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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