Market Analysis - Wednesday, Oct. 14

SPX futures rose to 7418.40 this morning as it approaches its target near 7950.00. While there is no assurance that it may reach that target, the likelihood becomes stronger if the current probe higher reaches or exceed 7876.00. In that instance, the fractal may be expanding. Should it not reach that level, the fractal may be shrinking, leaving a lower final target. The dominant factors are the massive issuance of new equities with the lockups expiring this year, coupled with a buyback blackout, wavering confidence and diminished liquidity.

NDX futures rose to 30676.00 this morning before easing back. Asset managers are still long, trailed by retail investors who are coming back after the summer rout. For the time being, the trend is still higher. While the Cycle Top is at 34422.50, it may not be likely that the NDX reaches that level. The rest of the week may tell the full story.

ZeroHedge reports, “US futures are higher, with small caps leading and tech lagging, as traders brace for what is expected to be the hottest monthly CPI print since the spring…”

The premarket VIX rose to 15.72 this morning, challenging the 52-day Moving Average. Should it close above it, a buy signal may be issued. Investors are complacent, as more calls than puts are being purchased. The Master Cycle may have terminated on Friday, October 9, allowing the VIX the ability to start a new uptrend.

The US 10-year Bond Yield bounced above its Cycle Top support at 51.53. I had mentioned earlier that the Cycle Top would provide a formidable support, despite the normal practice of pulling back to the neckline. The CPI report affirms that the trend is much stronger than anticipated.

ZeroHedge remarks, “Expectations were for a hot headline and cool core heading into this morning’s most-watched macro signal from CPI with the October FOMC decision on the line. FedSpeak has clearly pushed the market to back away from a hawkish view, today’s data may force a change.”

The US Dollar rose to 102.72, breaking out above the previous high. Should the USD continue rising, this may be labeled a running correction. That is, the normal retracement may be cut short. Dollar shorts have left the pan and are in the fire, giving impetus to the rally. The Cycles Model warned that today would show trending strength.