10:15 am
SPX has broken through the rally trendline at 3990.00, further confirming the sell signal. The next target is the 50-day Moving average near 3814.96 – 3818.00(daily chart).
ZeroHedge observes, “All of the US majors are in the red today led by the Nasdaq puking, hurt by Meta’s slide…
The Dow and the S&P 500 have joined the Russell 2000 in the red, erasing all of the massive gains from the post-Powell ‘dovish’ reaction in stocks…”
8:05 am
Good Morning!
I am highlighting the Dow Jones Industrials to show the magnitude of difficulty in analyzing the current Wave structure. The DJIA has made an 80% retracement of the 10 1/2-month decline. Wave (A) consists of an A-B-C bounce from the October 13 bottom. This structure alone suggests a completed (A)-(B)-(C) correction. However, Wave [2]s may completely retrace their counterpart Wave [1]. As a result, I am inclined to label this as shown in the chart. The deciding factor may be the Wave (B) decline. The NYSE Master Cycle may be due for completion on or around December 12.
The SPX has fallen short of its 50% retracement at 4155.00. Having met its mid-Cycle resistance at 4024.09 and the descending trendline at 4100.00, I would normally consider this done as well. However, there may be a week left in the current Master Cycle to complete a possible Wave (B). As it stands, it may not be enough to complete a decline to the Cycle Bottom at 3520.32. There is a catch. The VIX Master Cycle is due the week of the December op-ex on December 21. That may lengthen and deepen the SPX/NYSE decline. The chart shows the Master Cycle ending on day 249. That is early and subject to change over the next 1-2 weeks.
ZeroHedge reports, “US futures trade in a narrow range on Tuesday following Monday’s rout, as investors weighed stronger-than-expected economic data and the potential that Federal Reserve rates will peak at a higher level. Contracts on the S&P 500 and the Nasdaq 100 were both up around 0.1% at 7:30am ET after trading on either side of the unchanged line earlier, signaling moderate gains for Wall Street after both underlying indexes closed lower on Tuesday, with hot US ISM services data fueling bets on a terminal Fed rate of close to 5% next year. The dollar weakened and Treasuries gained while bitcoin was unchanged.”
VIX futures have been flat in the overnight session. They are at a low point that has been a buying opportunity three different times in the past year. This should be no different. Tie to expect the unexpected.
Tomorrow’s op-ex is lightly populated. Max Pain is at 22.00. Long gamma starts at 25.00 and goes to 40.00. However the December 21 op-ex is loaded for bear. Max Pain is at 23.00. Long gamma starts at 26.00 with 157,000 call contracts and extends to 70.00 with 154,000 call contracts. All told, there are nearly 1 million call contracts between the strikes at 25.00 and 70.00. Can the VIX tail wag the NYSE dog? We may find out.
TNX has pulled back from its new high made yesterday. This appears to be a slight pullback to retest the low, but the old Master Cycle is done, after 276 days. In fact, TNX may now be due for a surge of strength through the rest of the week.
USD futures have pulled back from the 200-day Moving Average. The Current Master Cycle is not due to bottom for another week. In that time we may see it test the bottom of the trading channel near 102.50. From there USD may go higher to mid-January.
In case you may have missed it, BKX fell through the 50-day Moving Average at 102.43. It is on a confirmed sell with the current Master Cycle running to the year-end. After testing the 50-day ,it may resume the decline to the Cycle Bottom at 92.39. This move is a warning that something is afoot. Yesterday I discussed the commercial loans that are in arrears or that may default after the New Year. The massive layoffs high personal debt levels also suggest credit card and mortgage defaults. These may all be revealed after the year end. Yesterday’s move tells us that serious money is being taken off the table at the banks. See the article below regarding the international banking scene.
ZeroHedge observes, “As the powers that be continue to scaremonger by slamming bitcoin and crypto every day, as if the asset class which is now well below $1 trillion is somehow systemic to the global economy and world markets, today the BIS briefly highlighted the real financial bogeyman.
In its latest quarterly report, the Bank for International Settlements – also known as the central banks’ central bank – warned that pension funds and other ‘non-bank’ financial firms now have more than $80 trillion of “hidden, off-balance sheet” dollar debt in the form of FX swaps.”