2:09 pm
SPX is on an aggressive sell signal which may not be confirmed until it reaches/passes Short-term support at 3922.41. The decline may persist until mid-Cycle support and trendline at 3821.71 where it may bounce. However, this decline may not allow very many opportunities to short after that. The chances are good that this decline may reach 3500.00 or lower by mid-December. Wave (C) may not have the bounces that were experienced in (A) and (B), so hang tough.
7:00 am
Good Morning! I am writing early due to appointments/errands that need to be done.
NDX futures declined to 11620.00 this morning before a bounce. It made its retracement top on November 15, a full 10 days prior to the SPX after reversing at the 100-day Moving Average at 11982.00, creating an aggressive sell signal. The 50-day Moving Average lies at 11371.00, the location of a confirmed sell signal. The decline may be swift and sharp, as Wave (C) of Wave [3] may spend the majority of its time beneath the Cycle Bottom at 10266.10.
ZeroHedge (TME) remarks, “The huge US equity net short is gone, but we are far from a meaningful net long. Noteworthy is the fact skew has caught some bids lately as people have closed out shorts. The increase in skew suggests people are switching into hedging the downside via puts, instead of running those delta 1 shorts.
ZeroHedge observes, “Apple shares fell nearly 2% in US premarket trading Monday on news that unrest at the world’s largest iPhone factory in central China could result in a production shortfall of iPhone Pro units this year, according to Bloomberg, citing a person familiar with assembly operations.
The person said Apple’s manufacturing partner Foxconn Technology Group’s factory in Zhengzhou, could wind up with a 6 million iPhone Pro production shortfall by the end of the year, adding the situation remains fluid and lost production numbers could change. ”
SPX futures fell beneath 4000.00 this morning after reversing at the mid-Cycle resistance at 4031.08. Friday was a peak strength and reversal day, which is catching many off guard, since the expectation is a continuance of the rally. What may follow is likely to be a 12.9-market day decline to complete Wave 1 of (C). Wave (C) declines are broad and sharp, leaving no doubt that this is a bear market.
ZeroHedge reports, “US stock futures, and the entire risk complex tumbled on Monday amid growing concerns that China’s economic reopening will not only be a disaster but will also be accompanied by violence following protests against Covid restrictions over the weekend. The entire risk complex was sharply lower, with S&P 500 futures down 0.7% as of 7:30 a.m. ET, trading just around 4,000 having dropped as much as 1% earlier, while Nasdaq 100 futures fell 0.9%. Crude crashed to $74, the lowest price since December 2021, while Asian stocks and the yuan plunged. Cryptos also slumped while the dollar and Treasuries ceded earlier gains that were fueled by investors’ dash to safety; the 10Y was last trading at 3.67%. ”
VIX futures rallied to 22.50 after making a Primary Cycle low on Wednesday. The next Master Cycle Pivot is due in mid-December and may be a significant new high. It is due simultaneously with the December op-ex.
TNX futures made a new Master Cycle low this morning at 36.20 on day 272 of the Master Cycle. Cash market values may be different from futures. The new Master Cycle may be due to peak during the first week of January with a significant new high.
ZeroHedge (Russell Clark) comments, “Shorting long dated bonds has been a great trade. But the view, and the positioning that I am seeing is suggesting that most investors think that trade is done.
If anything, I would say long bonds has become a conviction trade for many investors.”
USD futures made a morning low of 105.26, challenging the mid-Cycle support at 105.70. Should it rise above that level, we may have a confirmed buy signal.
Crude oil futures hit a new low at 73.61 in the weekend session. The Current Master Cycle may have up to two weeks left, allowing a further decline. Should WTI decline beneath the Broadening Wedge trendline at 68.00, then a further decline may be possible. The 50% retracement value of the decline from April 2020 is at 68.50. Beneath that lies the 61.8% retracement at 53.87, not very far from the Broadening Wedge target.
ZeroiHedge(TME) observes, “Oil – must hold approaching
Brent is approaching the huge 80 level. The entire 75/80 area is basically a must hold level for oil. Moving averages are not looking great. Note that the 200 day is “rolling” over into sloping negatively as well. Most people love oil and see that huge upside, but price action is moving against all these people that remain “fundamentally” bullish.”
