SPX futures rose to 7767.30 over the weekend in an attempt ot remain above the Cycle Top support/resistance at 7743.73. Support may fail followed by a decline to the 52-day Moving Average at 7498.98. The squeeze may have run its course and, with dismal economic news last week, hedge funds have started shorting again. Normally we may see another day or two of decline. However, should the Cycle Top hold, stocks may rally forcefully.
ZeroHedge reports, “US equity futures start the new week barely higher, having erased almost all of their overnight gains, yet still trading at all time highs, led by Tech with small caps starting the week in the red.”
The premarket VIX is consolidating above the trendline at 15.00. It is due for a bounce that may take it to the mid-Cycle resistnce at 18.65. There may be some hedging going on, but it doesn’t appear to be a driving force.
The US 10-year Bond Yield may be searching for the Cycle Top and neckline at 46.99 this morning. While TNX has performed a minimal retracement, it may find better support at the 52-day Moving Average at 45.41. A surge of strength may appear late this week that could restart the uptrend.
ZeroHedge remarks, “The Federal Reserve’s legal mandate is clear. It must focus on stable prices and maximum employment. In the past five years, the Fed has failed on both.”
The US Dollar Index has risen off its Master Cycle low, made on Friday. The bounce off mid-Cycle support at 99.13 offers a possible aggressive buy signal. Confirmation may come above the 52-day Moving Average at 100.53. While the reversal may be off to slow start, the new master Cycle may prove to be long lasting, to mid-October.
The “Yentervention” that sought to stabilize the Yen in late July ended in a Master cycle high on August 3. Unfortunately, the spike in the Yen was a weak one that may be doomed to go lower. Support at the 200-day Moving Average at 65.38may be failing. The new (declining) Master Cycle may last to the end of September. A minimal deckline may reach 55.00. It may go lower.
ZeroHedge observes, “Eight-time, best-selling financial author Jim Rickards is warning of a financial calamity already underway that Treasury Secretary Scott Bessent is trying to contain. It is the Japanese yen carry trade where the US Treasury is propping up the yen’s value.”
Gold may have reversed this morning, ending an elongated Master Cycle on Friday. Retail is buying golld again, after months of disappointment. However, this “breakout” may also fail to meet revived investor expectations.
Crude oil has risen above the mid-Cycle support/resistance at 77.60 and is testing the 52-day Moving Average at 80.59. The Cycles Model suggests there may be a few days left in this correction before a buy signal may be restored. A possible downside target may be near 70.00.
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