For those who wish

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Lansing has its own support page on the website.  As I am not currently charging for my blog, I would appreciate your support of a project dear to my heart that I have committed my own support.  Thank you.

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December 3, 2021

3:45 pm

SPX is finally beneath the trendline this afternoon.   The VIX is above 32.00 and the hi-Lo is currently at -120.00.  The Decline is underway.   Panic next week?

ZeroHedge observes, “S&P 500 futures have a distinctly bearish tone after a week of whiplash trading, which began with the post-Thanksgiving Day meltdown.

Though it hasn’t been a one-way street lower, intraday bounces for the contract have been fading at lower peaks.

That is a clear enough signal for short-term traders to see if they are positioned for a declining asset.

And even though non-farm payrolls did miss forecasts, the Fed won’t be derailed from its path to tighter policy.

Moreover, the blackout period ahead of the Dec. 15 FOMC decision begins this weekend, which means there won’t be any walking back of the hawkish noises heard this week.”

 

9:42 am

There may have been an effort to get the SPX out of negative gamma territory, which extends to 1630.00.  However, it appears to have failed at the 12.9-hour Cyclical interval.  Should the decline re-establish itself, we may see a probable 300-point plus decline through Monday.  Instead of “buy the dip,” there appears to be a movement to “sell the bounce.”

ZeroHedge questions, “Why are CEOs and corporate insiders selling their stocks at a far faster rate than we have ever seen before?  Do they know something that the rest of us do not?  If stock prices are going to continue soaring into the stratosphere like many in the mainstream media are suggesting, these insiders that are dumping stocks like there is no tomorrow will miss out on some absolutely enormous profits.  On the other hand, if a colossal market crash is coming in 2022, then 2021 was absolutely the perfect time to get out.  As I have said countless times before, you only make money in the stock market if you get out in time.  Could it be possible that many of the richest people in the world have picked the absolutely perfect moment to pull the trigger?”

 

7:25 am

Good Morning!

SPX futures probed down to 4546.10 before rising back to the close.  Dips are still being bought, but on lighter volume while hedge funds, owners and institutions are selling.  There is yet another week of selling ahead before a probable hiatus going into options week.

ZeroHedge reports, “U.S. equity futures were flat, rebounding from an overnight slide following news that 5 “mild” Omicron cases were found in New York, and European stocks wavered at the end of a volatile week as traders waited for the latest jobs data to assess the likely pace of Federal Reserve tightening and accelerated tapering. Emini S&P futures traded in a narrow range, and were up 2 points or 0.04%, Nasdaq futures were flat,while Dow Jones futures were up 8 points. The dollar edged higher, along with the euro after ECB President Christine Lagarde said inflation will decline in 2022. Crude advanced after OPEC+ left the door open to changing the plan to raise output at short notice.

 

ZeroHedge observes the technical side, “Earlier today we observed that amid the market turmoil of the past month, hedge funds have been unwinding net exposure at a furious pace and selling (or shorting) to retail investors, who paradoxically have been buying at the fastest pace on record.

We got some incremental data this morning from Goldman, which noted that the bank’s prime book (hedge fund-facing) was heavily net sold to start December (largest 1-day $ net selling since September, -2.5 SDs vs. the average daily net flow of the past year)driven by continued short sales and to a much lesser extent long sales (9 to 1). The frenzied shorting, which occurred in the context of sharp net deleveraging…”

 

VIX futures continue to hover beneath the Head & Shoulders neckline at 28.79.  This appears to be a consolidation after the breakout as the VIX gathers strength for its next move.   The Cycles Model suggests enough of a boost in strength to hurl the VIX above the neckline and towards its intended target.  Indications are that the actual target for Wave [iii]  of 3 may be closer to 50.00.

 

The NYSE Hi-Lo Index opened at -43 yesterday and has gone lower into the close.  It is hard to see how the market can rally when so many stocks are making new lows.  What this is really telling us is that the rallies, though sharp, are facing lower and lower limits to their efficacy.

 

TNX futures are hovering just above the 100-day Moving Average at 14.20 in a consolidation, waiting for the next surge of strength that may come later today.  Whether this is enough to cuse a breakout in rates is unknown, but the Cycles MOdel points to a triple burst of strength starting mid-week and extending through the weekend.

 

USD futures are moving higher, having risen to an overnight high of  96.32.  The Cycles Model indicates a continued uptrend through the second week of January.

 

 

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December 2, 2021 – The worst is yet to come…

3:10 pm

SPX has taken 10 hours into the afternoon high from yesterday’s high.  It is said that both time and price requirements must be met to complete a Cycle.  the 61.8% retracement is at 4596.37.  Thus far, the bounce has gone to 4592.13.  The retracement pattern appears complete.

The Hi-Lo (-110.00) remains beneath its Cycle Bottom resistance at 101.70.  The VIX remains within a point of its neckline at 28.79.

 

12:55 pm

I spoke too hastily this morning.  SPX is now approaching the 61.8% retracement at 4596.37 and has spent 8.6 hours making the hourly Cycle from 4562.94 to 4588.81.  Whereas Minor Wave 1 – 2 took 43 hours (8.6 X 5), Minute Wave [i] – [ii] only took 8.6 hours.  It is likely that Wave [iii] – [iv] may elongate.  I suspect that Wave [iii] alone may take 8.6 hours, putting the low at mid-afternoon tomorrow.   Most onlookers view this pattern as chaotic.  I see a distinct rhythm.

The NYSE Hi-Lo Index rose to -108.00, but still very bearish.  VIX is consolidating at the neckline.  NDX has completed a 42% retracement of a nearly 685 point decline.

ZeroHedge relates, “While US equity indexes have been relatively stable despite the recent spike in volatility, what is going below the surface is sheer turmoil.

Take the Nasdaq: while the index remains just shy of all time highs, this is entirely thanks to the five or so gigacaps, the GAMMA (fka FAAMG) stocks, which has found solid support in recent days. Alas, the same can not be said for the rest of the tech-heavy Nasdaq where as the chart below shows, we have just seek the biggest spike in new 52-week lows since the March 2020 crash.

This, when coupled with the recent bloodbath observed in the median stock (as measured by the Value Line Geometric), is why yesterday we rhetorically noted that “they better not start selling the generals” or else everything will come crashing down.

 

10:33 am

SPX made a 43% retracement of yesterday’s decline, far less than the “worst case” scenario (61.8%) I painted near yesterday’s close.  It is clearly in negative gamma territory and bearishness may heighten at the crossing of the 50-day Moving Average at 4532.45.  Today and tomorrow may see a panic develop as equities complete their next 4.3-day Cycle (3rd Wave) late on Friday.

The 100-day Moving Average lies at 4489.03, of which traders may take note.  The 200-day Moving Average is near 4300.00.  The massive Orthodox Broadening Top trendline is near 4000.00.  Finally, the daily Cycle Bottom is at 3935.00.  All of these potential supports may be taken out in Wave (1), due to end late next week.

VIX has climbed to 30.39, above the neckline a 28.79 and the Hi-Lo has declined from an open of -43 to a low of -151.00.

NDX has made a new low at 15770.92, beneath yesterday’s close at 15877.72.

ZeroHedge advises, “This morning’s melt-up from the cash open was extremely technical, lifting the US majors above various key technical levels.

However, that surge of buying did not last long and now that Omicron has struck in a second place in the US, the S&P (back below its 50DMA), Nasdaq (back below its 50DMA), and Dow (back at 200DMA) are all fading fast…

So what really changed? 

Nomura’s Charlie McElligott explains:

It’s pretty obvious: the Fed has green-lighted an accelerated taper in order to pull-forward a dense-but-short “lift-off,” as Jerome Powell is clearly now much more concerned about inflation (which is no longer transitory) than about economic growth

And Nomura’s “Economic Quadrant” playbook highlights the fact that the current Equities risk-premium / thematic return profile very closely mirrors what they said it would do upon this the phase shift from “Expansion” into “Slowdown” being confirmed in the first week of October (and holding since)…”

 

8:15 am

Good Morning!

SPX futures rose to an overnight high of 4554.00, for the first time not overlapping its previous low.   This may be an indicator that Wave 3 of (1) is underway, as Wave 1 may overlap, but generally impulsive Waves do not.  Yesterday may have been the  half-way point of this decline and it may become much more impulsive as it progresses.  It currently sits just above the 50-day Moving Average at 4631.51.  It remains deeply in the negative gamma zone.  Should it open beneath the 50-day, all hell may break loose as dominoes start falling hard.

ZeroHedge reports, “U.S. index futures regained some ground alongside Asian markets while European stocks slumped to session lows in a delayed response to yesterday’s late Omicron-driven US selloff, as markets remained volatile following the biggest two-day plunge in more than a year, spurred by concern about the omicron coronavirus variant and Federal Reserve tightening. Investors await data for unemployment claims, as well as earnings from companies including Dollar General and Kroger. Tech is the weakest sector, dropping in sympathy after Apple warned its suppliers of slowing iPhone demand. Nasdaq futures pared earlier gains of up to 0.8% to trade down 0.1% while S&P futures are only 0.2% higher after rising as much as 0.9%.

While the knee-jerk reaction of stock investors may “continue to be to take profits before the end of the year,” there is “plenty of liquidity available to drive stock prices higher as dip-buyers enter the market,” Ed Yardeni wrote in a note. The U.S. economy grew at a modest to moderate pace through mid-November, while price hikes were widespread amid supply-chain disruptions and labor shortages, the Federal Reserve said in its Beige Book survey Tuesday.”

 

VIX futures dipped beneath the Head & Shoulders neckline at 28.99 but has recovered to rise back above it as I write.   The Cycles Model suggests trending strength may be growing over the weekend, indicative of a third Wave.  As mentioned before, the H&S target is a minimum.  There is also a Cup with Handle formation with a potential target near 50.00 for Wave 3 of (C).

 

The NYSE Hi-Lo Index closed at -202.00 yesterday,, the second lowest close of the week.  Dip buyers appeared in the morning, as it opened at 5.00., but it appears that hedge funds and institutions saw this as an opportunity to liquidate.

ZeroHedge observes, “Over the weekend, and then again on Monday we reported that It had been a catastrophic week for hedge funds: heading into Black Red Friday, losses were staggering with Goldman Prime reporting that many hedge funds were caught off-guard by news of the Omicron variant as they had bought Reopen stocks and sold Stay-at Home names in the past week. As a result, in the week ending Nov 25, GS Equity Fundamental L/S Performance Estimate fell -1.57% between 11/19 and 11/25, driven by alpha of -1.12% which was “the worst alpha drawdown in nearly six months” and beta of -0.45% (from market exposure and market sensitivity combined).

It only got worse on Friday and then again Monday, when Moderna – the 3rd most popular short in the hedge fund universe with some $4.5BN of the stock held short by the 2 and 20 crowd…”

 

TNX is challenging the 100-day Moving Average at 14.20 this morning, but has not yet broken beneath the previous low at 14.12.  Should it break through, the decline may continue for another week, according to the Cycles Model.  The next support level is the Cycle Bottom at 11.97.

 

USD futures consolidated, making an overnight low of 95.83, just above the Cycle Top Support at 95.71.  The Cycles Model suggests gathering strength over the weekend with possible new highs early next week.

 

BKX broke through its Ending Diagonal trendline on Tuesday and now its atop it mid-Cycle support at 128.75.  That, and the 200-day Moving Average at 127.86 are due to be skewered.  The Cycles Model suggests the decline may pick up intensity next week with the Cycle Bottom at 115.67 being the next potential support.

 

WTIC futures made a new low at 63.85 this morning, breaking through the Broadening Wedge trendline at 64.40.  The current shorting opportunity was made last week when the bounce was rejected at the 50-day Moving Average.  The Cycles Model suggests a Master Cycle low early next week, with a probable target at the Cycle Bottom support at 56.84.  From there we may expect another bounce lasting up to 2 weeks to retest the trendline.

ZeroHedge observes, “An earlier trial balloon of a smaller 200k b/d production hike was been popped as Russia moves with a formal proposal for OPEC+ to lift oil output by 400,000 b/d for January, sending oil markets crashing.

Energy Intel’s Deputy Bureau Chief & Chief Opec Correspondent Amena Bakr confirms that “All ministers appear to be in agreement with an increment of 400k for Jan (i.e. a rollover of the current policy)” according to sources.

This is what was planned by OPEC+ but not what the market was ‘hoping’ for.

WTI plunged further on the headlines, tumbling to a $62 handle.”

 

After a week-long consolidation, gold  futures made a new low this morning at 1768.40.  It is approaching its own Broadening Wedge trendline at 1760.00.  Should it break through, the next support may be the Head & Shoulder neckline at 1670.00.  The Cycles Model calls for a Master Cycle low in early January.  By then we may see gold near or below 1200.00.

 

 

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December 1, 2021

4:10 pm

On a periodic basis I check the 2-hour, daily, weekly and monthly charts for consistency.  One of the problems with hourly and even daily charts is “drift,” where trendlines, formation outlines and even labels tend to become out of sync with their appropriate positions.  Today was one of those times where I found that the daily chart shows the 20-month trendline from March 2020 at 4510.00, where the bounce occurred.  I have remedied that error in the 2-hour chart.

This tells us to prepare for a potential bounce tomorrow morning.  If not, all the better, but SPX is in negative gamma territory all the way up to 4620.00.  The 61.8% Fibonacci retracement is at 4598.47, which still leaves it under the influence of negative gamma.

 

3:40 pm

SPX bounced off the 50-day Moving average at 4531.70.  It may save the move lower for the overnight session.   The NYSE Hi-Lo Index is at -131.00.  In addition, the SPX is in negative gamma territory (dominated by puts) beneath 4620.00.

ZeroHedge observes, “Update (1420ET): Reports that the Omicron variant has arrived in the US sent stocks and bond yields legging further down…

The Dow and Nasdaq just joined Small Caps in the red for the day…

And 30Y Yields are down 8bps from their intraday highs, back at yesterday’s lows…”

 

3:35 pm

VIX broke through the neckline of the Head & Shoulders formation.  Should start rocking over night.

12:30 pm

SPX rose above mid-Cycle resistance at 4627.00 due to a large call option position at 4640.00.  However, it appears that the “pull up” may not be strong enough to sustain the bounce.  Once the mid-Cycle support goes, the 50-day Moving Average at 4531.52 may be the next test.

VIX  is now rising from its Cycle Top at 23.17 and the Hi-Lo Index, which opened at 5.00 is now at -17.00.  There seems to be no confidence in this rally.

ZeroHedge explains, “As expected, yesterday’s bearish month-end rebalancing which saw over $8 billion in MOC for sale orders has given way to the traditional strong December equity inflows, sending futures sharply higher.

So now that reflexive fund flows have reversed and the narrative is quickly changing to one where both the bearish Omicron and Powell developments have been mitigated, at least according to today’s price action, the question is what comes next.”

 

8:00 am

Good Morning!

SPX futures bounced back to test Intermediate-term resistance at 4622.75as it establishes new support and resistance boundaries.  The decline thus far has been a stair-step affair with overlapping Waves.  Two nearby supports have yet to be challenged, the 50-day and the 20-month trendline.  The current Cycle has another 8 days to go, and the decline may be starting its panic phase, despite the steep retracements.

ZeroHedge reports, “Heading into yesterday’s painful close to one of the ugliest months since March 2020, which saw a huge forced liquidation rebalance with more than $8 billion in Market on Close orders, we said that while we are seeing “forced selling dump into the close today” this would be followed by “forced Dec 1 buying frontrunning after the close.”

And just as expected, despite yesterday’s dramatic hawkish pivot by Powell, who said it was time to retire the word transitory in describing the inflation outlook (the same word the Fed used hundreds of times earlier in 2021 sparking relentless mockery from this website for being clueless as usual) while also saying the U.S. central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks, the frontrunning of new monthly inflows is in full force with S&P futures rising over 1.2%, Nasdaq futures up 1.3%, and Dow futures up 0.9%, recovering almost all of Tuesday’s decline.”

 

VIX futures declined to a low of 23.47, remaining above Cycle Top support at 23.14 as it prepares to vault above the Head & Shoulder neckline.  The current Master cycle may run to the end of December, so there is time for a breakout above the Head & Shoulders neckline.

CharlesHughSmith relates, “ne of the most famous examples of smart people being sucked into a bubble and losing a packet as a result is Isaac Newton’s forays in and out of the 1720 South Sea Bubble that is estimated to have sucked in 80–90% of the entire pool of investors in England.

Some have claimed that Newton did not buy early in 1711, sell in April 1720 for a nice profit and then sink the majority of his substantial fortune in the bubble as it peaked in summer, then suffering heavy losses as the bubble popped in September, but evidence supports this chain of events.

Newton “bought the dip” on the way up and then added to his position as the mania rolled over, making his final fatal purchase as a “buy the dip” just before the “last chance to exit” spike — which is precisely the point the current bubble has finally reached, when everyone is all in and “buying the dip” to increase the profits that everyone agrees are essentially guaranteed because the Fed.”

 

The NYSE Hi-Lo Index opened in the negative and became more so throughout the day yesterday.  The story being told here is that shares of a lot of companies are being distributed to eager speculators willing to buy the dip.  The Cycles Model suggests the Hi-Lo may see a bottom next week, which implies a bounce during options week.  However, there appears to be no corresponding Master cycle low in the stock indices or in the VIX.

 

TNX futures surged to 15.06 this morning, challenging the mid-Cycle resistance at 14.92 before puling back at the open.  It has begun an Intermediate Wave (C), which, by any standards, is coming on strong and fast.  The Cycles Model suggests a cotiued rally through the week of January 15.

 

USD futures consolidated above Cycle Top support at 95.64 in the overnight session.  By staying above that support, the uptrend is preserved.  The Cycles Model suggests a continued uptrend to mid-January.

 

BKX broke through its 13-month trendline yesterday, strengthening the sell signal already confirmed beneath the 50-day Moving Average.  The implication is that the entire rally from March 2020 is in danger of being retraced.  It is in day 224 of the 258-day Master Cycle, leaving more than a month to go for the next low.

 

Gold futures bounced this morning to test the 50-day Moving Average at 1790.26.  The decline is still underway with a Master Cycle low anticipated during the week of December 13.  The Broadening Wedge trendline at 1760.00 is is under consideration to be broken with a possible support at the Head & Shoulders neckline at 1680.00 for the next Master Cycle low.

 

 

 

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November 30, 2021

8:30 am

Good Morning!

SPX futures plunged beneath back beneath Intermediate-term support at 4616.50 this morning  to an overnight low of 4586.10 as the bear market resumes.   SPX completed a 4.3-day (top-to-top) Cycle at 1:00 pm yesterday and possibly set the pattern for the next Cycle high on Monday morning.  This decline is likely to take out the 50-day Moving Average at 4626.65 and challenge the trendline just above 4400.00.  Wave 3 may be a multiple the size of Wave 1.  Experts are still calling for a Christmas rally later in December.  However, the Cycles Model may not agree.

RealInvestmentAdvice opines, “Last week, we asked if there would be a market correction before “Santa visits Broad and Wall?”

Investors’ ‘wish lists’ are hung by the chimney with care, hopeful the ‘Santa Claus rally’ will soon be there. While they remain ‘snug in their beds, the historical data dances in the heads.’ The chart below from @themarketear shows the annual “seasonality” from 1985 through 2019.

It certainly seems there is little to worry about. However, notice that dip at the beginning of December.

 

VIX futures rose to an overnight high of 27.58 as the level of fear rises again.  Commentators suggest that VIX is trading more line February 2020 than a mere correction.

 

The NYSE Hi-Lo Index is not offering any support for the bulls.  Although at a higher low, the Hi-Lo Index Cycles Model doesn’t call for a low until December 8-10.  That’s nearly 2 weeks of negative market to look forward to.

 

TNX has declined to a morning low of 14.24.   Wave (B)appears to be turning into an Expanded Flat correction that may find a bottom near 14.15.  The Cycles Model suggests that the bottom is near and an abrupt reversal may be at hand.

 

USD futures made an overnight low at 95.65, just above Cycle Top support at 95.58.  The Cycles Model also calls for a sharp reversal today in USD.

 

 

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November 29, 2021

10:24 am

However, the NYSE Hi-Lo Index only briefly opened positive and has declined since then.  This is not conducive to a strong, sustained rally.  Should the rally not be able to sustain itself in the next few hours, we may see a downturn  by this afternoon.

11:10 am

The Hi-Lo declined even further to -50.00.  Things don’t look good for the rally.

ZeroHedge informs, “While Nasdaq continues to hold rebound gains, The Dow and Small Caps have erased all the weekend’s “Omicron’s not all that bad” gains since the US cash equity open…

Interestingly, there is some building anxiety under the hood as VIX calls expiring on Dec. 22 are among the most active options contracts in early Monday trading.”

 

10:17 am

SPX is at an interesting crossroad.  It may either go higher, with a possible target of 4680.00 (Short-term resistance) or the 61.8% retracement at 4683.00…

…or it may resume its decline from here.  There are two different Elliott Wave structures that may be indicated simultaneously.

ZeroHedge poses the dilemma, “A lot of investors finally have what they wished for: a chance to buy the dip. The problem is uncertainty is much higher now.

Friday’s selloff, fueled by the emergence of a new Covid-19 variant, brought a firm halt to the market’s exuberance of recent weeks. The Stoxx 600 Index is now more than 5% below its record closing high of mid-November, opening a window for those who have been awaiting weakness to add positions.

“Many investors had been complaining about ever-rising markets that give little entry opportunities,” says Martin Moeller, co-head of Swiss and global portfolio management at Union Bancaire Privee in Geneva. “Here is the next one shaping up, given that in 2022, the easing of supply chains and delayed execution of very strong prior order intake should be supportive for economic growth.”

 

8:20 am

Good Morning!

The expected bounce at mid-Cycle support came over the weekend with SPX futures rising to a high of 4646.00, just above the 50% retracement of Friday’s decline at 4644.00.  Pundits blame the decline on the Omicron scare, ignoring the fact that the uptrend may be finished.

ZeroHedge reports, “As expected over the weekend, and as we first noted shortly after electronic markets reopened for trading on Sunday, S&P futures have maintained their overnight gains and have rebounded 0.7% while Nasdaq contracts jumped as much as 1.3% after risk sentiment stabilized following Friday’s carnage and as investors settled in for a few weeks of uncertainty on whether the Omicron variant would derail economic recoveries and the tightening plans of some central banks. Japan led declines in the Asian equity session (which was catching down to Friday’s US losses) after the government shut borders to visitors. The region’s reopening stocks such as restaurants, department stores, train operators and travel shares also suffered some losses.  Oil prices bounced $3 a barrel to recoup some of Friday’s rout, while the safe haven yen, Swiss franc and 10Y Treasury took a breather after its run higher.”

 

VIX futures declined to 24.45, well above the Cycle Top support at 23.10.   VIX is behaving as it should in a new Master Cycle that may last another month.  Pundits refer to this as a contrived  “fearstorm.”  However, from a Cycles perspective, it was overdue.

 

The NYSE Hi-Lo Index made an even deeper low on Friday.  It is well into its sell signal.  It is likely that there may be a bounce back.  However, the Cycles Model suggests the decline in the Hi-Lo may last another two weeks, at a minimum.

 

TNX recovered from its Friday swoon, having completed an irregular correction and beginning its strongest move higher, Wave (C), in the series.  We may see a breakout in the next few days, with a high degree of strength growing in the rally the week of December 6.

 

USD futures began a consolidation, rising to 96.39 over the weekend.  It may rise out of the consolidation as early as this week.  If not, trending strength may return the week of December 6.

 

BKX is likely to retest its 50-day Moving Average at 136.33.  Wednesday may have been the last day of strength in the uptrend.  Trending strength may return the week of December 6, but may accentuate the downtrend.

 

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November 26, 2021 – Red Friday

11:42 am

SPX fell beneath Intermediate-term support at 4599.82 and is back-testing that support/resistance area.  Nearby higher resistance is at 4620.00 -4625.00.  Should the SPX fail to exceed that level, the decline may resume shortly.   VIX is still beneath the neckline at 28.79.  However, the NYSE Hi-Lo has fallen to -118.00, a new low.

ZeroHedge adds commentary, “It’s pretty clear that markets are not having a good day today, and all else equal, it’s likely they will only get worse for the simple fact that gamma is now broadly negative, and more put buying (and selling) will lead to more selling (and put buying).

As our friends at SpotGamma note, for those looking at market support (and resistance), the main levels remain similar to that of Wednesday: support at 4600 and resistance at that 4650 area which is also the gamma flip point. The bulk of positive gamma is positioned up into the 4675-4700 which is where we see major resistance. As gamma is negative we anticipate large directional swings in todays shortened session.”

See you on Monday.

 

10:50 am

Welcome to “Red Friday.”  I had expected this move on Monday, not today, due to light after-holiday trading.

ZeroHedge reports, “The Friday after thanksgiving is called black Friday because that’s when retailers finally turn profitable for the year. Not so much for market, however, because this morning it’s red as far as the eye can see. The culprit: the same one we discussed late last night – the emergence of a new coronavirus strain detected in South Africa, known as B.1.1.529, which reportedly carries an “extremely high number” of mutations and is “clearly very different” from previous incarnations, which may drive further waves of disease by evading the body’s defenses according to South African scientists, and soon, Anthony Fauci.”

 

VIX made nearly a 51% spike this morning on the news of the Nu Covid variant.  It appears that the Head & Shoulders neckline may be the next target to fall.  Note that, should the neckline be exceeded, a more likely target may be 48.00-50.00.

ZeroHedge warns, ”

The Market Ear Picture

Welcome to pure panic

We haven’t seen Eurostoxx 50 “VIX”, V2X, spike by almost 50% in a long time. This is pure panic. Having much view on volatility here is naive, but if you ever felt like buying when there is blood on the streets, this could be one of those days…

Source: Refinitiv

VIXplosion

Haven’t seen VIX up by almost 50% in a long time. The situation remains extremely fluid. For now it looks like the big bond guys were right.”

 

The NYSE Hi-Lo Index may be on its way to a new low today, even on shortened trading hours.

BKX sliced through its 50-day Moving Average at 136.30, confirming its sell signal.

ZeroHedge interviews the bankers, “”Black Friday” has quickly mutated into red Friday for markets, where panicking traders sell first and only ask questions later if at all. So for those who are too pressed for time to read out primer on the “Scared Nu World”, but want to catch up to speed on consensus, here is a snapshot of analyst kneejrek reactions to the market’s latest obsession.”

 

WTIC futures, which had back-tested the 50-day Moving Average on Wednesday to confirm its sell signal, plunged below 70.00 this morning.

ZeroHedge observes, “The emergence of ‘nu’ has sparked demand anxiety in the crude complex and oil prices are collapsing.

WTI is down 12% testing below a $70 handle, the lowest in almost months as the smell of liquidation is in the air….

That is the biggest single-day drop since the day WTI traded in negative territory and is near 3 month low, and has broken a key technical level – the 200DMA…”

 

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November 24, 2021

8:00 am

Good Morning!

SPX futures have declined to a morning low of 4670.80.  It has already tested overhead (Short-term) resistance at 4689.02 and has since reversed.  Should investors attempt to hold the line at 4652.66, there may be another attempt at Short-term resistance.  Few commentators are worried, although SPX made its closing high on November 18 (day 259) and it’s all-time intraday high on November 22.  From Monday’s high virtually all equities indices made a key reversal, also indicating a probable top.  The Cycles Model indicate a probable 2-month decline into the last week of January.

ZeroHedge reports, “For the third day in a row, US equity futures have been weighed down by rising (real) rates even as traders moderated their expectations for monetary-policy tightening after New Zealand’s measured approach to rate hikes where the central banks hiked rates but not as much as some had expected. Traders also braced for an epic data dump in the US, which includes is an epic data dump which includes an update to Q3 GDP, advance trade balance, initial jobless claims, wholesale and retail inventories, durable goods, personal income and spending, UMich consumer sentiment, new home sales, and the FOMC Minutes The two-year U.S. yield shed two basis points. The dollar extended its rising streak against a basket of peers to a fourth day. At 730am, S&P 500 e-mini futures dropped 0.3%, just off session lows, while Nasdaq futures dropping 0.34%.”

 

The NYSE Hi-Lo Index made a new low not seen since March 2020.  The Orthodox Broadening Top formation is now being activated to decline to Point 8.  Its average target indicated as many as 80% of all NYSE stocks may make a new 52-week low, possibly by the end of January.  The Cycles Model shows a potentially complex decline with a possible Master Cycle low near December 8.  A potential Christmas rally into options expiration on December 17 is also indicated.  The SPX Cycles do not confirm the Master Cycle low in December, but both agree on the second Master Cycle low in the last week of January.

 

VIX futures consolidated inside yesterday’s trading range, with a positive result.  VIX peaked 13 (12.9) days from the Master Cycle low and may be due for a pullback to retest resistance (turning to support) at 18.37.  VIX is on a buy signal.

 

TNX beat yesterday’s high at 16.69 by a point, but may decline for the rest of the week.  We may see TNX revisit the 50-day Moving Average at 15.30 before marching higher next week.

ZeroHedge reports, “After two ugly auctions to start the holiday-shortened week on Monday, when both the 2Y and 5Y auctions tailed badly amid overall poor demand, traders were understandably nervous about the outcome of today’s $59BN sale of 7 year paper: after all, it was the catastrophic 7Y auction back in February that started a cross-asset rout in both bonds and stocks which lasted for weeks and led to billions in losses across various macro investors.

In retrospect, there was no reason to be nervous because moments ago the Treasury announced that the 7Y auction priced at a respectable 1.588%, which while the highest since Dec 2020 as expected, stopped through the When Issued 1.598% by 1 basis point – this was the first stop through since June, and followed four consecutive tailing auctions.

The Bid to Cover was just as solid, rising from 2.245 in Oct to 2.424, the highest since August 2020, and well above the recent average of 2.305.”

 

USD futures made a new high at 96.88 in the overnight session.  There may be a brief revisit of the Cycle Top support at 95.34 by the weekend as activity takes a breather in the markets.  However, new strength emerges new week that may last to the middle of January.

 

The GSCI Ag Index continues its rise toward its April high at 474.12.  A breakout is likely, as the Master Cycle may continue higher until mid-December.  A possible minor pullback over the next few days may be indicated.  However, strength may return in early December through the end of the Master Cycle.

ZeroHedge observes, “The real trouble will start when this year’s energy crisis morphs into next year’s food inflation problem.

We’ve all become armchair inflation experts. And why not? It’s almost impossible for anyone to keep getting it as systematically incorrect as professional economists have done this year.

It’s time for the conversation to move beyond the current obsession with eye-catching headline numbers. That we’re in a global inflation regime of a kind not seen for decades, is beyond doubt.

Interest in supply chains is at a 17-year high, according to Google Trends, but it has become a red herring when it comes to forecasting the persistence of inflation.”

 

Gold futures are taking a breather after two days of nastiness.  We may see a retest of the 50-day Moving Average at 1793.61, or possibly Intermediate-term resistance at 1805.01.  However, a reaction to this decline may arrive on Friday that will indicate whether a change in sentiment is due, or will the bear continue?  The Cycles Model indicates that the trend may continue until the first week of January.

 

 

 

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November 23, 2021

2:36 pm

The NYSE Hi-Lo is now on a confirmed sell.  This is the final piece of the puzzle saying, “go short, young man!”

 

1:05 pm

SPX is looking weak after it has completed an impulsive decline.  Normally we may see a bounce back to Short-term resistance at 4688.70 by the weekend.  This poses a dilemma for those not having made their move, especially over the holiday-shortened week.  For those who have sold long and gone short, it is time to be patient.  Others, who are waiting for the “right moment” may get whipsawed.  For myself, having made my move, I intend to relax and enjoy Thanksgiving with my family.  I may make a shortened commentary tomorrow, but Friday will be very busy from the word “go.”

ZeroHedge explains, “Something odd happened today. Treasury 10- and 30-year TIPS fell to session lows after the Fed postponed Tuesday’s scheduled purchase operation targeting the 7.5- to 30-year sector until Wednesday.

Due to technical difficulties, today’s Treasury outright purchase operation – scheduled for 10:10 AM in the TIPS 7.5 to 30 year sector for up to $1.075 billion – is being rescheduled,” Federal Reserve Bank of New York says.

“It is now scheduled to take place Wednesday, November 24, 2021 at 11:00 AM,” New York Fed says Tuesday on its website

TIPS prices fell quickly on the news…”

 

12:30 pm

Yesterday morning I reminded that gold was on a sell signal.  Well. here it is.  Today gold declined further to 1781.85, beneath the 50-day Moving Average at 1790.83.  The sell signal may continue through early January with a likely test of the Head & Shoulders neckline at 1675.00.  Pundits aren’t happy.

ZeroHedge notes, “Good Morning. Monday morning saw a massive sell order hit the Gold futures market with almost reckless abandon. While no-one who is speaking knows why the market acted this way, we do know that it was one of three type players. It always is.

Someone Sold $2.2 Billion of Gold in 2 minutes Monday…” 

 

7:45 am

Good Morning!

SPX futures are wobbling around the close after declining to an overnight low of 4658.10.  It has made a “Key Reversal” by making a new all-time high, then closing beneath Short-term support at 4688.68 and the Wave (5) trendline at 4725.00 for an aggressive sell signal.

My original thought was that the SPX might flash crash after the November 8 high, then make a comeback to new all-time highs through January.  It appears that this assessment was premature.  The uptrend from March 23, 2202 now appears complete.  The Cycles Model now posits that a 2-month decline awaits the SPX ending in the last week of January.  Should that be the case, it is possible that the SPX may decline to “Point 6” of the Orthodox Broadening Top near 2100.00.  In order to do that, SPX must decline beneath the bold trendline near 4400.00 in the next few weeks.  Fasten your seatbelts.

ZeroHedge reports, “US equity futures continued their selloff for the second day as Treasury yields spiked to 1.66%, up almost 4bps on the day, and as the selloff in tech shares spread as traders trimmed bets for a dovish-for-longer Federal Reserve after the renomination of Jerome Powell as its chair. At 8:00am ET, S&P futures were down 2.75 points or -0.05%, with Dow futures flat and Nasdaq futures extended their selloff but were off worst levels, down 41.25 points or 0.25%, after Monday’s last-hour furious rout in technology stocks.

 

VIX futures broke out above its November 10 high, rising to 20.83.  It is officially on a buy (SPX sell) signal.  The next resistance appears to be the Cycle Top at 23.40.  VIX has two upcoming Master Cycles, the first in the last week of December and the second at the end of January, while SPX only has the second.  Tis may make for some interesting volatility patterns through the year end.

 

The NYSE Hi-Lo Index closed at 6.00 after rising to 93 at mid-day.  The item that apparently throws off the Hi-Lo count intra-day is that ETFs may be included, double and triple counting the new 52-week highs and lows.  They are taken off the count after the close, so intra-day measures may be misleading.

Yesterday’s close was low enough to count as a sell signal, pending today’s open.

 

NDX futures declined to 16276.60 this morning, crossing beneath the trendline at 16350.00 and giving a potential sell signal.  It also made a huge Key Reversal, indicative of a potential change in trend.

 

The NDX Hi-Lo Index plunged to new lows not seen since March of 2020, confirming a sell signal.  The Hi-Lo Index was negative since last week, despite making new all-time highs.  Tis indicates a lack of confidence in all but the mega-caps.

 

TNX has broken out above the previous November high and may be overtaking the October high, as well.  The Cycles Model suggests a continued rise in rates through January options expiration.

ZeroHedge observes, “Investors are fretting over the prospect of a “Fed Taper,” but history shows such will likely be good news for the bond market. Currently, it doesn’t seem that way, with rates rising post-announcement. As noted by CNBC:

“While the Fed has gone into policy retreat before, it has never pulled back from such a dramatically accommodative position. For the past eighteen months, it bought at least $120 billion of bonds each monthSuch provided unprecedented support to financial markets that it now will walk back.

The bond purchases have added more than $4 trillion to the Fed’s balance sheet which now stands at $8.5 trillionRoughly, $7 trillion of which is the assets bought up through the Fed’s quantitative easing programsThe purchases helped keep interest rates lowSuch provided support to markets that malfunctioned badly during the pandemic, and fueled a powerful run for the stock market.”

Previously, when the Fed began to taper their bond-buying programs, the market buckled as the “risk-on” trade reversed.”

 

USD futures rose to 9662 in the overnight market before a brief pullback that may last to the end of the week.  Thereafter, a surge of strength is indicated through the month of December.

 

 

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November 22, 2021

12:45 pm

NDX also made a new all-time high, then threw a tantrum.  The trendline lies at 16400.00.  No signal yet, but its time to be alert.

ZeroHedge remarks, “Update (1200ET): After Powell’s nomination, and a tailing 2Y Auction, it appears a combination of spiking yields and hawkish rate expectations finally triggered a tantrum in stocks.

STIRs are pricing in a full rate-hike by June 2022…

2Y Yields spiked to new cycle highs…”

 

12:37 pm

SPX made a new all-time high, then challenges the trendline at 4700.00.  A breakdown here may give a SPX sell signal.  Confirmation lies below Short-term support at 4688.22.  Critical support lies at the 50-day Moving Average at 4513.62.

 

12:29 pm

TNX has broken above Intermediate-term resistance.  It is on a buy signal through late January 2022.

ZeroHedge reports, “In a bizarre day for risk assets, one where stocks surged to a new all-time high promptly after the start of trading only to fade all gains and push the Nasdaq into the red, moments ago the Treasury sold $58BN in 2 year paper in a very poor, tailing auction, which was a mirror image of last month’s stellar 2Y sale which only saw tremendous interest due to the buying frenzy by shorts who needed physical paper to offset their futures shorts.

In any case, today’s 2Y auction priced at a high yield of 0.623%, was well above last month’s 0.481% and tailing the When Issued 0.612% by 1.1bps. This was the biggest tail since Feb 2020 when the economy was about to implode.

The Bid to Cover was also ugly, sliding sharply from last month’s 2.686 to just 2.358% and far below the 6-auction average of 2.56.”

 

8:10 am

Good Morning!

SPX futures rose to 4719.50 (possibly a typo, since corresponding data shows 4717.50) over the weekend session.  Futures have since come down from their high.  SPX closed just under 4700.00 on Friday, leaving the holders of options at a strike of 4700.00 or higher penniless.  That was grand theft of a legal variety on a massive scale.

That leaves Thursday, with a closing price of 4704.54 as the Master Cycle high on day 259.  It was a brilliant maneuver, keeping players glued to their positions with the “hope” of a higher market at expiration.  This week we may see a sell-off as dealers and hedge funds offload their long positions.

ZeroHedge reports, “US equity futures and European markets started the Thanksgiving week on an upbeat note as investors set aside fear of surging inflation and focused on a pickup in M&A activity while China signaled possible easing measures. The euphoria which lifted S&P futures up some 0.5% overnight and just shy of all time highs ended abruptly and futures reversed after German Chancellor Angela Merkel said the Covid situation in the country is worse than anything so far and tighter curbs are needed. At 730 a.m. ET, Dow e-minis were up 95 points, or 0.26%. S&P 500 e-minis were up 12.25 points, or 0.26% and Nasdaq 100 e-minis were up 58.75 points, or 0.357%.”

 

VIX futures have risen just under the 50-day Moving Average at 18.39, the trendline and the mid-Cycle resistance at 18.44.  The morning high so far was 18.34.  Be prepares for a VIX buy signal.  The Cycles Model suggests rising volatility for the next two weeks is possible.  We may need to monitor it for a breakout above the Head & Shoulders neckline.

 

The NYSE Hi-Lo Index closed on a potential sell signal on Friday at -19.00.  An opening value in single digits or below zero would alert us to the fact that lower prices are coming.  The fly in the ointment is that Friday was day 253 of the Master Cycle.  Today is day 256.  We may see a bounce soon that may negate the signal.  What comes to mind is a potential 1–2 day volmageddon that shakes out the weaker hands before a resumption of the bull market into late January.  Should SPX stay above 4000.00, the market may continue higher.

 

TNX is rising, challenging Intermediate-term resistance at 15.74.  It made a 54% retracement of its rally off the MC low and may be prepared to make new highs.  The Cycles Model suggests a continued rally through the third week of January.

 

USD futures consolidated inside Friday’s trading range as awaits further developments in TNX.  The next resistance to the rally appears to be near 98.00.  The Cycles Model projects a continued rise in the USD until mid-January.

 

Gold futures made a new low at 1828.50 during the weekend session.  It is on a sell signal with a declining outlook through the first week of January, according to the Cycles Model.

 

WTI futures declined to a weekend low of 74.83 as it probes lower.  Today is day 259 of the Current Master Cycle.  We must be alert to a reversal which may be imminent.

 

 

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November 19, 2021

7:45 am

Good Morning!

SPX futures touched a new high of 4727.20 overnight, but are sinking away from the gamma-laden options strike at 4700.00 this morning.   The morning low was 4688.40 thus far.  Today is day 260 in the old Master Cycle with the intra-day high on November 5, day 246 at 4718.50.  By all reckoning, thus far in the cash market November 16 may be called a failed MC high at 4714.95.  However, the closing high on November 16 was 4700.90,  higher than the 4697.53 on November 5.  Needless to say, this top has been chaotic.

Open interest at the 4675.00 level is light, while open interest  in SPX puts at 4650.00 is 21,506 vs. 13,464 calls.  The big hurdle is this fternoon’s SPY options with open interest of 90,587 calls at the 470.00 strike vs. open interest of 40,048 put contracts.  The Max Pain zone for SPY is 467.50.  Should SPY fall beneath that level, put gamma may dominate the market.  Wall Street appears to have an “excuse” for its behavior.

ZeroHedge reports, ” Having briefly touched new all time highs of 4,723.5 overnight, S&P futures tumbled shortly after Europe opened as a fourth wave of the pandemic in Europe resulted in a new lockdown in Austria and the prospect of similar action in Germany wiped out earlier gains and forced stock markets down close to 1% as it overshadowed optimism about corporate earnings and the economic recovery. Friday is also a major options-expiry day, which could trigger volatility in equities. Two progressive Democratic senators said they oppose the renomination of Federal Reserve Chair Jerome Powell to a second term, because he “refuses to recognize climate change” joining Elizabeth Warren in urging President Joe Biden to choose someone else.

S&P and Dow futures fell tracking losses in banks, airlines, and other economically sensitive sectors. Uncertainty over rising inflation and the Federal Reserve’s tightening also kept demand for value stocks low. At 745am Dow e-minis were down 218 points, or 0.609%. S&P 500 e-minis were down 12.25 points, or 0.26% and Nasdaq 100 e-minis were up 68 points, or 0.41%.”

 

 

The NYSE Hi-Lo closed at 10 yesteday, on the verge of a sell signal.  An open beneath 0.00 may confirm the sell signal.  The Hi-Lo Index reveals a quiet withdrawal out of equities that has not been clear in the price action to date.  Today may be the turning point, as may be indicated in the Hi-Lo.

 

VIX futures rose to 19.01 this morning, giving us a buy (SPX sell) signal.  That, along with a potential confirmation from the Hi-Lo may give us the confidence to sell/short equities.

ZeroHedge remarks, “Today’s “elephant in the room” for traders is the fact that 41% of SPX gamma expiring today. As SpotGamma notes, that is a very large number, and may invoke some unexpected volatility today. As we chronicled extensively the past week, we certainly think it will spur volatility next week.

The chart below shows the current distribution of gamma across strikes in SPX, and its rather remarkable.

We cannot recall seeing such a concentration at a single strike before – and this is the result of 18k calls and 23k puts to the 4700 strike.”

 

TNX declined this morning, approaching the 50-day Moving Average at 15.11, with a secondary target  being mid-Cycle support at 14.92.  This move may be more of an “automatic” migration from stocks to bonds than a reversal in trend.  The move thus far is a 51.5% retracement with a 61,8 Fib retacement at 15.03.

 

USD futures consolidated in place during the overnight session.  There is room to retest the Cycle Top support at 95.10 before moving higher.  The Cycles Model suggests a continued rally trhrough mid-January.

 

Crude oil declined to an overnight low of 75.88, well below the 50-day at 78.10.  It is on a sell signal with the current Master Cycle having two more weeks to go.  The Cycles Model suggests a decline to the Cycle bottom may be in order.

 

 

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