NDX futures slid beneath 16000.00, declining to 15975.00. Today is day 253 in the Master Cycle, leaving an approximate week of possible gains in the rally. The Cycles Model suggests that, should the rally use this time, it may rise to 17000.00. However, the Cyclical turn may happen at any time.
There are several reasons for this possibility:
First, it has bounced above the 1987 trendline in 2020 and in 2022. The trendline gives support until it is broken. The SPX only briefly broke above the trendline in 2021 and then fell back beneath it in April 2022. The trendline acted as resistance in July 2023 for the SPX. It hasn’t risen above it since. That explains the relative strength of the NDX and its outperformance VS. the NDX.
Second, the relative strength has been concentrated only among the seven largest Tech companies. This gives even more outstanding performance among those seven.
Third, the size of these formations are at a Cycle and Super Cycle Degree, measured in years. For example, Super Cycle Wave (b) is approaching 21.5 years old and is due for a change. Cycle Wave c now measures 13.5 years. It is now due for a 4-year decline These are known as secular Waves, not Cyclical Waves, because they are so large and last so long. Compare that to the commonly used Trading Cycle, which only lasts 60 days.
Today’s options chain shows long gamma is fading. Short gamma begins at 16050.00.
ZeroHedge comments, “Tech needs to take out this high
We are kicking the tyres on tech post the 2-year anniversay of the ATH. To really celebrate we would want to take out this ulitmate level below. February 2000…..we are coming for you.
We are going to need a bigger word
Magnificent is not doing this group justice.
• Mag 7: +105%
• S&P 500: +19%”
SPX futures have declined to a morning low at 4534.60. Michael Hartnett called the bottom accurately and now he suggests “fading 4550.00”. SPX may linger near the top for the rest of the week, but there are no guarantees that it will stay there.
Today’s options chain shows Max Pain at 4540.00. Long gamma may begin at 4560.00, while short gamma starts strongly at 4530.00. Based on the options market, the SPX may not be capable of further rally should it decline beneath 4500.00.
VIX futures are testing yesterday’s trading high at 13.69. The decline may be complete, or nearly so. There is a tendency for the VIX to reverse in advance of the SPX, so should tat event happen, you will be informed. The Cycles Model suggests that, once the rally is underway, it may last until mid-January.
Tomorrow’s options chain shows virtually no short gamma. Long gamma explodes on the scene at 14.00 and extends to 30.00.
TNX is riding the trendline near 44.00 this morning. The decline appears complete at day 250 in the Master Cycle. We may see TNX linger at the trendline for a few more days. This weekend may be the the turning point for all indices.
ZeroHedge reports. “We knew that going into this week’s holiday-shortened week liquidity would be challenging; but nobody expected it to be this bad: moments ago the Treasury sold 20Y bonds in a solid auction with decent bidside demand, and while this was a far cry from the recent “catastrophic” 30Y auction, the market reaction was as if the Fed has resumed QE, with yields tumbling across the board and stocks suddenly surging to session highs amid a burst of program buying. More on that in a second.
First, the details of the auction: pricing at a high yield of 4.78%, this was not only the first time since March that the yield in the 20Y auction has fallen sequentially, but it was also well below last month’s 5.245%. It also stopped through the When Issued 4.79% by 0.1 basis point, making this the third consecutive stop through in a row.
The Bid to Cover was solid if hardly remarkable: printing at 2.58 it was in line with last month’s 2.59 if below the recent average of 2.67%.”