SPX futures declined to 7133.10 on news of Open AI’s miss. This strikes a cautionary note, since the Cycle Top support lies at 7130.00, beneath which is an aggressive sell signal. The current Master Cycle has run its course, meeting time and price targets. The formation is a complex Ending diagonal that doesn’t like to share its secrets. However, the Cycles Model for the SPX may be complete.
Today’s options chain shows Max Pain at 7165.00. Long gamma may begin above 7200.00. Short gamma strengthens beneath 7125.00.
NDX futures reversed down to 26931.00 this morning. Critical support (Cycle Top) lies at 26614.00. Breaking the Cycle Top gives a strong sell signal. While more than 42% of the SPX reports earnings this week, Wednesday may be the most concentrated earnings session with 4 of the Mag 7 reporting. Hedge funds are selling while CTAs have quit buying semiconductors, while investors are still chasing the only thing left that is rising.
VIX futures bounced from yesterday’s low to 16.42 this morning, crossing above mid-Cycle resistance, offering a buy signal. The VIX, which tracks the SPX is subdued, not reflecting the large moves being made in individual stocks. This week’s earnings may pop the cork in the VIX.
Tomorrow’s VIX options chain shows no short gamma. Long gamma starts at 18.00 and calls dominate the chain up to 35.00.
TNX broke out above 43.50 this morning, offering a caution to bond investors and stocks that are interest rate sensitive. The Cycles Model suggests rising yields may dominate the scene for another month.
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