SPX is trading flat at or beneath 4700.00 despite efforts to boost equities. It’s time to short this market. I cannot see it recovering on Monday after such a negative options expiration. Be prepared for increased volatility.
The NDX is deep into short gamma territory. This may have an influence on the blue chips, as well.
The SPX has crossed beneath the 50-day Moving Average at 4669.39 and may be heading for the 22-month trendline/100-day Moving Average at 4628.05. The decline is now impulsive to the downside, although there may be a bounce once it hits support.
I have been watching the NDX with a mixture of amazement and disbelief. The decline may now be impulsive (trend changing) and may have more decline ahead. The negative gamma appears to be simply overwhelming and may build on itself. The NDX is on a sell signal, but confirmation lies beneath the trendline. Until then the risk of a pullback is very high. This may not be an easy position to hang on to but the message is clear. The Cycle may now be heading down for the duration of January. I realized the Cycles Model may have been correct after all, especially as it pertains to the NDX. Should the decline continue, the next target appears to be near 15000.00. The daily Cycle Bottom appears near 13000.00.
The NDX Hi-Lo rose at the open to -2.00 in an effort to revive the bounce. It has since subsided to -77.00.
TNX continues to rise above the Lip of a Cup with Handle formation. What is not understood by many is that (1) the Fed is no longer in charge of rates and (2) rates may rise far more than anticipated or even imagined.
ZeroHedge remarks, “A hotter than expected wage growth print and tumbling unemployment rate have been greeted by selling in bonds and stocks as no obvious ‘dovish’ excuse can be gleaned from the data.
Academy Securities’ Peter Tchir’s instant reaction clarifies much and the headline is simple – this is not great for markets…”
NDX futures are bouncing, but not yet able to exceed yesterday’s high at 15900.60. Today it must overcome the 50-day Moving Average at 16101.25. To put this into context, NDX option gamma is extremely bearish. The Max Pain zone is at 16160.00 and gamma turns bullish at 16200.00. QQQ (closing price $382.10) must rise to its Max Pain zone at 392.00. Options gamma turns bullish at 400.00.
The Cycles Model suggests a probable Cycle top, if not a new all-time high, near January 15. Since that is a weekend, it may be either January 14 or the 17th, should the Cycle be on time. It is noteworthy that the heaviest options will be on January 21.
ZeroHedge comments, “NASDAQ – to dare or not to dare?
NASDAQ has actually done nothing since early September. The index has been stuck in a perfect range since mid Oct. The only thing that has risen is tech volatility, VXN. Price action today is not overly impressive post the carnage yesterday, but note VXN is up as we trade close to the 100 day, the longer term trend line and the lower part of the range. All break out attempts (up as well as down) have been reversed since October. Is this time different?”
The NDX Hi-Lo Index closed at -522.00, a very dicey position. But the Hi-Lo has recovered from plunges this low in the past month. There may be more choppiness ahead.
SPX futures are lingering near 4700.00, not as dire as the NDX. The rotation to quality stocks has helped the blue chips. However, the mega-tech stocks still weigh heavily in the SPX. If we are to follow the NDX Master Cycle, we may yet see a new all-time high in the next week. In today’s options expiration, gamma is very bearish at 4700.00, so a stumble lower may start a panic. However, the Max Pain zone is at 4745.00. Gamma turns bullish at 4775.00.
ZeroHedge reports, “US index futures climbed on Friday, paring this week’s losses fractionally as investors braced for jobs data that should provide clues about the pace of Fed tightening and which is expected to come in strong (whisper number at 502k, above 447k estimate, up from 210K last month; Wednesday’s ADP print was 807k, well above 410k estimate, our full preview is here) but not too strong – remember we now live in a “good news is bad news” world – or else the market will freak out that the Fed will hike even faster than is currently expected. Nasdaq futures also showed signs of recovery after a three-day selloff even as cryptocurrencies crashed again during the Asian session. As of 730am, emini S&P futures were up 4 points or 0.1%, Nasdaq futures were 0.24% higher, or 37 points and Dow futures were unchanged.Treasuries were steady, with the two-year yield heading for the biggest weekly spike since October 2019. Crude oil headed for the longest streak of weekly gains since October on tightening supplies.”
TNX just surged above the Cycle Top at 17.42 on the news of the Payrolls miss. This may jolt equities lower.
ZeroHedge reports, “With everyone bulled up on the December jobs print which was expected to more than double the disappointing November print of 210K to 447K with a whisper of more than 500K, moments ago the BLS reported that in December the US job market deteriorated again, as only 199K jobs were added, a huge miss to expectations, and the lowest number since December 2020.”