00.

ZeroHedge reports, “Futures are solidly in the green on the last day of the week ahead of Powell’s Jackson Hole speech, with Tech leading. As of 7:45am S&P futures were up 0.5% while Nasdaq futures gained 0.8% with top MegaCap tech stocks TSLA (+1.5%), NVDA (+1.2%), and AMZN (+69bp). Bond yields are roughly unchanged: the 10Y yield is down 1bp to 3.84% as the USD resumes its slide ahead of what many expect to be another dovish speech by Powell cementing a 25bps Sept rate cut. Commodities are mixed with Oil and Precious Metals higher, while Base Metals are lower. Today, the main focus will be Powell’s speech at Jackson Hole at 10am ET.”

Meanwhile, VIX futures slid back to 16.84 this morning, well above the 50-day Moving Average at 15.99.  The phenomenon of rising VIX coupled with a potential panic upside in the SPX may create a very unstable condition as everyone chases the upside with no protection on the downside.   The speed at which the VIX has fallen in August may lay the groundwork for further turbulence ahead. This may be the last opportunity to buy downside protection while it is affordable.

The August 28 op-ex shows Max Pain at 16.00.  Short gamma resides at 15.00 with little conviction below.  Long gamma may begin at 18.00 with pockets of calls up to 30.00.  There seems to be no fear of a repeat of the August 5 episode.

TNX has eased back, but still above the Cycle Bottom support at 37.85.  Today is day 260 of the Master Cycle.  I have marked Wednesday as the MC low, but there is time for a further extension lower.  The trendline near 37.00 may be an appropriate target should that event occur.

USD futures declined to 101.15 this morning after being repelled at the Cycle Bottom resistance at 101.41.    The Cycles Model offers a volatile outlook for today, with a potential for retesting the trendline at 101.78.  Should the Master Cycle extend, this may be the last probe at the low as today would be day 268 of the current MC.

Gold futures are on the rise again at 2538.00 this morning.  Today may also offer gold investors their last hurrah as gold may seek to target 2700.00 on day 260 of its Master Cycle.  There are absolutely no guarantees, but the fractal structure appears incomplete.

Crude oil futures may be testing the Triangle trendline near 75.70 with a bounce to 74.52 this morning.  Today is day 254 in the Master Cycle.  A bounce to the trendline (or higher) may set off a possible two-month decline in crude.  Note the Head & Shoulders neckline.  It has two possible outcomes.  The target listed may be the smaller of the two.

Zerohedge remarks, “Oil prices have dipped, with Brent crude hovering around $77 per barrel, leading some market analysts to spot potential short-term buying opportunities. Citi Research, in a note dated August 21, and seen by Investing.com, sees this price pressure as a likely precursor to a rebound despite recent easing in geopolitical tensions.”

8:00 am   2 Chronicles 7:14 

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

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

9:50 am

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

7:30 am    2 Chronicles 7:14 

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

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

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

ZeroHedge remarks, “Closing in on huge levels

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

8:15 am    2 Chronicles 7:14 

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

Good Morning!

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

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

ZeroHedge comments, “Earnings are alright

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

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

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

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

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

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

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

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

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

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

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

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

7:40 am    2 Chronicles 7:14 

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

Good Morning!

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

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

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

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

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

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

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

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

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