Market Analysis - Tuesday, Oct. 13

SPX futures consolidated this morning inside yesterday’s trading range. It is in the final days of its current Master Cycle.There may be a new all-time high, but the market has lost momentum. Without that momentum, earlier targets are getting a haircut. In fact, the fractal structure may put a limit on the upside at 7950.00. Whether it reaches that price under current circomstances or not is open to debate.

ZeroHedge reports, “US futures are mixed with the Nasdaq lagging as the AI rout that started on Wall Street on Monday ricocheted through Asia, where the Kospi crashed as much as 7% after Broadcom’s Hock Tan likened AI investing to a casino…”

The Dow Jones Industrials futures is the only index that is posibie this morning, reaching 52311.10. The positive is that it has exceeded its Intermediate resistance at 51138.00. The next resistance is the 52-day Moving Average at 52610.30. A leap above that level may give the Dow a second wind, as investors take flight to quality in a deteriorating market.

The premarket VIX rose to 15.61 this morning, testing the 52-day Moving Average at 15.53. A close above the 52-day offers a confirmed buy signal.  The VIX may have reached the downside terminus of its Master Cycle on Friday. This particular Triangle formation did not have an elongated tail, as several recent formations have shown. This shortened version may be viewed as a truncation.

The US 10-year Bond Yield futures tumbled to 51.70 while the cash market bottomed at 51.85. The Cycles Model demonstrates a potential weakness for another week or so, allowing the TNX to decline.  The normal retracement would be a pullback to the neckline of the Head & Shoulders formation at 50.00. However, the Cycle Top at 51.37 provides a very strong support structure that may not allow a full retracement. While many analysts are expecting a deeper pullback fueled by a potential short squeeze, the bond market may ofer a nasty surprise.

The US Dollar may be proving a point made for the bond index. It has stopped its decline at the Cycle Top at 102.21. In addition, the Cycles Model sugests that a resumption of trending strength may be imminent. Should the USD bounce above the Cycle Top, the outcome may be a possible panic rally engaging the Head & Shoulders formation.