Market Analysis - Tuesday, August 25

SPX futures rose up to 7699.50, against round number resistance, setting up a possible buy signal above 7700.00. The expected correction may be over, having made a minimal 35.5% retracement. This may be a second buying opportunity for both the SPX and NDX.  SPX may be ready to make its final probe to its all-time high over the next several weeks. The coming rally may be subdued for the balance of this week. However, September may come in with a bang.  as it breaks higher.  The minimal target for this rally may be the trendline near 7925.00. However, should the rally extend beyond mid-September, the rally may “throw over” the trendline with a possible target near 8100.00.

ZeroHedge reports, “Global stocks rose as chipmakers rebounded, with falling bond yields adding support to risek sentiment after Brent crude slid below $90 a barrel, down more than 3% after a New York times reports that “evacuated foreign service officers could begin heading back to their posts as early as this week… suggesting Washington does not anticipate a renewal of full-scale conflict with Iran.”” 

NDX futures rose to 29344.90 thus far, overtaking the 52-day Moving Average at 29303.39 and offering a possible buy signal after a gut-wrenching decline. Should it follow through, the upper trendline near 31800.00 may be its intended target by mid-September.

The premarket VIX is consolidating jn a narrow range this morning. Investors may distrust the rally in equities this week, increasing their hedges against another decline.

The US 10-year Bond Yield dropped back after a near-breakout (47.44) on Friday. The cash intervention from the Treasury General Account may be an attempt to produce a massive short squeeze. The Cycles Model suggests it may temporarily be so, with the current Master Cycle headed for the 53-day Moving Average at 45.83 over the next week. It should be noted that history does not support this move as a long term solution. The uptrend may remain intact.

ZeroHedge remarks, “I predicted back in May that the bond market would “break” Washington. Last week we saw signs of that with the Treasury’s increased intervention at the long end of the curve.”

The USD is consolidating beneath its mid-Cycle resistance at 99.03 this morning. The consolidation may continue through the week, with a possible surge in strength in September.