NDX Futures Are Consolidating Beneath Yesterday’s High
7:20 am
Good Morning!
NDX futures are consolidating beneath yesterday’s high, within a range of 13804.38 to 13860.38. It appears to be in an irregular correction that may require yet another probe higher. A decline beneath the 50-day Moving Average at 13568.88 would negate that move higher. However, NDX has yet another potential period of strength on Friday that may not be shared with the SPX. That strikingly corresponds with a potential period of weakness in the TNX, which ends over the weekend.
ZeroHedge observes, “Several assets are working on the range break out, although in slow motion. US 10 year at 1.51% is a new “thing”. We have not seen yields close here or lower since early March. Note the 100 day slightly lower at the big 1.5% level.
Source; Refinitiv
With yields down, the obvious question is whether or not NASDAQ will start to catch more solid bids. Note the most recent short-term divergence between yields and NASDAQ.”
The Shanghai Composite appears to be due for a Master Cycle high early next week as well, which also corresponds closely with a possible high in the NDX and a potential low in the TNX. Should it go higher, the target appears to be the Cycle Top resistance at 3655.15.
ZeroHedge reports, “Update 10:00 pm ET: moments after reporting a red hot PPI which was the highest since Lehman, China effectively launched price controls, with China’s economic planning agency vowing to increase the supply of key consumer goods to stabilize prices, according to a statement on NDRC website on a national video meeting Tuesday.
- *CHINA VOWS TO CONTROL CORN, WHEAT, PORK PRICES AFTER PPI SURGE
- *CHINA TO KEEP PRICES OF GOODS LINKED TO LIVELIHOOD STABLE: NDRC”
SPX futures are consolidating in a narrow range between 4222.62 and 4232.12. The correction of the May 12 decline appears to be complete. This Friday’s open interest in the options market shows net puts outpace calls at 4200.00 by 2800 contracts, while calls outpace puts at 4225.00 (by 2700 net calls) to 4250.00 with over 10,000 net call contracts. Max pain lies in the 4200.00 to 4225.00 range. All of this is in a period of strength that ends on the weekend.
ZeroHedge reports, “S&P futures traded in a narrow 8 point range near all-time highs as a lack of clear catalysts kept trading slow, with investors awaiting fresh cues from inflation data this week and an upcoming Federal Reserve meeting. 10Y TSY yields dropped below 1.50% for the first time since May 7 amid a plunge in odds that Biden’s reflationary infrastructure program will pass, and easing fears that tomorrow’s CPI print will smook markets. At 07:15 a.m. ET, S&P 500 E-minis were up 3.25 points, or 0.08%, Dow E-minis were down 37 points, or 0.1%, while Nasdaq 100 E-minis were up 40 points, or 0.29%. The dollar dropped against all of its G10 peers.
On Tuesday, U.S. stocks closed within a hair’s breadth of a record high and Treasuries rose as investors debated the impact of resurgent inflation on monetary policy. “Investors are likely to be in a wait-and-see mode,” said Mitsushige Akino, a senior executive officer at Ichiyoshi Asset Management. “People will want to check how market expectations over the Fed’s policies change and how yields, whose upside has been capped recently, move following the U.S. CPI data.”
VIX futures appear to be consolidating in a range from 16.04 to 17.37. VIX options expiring today have a Max Pain range from 16.00 (puts prevail) to 20.00 (calls prevail), It is likely that the VIX may remain range-bound today. Next Wednesday’s VIX options show the puts have it over the calls by over a million contracts spread between 15.00 and 22.00. This is begging for an accident to happen. At the very least, it suggests that at next week’s expiration on the VIX is likely to be near 22.00 or possibly higher, since the number of net calls is miniscule.
TNX made a morning low testing the 100-day Moving Average at 14.87 on day 253 of the Master Cycle. Monday is day 258, which is likely to end the decline. The only obvious target is the mid-Cycle support at 11.99.