Market Analysis - Monday, July 20

SPX futures have risen to 7505.70 this orning after closing above the 52-day Moving Average on Friday. Should it rise above 7550.00, SPX may continue its rally to 7650.00-7700.00, making a new all-time high. The Cycles Model indicates that today may be a day of strength for equities, causing the Master Cycle to extend higher.  However, should it fail, it may decline bneath the 52-day Moving Average, creating a sell signal.

ZeroHedge reports, “US equity futures rebound from Friday’s selling, indicating a firmer start to the week with S&P futures rising 0.5% at 8.00am ET, and Nasdaq futures up 1% after a sluggish start to the session, after Iran’s ForeignMinistry said it had received proposals from mediators about the conflict with the US.”

The NDX has kept its well-defined Triangle formation. This morning’s NDX futures have risen to 28929.60, still beneath the Triangle trendline at 29000.00 and the 52-day Moving Average at 29482.76. A rally above those levels may create conditions for a blow-off top in the NDX over the next week. The tail in the Triangle formation may have crfeated signs of panic. However, the market often gives misdirection at critical turning points.

The premarket VIX declined to a morning low at 17.77, remaining above the 52-day Moving Average at 17.36. Should it decline beneath it, the VIX may form a tail going beneath the trendline toward a target near 13.75.

The US 10-year Bond Yield bounced back this morning after Friday’s losses. It may retest the Cycle Top at 46.16, causing consternation among the bond longs. However, the Cycles Model indicates a stronger propensity toward lower yields through the month of August.

The USD is hovering near the neckline of the Head & Shoulders formation and has bounced from Intermediate support again. The Cycles Model suggests today may be a day of strength.  Should it have an effect, we may see the USD rise to, or above, the Cycle Top resistance at 101.36. The head & Shoulders formation may still be active.