SPX Losing Gains
Stock-Markets / Financial Markets 2018 Aug 17, 2018 - 03:36 PM GMT
SPX futures are losing yesterday’s gains as selling in the world markets returns. The index appears to be challenging Short-term support at 2835.51 at this time. This morning the SPX E-mini futures and options expire at the open. It is unusual to see the selling begin before expiration. As a result, this may cause more selling for the regular options that expire later today.
ZeroHedge reports, “A sense of "risk off" has returned to the the market, with 10Y yields sliding, the dollar rebounding from session lows and the Turkish Lira resuming its plunge, renewing concerns about emerging market contagion, leading to a "red return" across global market monitors, following yesterday's torrid surge in the S&P500.”
NDX futures are also down, but haven’t yet broken through mid-Cycle support at 7339.04.
Bloomberg reports, “Semiconductor stocks may be poised to extend their longest skid in months after disappointing guidance from Nvidia Corp. and Applied Materials Inc. sent shares of both companies sliding in extended trading.
The Philadelphia Semiconductor Index is poised to fall for a fourth day on Friday with Nvidia sinking 3.8 percent in pre-market trading in New York, while Applied Materials fell 5.7 percent on little early volume. Peer Micron Technology Inc. also fell 1.2 percent after it was named in a class-action antitrust case Thursday alongside South Korean peers Samsung Electronics Co. and SK Hynix Inc.”
VIX futures are rallying after closing above the 50-day Moving Average at 13.23. Today has the potential of being a barn burner for the VIX. Despite yesterday’s pullback, the trading pattern shows “eagerness” to go considerably higher. This appears to be the start of the largest rally since February.
TNX appears to be resuming its decline after testing mid-Cycle resistance at 29.01
A provocative article in ZeroHedge, “People associate leverage with volatility and trouble. The history of finance is littered with examples: the savings and loan crisis of the late 1980s, Orange County in 1994, Long Term Capital Management in 1998 and MF Global in 2011. But personal leverage is common; anyone with a mortgage is leveraging their home. The typical 20%-down mortgage gives the buyer five times leverage to their equity.
Leverage is a productive tool, used within limits.
Enter U.S. Treasury bonds.
Leverage may not immediately seem to belong with a Treasury, but for three important reasons, leveraged U.S. Treasury bonds make sense as an ordinary investment.”
USD futures have declined beneath Cycle Top support at 96.49. A recognizable reversal pattern is not evident, but a decline beneath the Cycle Top is the first evidence of a change in trend in a pattern such as this.
The SouthChinaMorningPost quips, “Forget the trade war – it’s the strong US dollar that should really make us worry
Richard Harris says the strength of the US currency is bad news for economies with large trade deficits, budget problems or – like Turkey – enormous foreign borrowings. If the strong dollar continues, a global slowdown can’t be ruled out.
The biggest financial issue of the moment is not the collapse of the Turkish lira, or Britain’s impending ignominious exit from the European Union. Nor even Donald Trump’s tariff temper tantrums, or China’s worryingly slowing growth. It is the mighty dollar.”
Regards,
Tony
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