SPX may have reversed at 3975.90 at 11:45 am, as indicated this morning. It achieved the Short-term resistance at 3984.00 before the cash open and may proceed lower for the duration of the day. Be prepared for a possible gamma-induced panic beneath 3950.00.
SPX futures have attained 3985.00, its 38.2% retracement value. There may be another 1-2 hours left to the retracement. The 50% retracement lies at 4009.00, should it venture further. There may be another 7-11 days left in this decline. The minimum target appears to be the 50-day Moving Average at 3828.70.
Today’s op-ex shows Maximum Pain for options investors near 3990.00. Long gamma begins at 4000.00, while short gamma starts at 3950.00.
ZeroHedge reports, “After sliding 8 of the previous 9 days, US stock futures extended yesterday’s gains as investors awaited today’s PPI data (ahead of next week’s critical CPI print) and the Fed’s final meeting for 2022 next week. Contracts on the Nasdaq 100 were up 0.6% as of 7:30 a.m. in New York, while S&P 500 futures rose 0.5%; more importantly spoos were back above the critical and closely watched medium-term CTA trigger of 3976. Treasury yields were little changed, with the 10-year rate just below 3.5%. The Bloomberg dollar index dropped.
VIX futures climbed to 22.75 this morning, a warning to those who are comfortably long equities. While the NYS Master Cycle may find completion on or near December 12, the VIX Master Cycle may be complete on December 19. Master Cycle normally land at an important inflection point. The Head & Shoulder neckline at 40.00 appears to fit the mold.
Investing.com observes, “If growth deteriorates too quickly or goes too far, then “bad news is bad news indeed,” JP Morgan Chase said. Professional investors are betting that a recession can be avoided, despite warnings to the contrary. It’s a risky bet — for several reasons, Goldman Sachs says in its analysis.
Fund managers prefer financially sensitive stocks, such as industrial companies and commodity producers, according to a Goldman Sachs study of the placement of Mutual funds and Hedge funds with assets totaling nearly $5 trillion.”
TNX made its extended Master Cycle low on December 7, day 281. I inserted a small parabola to show the 21-day extension, since the Cycle appeared structurally complete on November 16. This was no ordinary extension and implies that big players were involved.
TNX has risen from its December 7 low and above the trendline at 34.50. Today may show trending strength as yields rise.
ZeroHedge reports, “Having fallen for four straight months, the year-over-year change in Producer Prices was expected to continue to slow in November to +7.2% (from +8.0% in October) with a 0.2% increase MoM. However,m the headline printed hotter than expected (+0.3% MoM) – the highest since June. This left the YoY PPI at +7.4%, the lowest since May 2021…
USD futures pulled back from the 200-day Moving Average at 105.43 in the morning session. USD futures are in a no-man’s zone and are due for a potential reversal early next week, if not sooner. It may target the lower trading channel trendline before a sustained rally begins.