Market Analysis - Monday, March 9

SPX futures plunged to 6580.30 over the weekend session as momentum has clearly overtaken price. The morning session brought a bounce to 6696.00 as futures tested the neckline near 6705.00 from beneath.  The Cycles Model suggests the Head & Shoulders target may be reached in the next few days. The corollary is, will there be more downside following this low? Head & Shoulders formations often occur in the midst of a Cycle and not at the end. While the Head & Shoulders may easily be fulfilled this week, the Cycles Model projects the end of the Master Cycle in the following week. So, while the Head & Shoulders projects a low near 6400.00, there is a very strong support in the 1987 trendline near 6200.00, with the Cycle Bottom support near 6100.00 as a follow-up decline.

Today’s options chain shows Max Pain at 6800.00. Long gamma is strong above 6850.00 while short gamma goes into full swing beneath 6700.00. SPX is in deep short gamma. There are put walls at 6650.00, 6600.00 and 6500.00.

ZeroHedge reports, “US futures tumbled and oil surged as the war in Iran showed little sign of deescalating over the weekend and led to more major Middle East producers curbing output. Still, futures retraced more than 50% off the overnight lows as WTI nearly touched $120 overnight, the highest since 2022, before dropping back to around $100 after a report G7 countries may release 300 million to 400 million barrels, or around 25% to 30% of the 1.2 billion barrels in strategic reserve.”

DJIA futures plunged to 46308.00 this morning, confirming its Head & Shoulders formation. It is on a similar trajectory as the SPX, with a possible Cycle terminus near the Cycle Bottom support at 42601.00.

NDX futures crashed to 23976.00 in the overnight session. It has bounced back to the neckline near 24300.00.  While this has a “heavy” feel, the chances of a limit down day are minimal.

The premarket VIX reached an overnight high at 35.30, but may scale the probe back to 30.00, or possibly to the neckline of its own Head & Shoulders formation. The VIX has a longer Cycle timeline than the SPX. The prospect of war in the Middle East may keep worries and tensions high while bringing a short-term recovery to equities as war production gears up.

The March 11 options chain shows Max Pain at 21.00. Short gamma is strongest between 17.00 and 19.00. Long gamma begins at 24.00 and remains strong to 40.00.

TNX futures vaulted above its 200-day Moving Average at 42.02, reaching a weekend high at 42.15 before pulling back beneath the 200-day resistance at the open.  The Cycles Model had anticipated a surge in trending strength over the weekend with another market- moving event the following weekend.  Military events appear to happen on the weekends in order to keep them from influencing the markets while open.