December 7, 2022

8:15 am

Good Morning!

SPX futures have declined to a low of 3911.50 this morning, approaching Intermediate-term support at 3898.14.  There may be a short-term bounce at that level.  Should SPX bypass that support and go lower, the 50-day Moving Average at 3818.14 may be the next target.  This morning SPX will have accomplished 4.3 days of decline.  The high thus far was at day 247 of the Master Cycle.  Should that have completed the Master Cycle, it would allow up to 60 days of decline.  Today is day 253 of the MC.  It is possible for the Master Cycle to end at a low on either December 19 (258 days) or possibly extend to December 19 (265 days), followed by a year-end bounce.  This needs monitoring.

Today’s op-ex shows 3955 as the Max Pain level.  Long gamma starts at 3975.00, while short gamma begins at 3930.00.  Futures are attempting to rise out of short gamma as I write.  A decline beneath 3900.00 may create a runaway train scenario.

ZeroHedge reports, “US futures slumped for a fifth day as investors faded the latest China reopening news – which saw Beijing move definitively away from its long-held Covid Zero approach as it eased a range of restrictions – as the latest dismal Chinese trade data reaffirmed the risk of a global recession. Contracts on S&P 500 futures dumped 0.7% at 7:20 a.m. ET with selling picking up US traders came to their desks after trading unchanged for much of the overnight session, and after the underlying gauge fell Tuesday for a fourth straight day and closed at the lowest level in nearly a month. Nasdaq 100 futures were down 0.8%”


NDX futures declined to 11412.00, approaching the 50-day Moving Average at 11363.00.  The rally was stopped at the 100-day Moving Average with a mere 26.5% retracement.

In today’s op-ex, Maximum Pain for options investors is at 11530.00, with light volume.  QQQ (closing price 281.68) shows Max Pain at 282.00.  Long gamma begins at 285.00,  while short gamma resides at 275.00.

ZeroHedge reports, “Apple shares fell more than 1.5% in premarket trading amid new signs that iPhone 14 demand wanes after a key supplier expects to reduce handset production and Morgan Stanley slashed fourth-quarter iPhone estimates.

Apple Supplier Murata Manufacturing Co.’s President Norio Nakajima told Bloomberg in an interview, “Judging by handset availability in stores, I see a downward revision happening,” and he “hopes that it won’t be too deep.”

Nakajima’s comments didn’t directly specify Apple, as its customary for suppliers not to talk about their clients, but this adds yet more evidence the global smartphone industry is in shambles.”


VIX futures rose to a morning high of 23.01, crossing above a support/resistance area at 22.63 and confirming a buy signal.  The VIX Master Cycle indicates a rally in strength until December 19.  The chart shows the low of December 2 as the Possible Master Cycle at day 242.  However, that is the minimum range and there is good reason to believe that the next 8.6 market days may show a breakout above the Head & Shoulders neckline.  No one seems to recognize the changes in the VIX, and probably won’t until it exceeds 25.00, it’s historical median.

Today’s op-ex shows Max Pain at 22.00.  Short gamma begins at 21.00, but without conviction beneath it.  Long gamma starts at 25.00 with strong conviction to 40.00.  The December 21 op-ex shows extreme long gamma to 70.00.  An example is the 30.00 strike with 409,850 contracts!


TNX made a new corrective low at 34.48, testing the lower trendline.  At day 280, this is far beyond the normal range of a Master Cycle.  This is emboldening those who believe that bonds are a “safer” alternative to stocks.  Unfortunately, this may not be true.

RealInvestmentAdvice gives an example, “Back in the day, a double dog dare was often a kid’s first introduction to evaluating risk and reward. The rarely presented double dog dare happens when one kid dares another to do something foolish. Usually, the kid being dared asks for an incentive to complete the challenge.

When assessing a double dog dare, one usually first values the reward. Maybe there are a couple of candy bars or a soda for completing the challenge. Then comes the risk assessment. Does the potential to break an arm or leg exist? Maybe worse, at least in some children’s minds, what will the punishment be for being caught? Simply, is the reward enough to compensate correctly for the risks associated with the double dog dare?

Evaluating the risks and rewards of a double dog dare are not that dissimilar to equity investing, as we explain.”


USD futures are consolidating near the 200-day Moving Average at 105.34.  There is a cluster of Maser Cycle lows in December, including a possible new low during the week of December 12.  From there USD may launch a rally to new highs until mid-January.





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