December 1, 2023

2:30 pm

SPX may have hit its final resistance at 4600.00 that I had announced on Monday.  Let’s see if it sparks a reversal.  Another interesting point.  At 1:00 pm today the SPX concluded exactly 31.42 market days (PI = 3.1416) from the October 13 high.   In fact, 7 of the 10 reversals this year were at PI intervals.

 

2:15 pm

BKX is finally reaching its Cycle Top at 88.57 this afternoon, on day 252 of its Master Cycle.  Something is afoot here, since the Cycles Model calls for a possible massive panic decline starting this weekend, or possibly today.  Don’t let this fool you,  There are numerous indicators pointing to some event-driven decline starting this weekend.  Note: this may be a global event.

ZeroHedge reports, “Money-market funds saw a massive $102BN inflow last week (the largest since the middle of the SVB crisis in March). The fifth straight week of inflows pushed total MM fund assets to a new record high of $5.84 TN…”

 

ZeroHedge further sates, “Unrealized losses on securities held by US banks exploded by 22% in the third quarter.

Of course, unrealized losses don’t really matter — until they do.

This is yet more evidence that the financial crisis that kicked off last March continues to bubble under the surface.

Unrealized losses, primarily on US Treasuries and mortgage-backed securities rose by $126 billion in Q3 and now total $684 billion, according to the FDIC’s quarterly bank data release.”

 

8:00 am

Good Morning!

NDX futures rose to Short-term resistance at 15986.00 (not shown) this morning before pulling back.  Critical support is at 15745.00, which indicates an aggressive sell zone.  Wednesday’s peak at 16166.50 may have fulfilled all the requirements for a completed Master Cycle at day 261.

Today’s options chain shows Maximum investor pain at 15950.00.  Long gamma starts at 16000.00 while short gamma begins at 15950.00.

ZeroHedge remarks, “A significant miss in the November manufacturing ISM, released later today, leaves stocks open to downside, as overboughtness and less favorable liquidity conditions meet hard-landing fears.

The US manufacturing ISM is one of the most consequential pieces of macro-economic data for markets.

It is the single largest explanatory factor for the performance of global stock markets, it is leading, and it is minimally revised. Last month it surprised to the downside, coming in at 46.7 versus 49 expected.”

 

SPX futures rose to 4578.00 in the overnight session, then declined back into the red.  Critical support lies at 4489.00, where an aggressive sell signal lies.  Wednesday’s high remains as the probable end of the rising Master Cycle.  Should that be true, the new Master Cycle may decline until mid-January.  The Cycles Model indicates a triple whammy of (downside) strength beginning this weekend, possibly today.

Today’s options chain shows  Max Pain at 4555.00.  Long gamma may begin at 4570.00 while short gamma lies at 4550.00.

ZeroHedge reports, “US futures reversed some of Thursday’s gains to start the final month of the year after a blowout performance in November, as European stocks gained, and Asia stuttered. US Treasuries and the dollar posted small moves before comments from Fed Chair Jerome Powell at 11am ET that may offer clues on the path of interest rates. Oil rebounded after OPEC+ promised further output cuts but was hazy on details. Israel resumed fighting against Hamas in the Gaza Strip after a weeklong truce ended: Israel’s army said Hamas violated the cease-fire terms by firing toward its territory. Bitcoin soared to its highest price so far this year. Base metals are rallying after the strong China Caixin Mfg. PMI results (50.7 s. 49.6 survey vs. 49.5 prior). Today, we get the November ISM-Mfg. at 10am ET (exp. 47.9, last 46.7) and hear from Powell at a “fireside chat” at Spelman College in Atlanta on Friday at 11am ET ahead of Fed’s blackout period. Focus for Powell events is whether he’ll back dovish comments earlier this week by Fed Governor Waller, which spurred a rally across front-end of the Treasuries curve.”

 

VIX futures are consolidating near the bottom of its trading range.  Last Friday’s Master Cycle low gave warning that the trend is about to change.  Those who follow the VIX realize that downside risk is now minimal.  The change in trend is confirmed above Wednesday’s high at 14.30.

The December 6 options chain shows Max Pain at 14.50.  While short gamma rules between 12.50 to 14.00, long gamma takes over at 15.00.  There’s not a lot of conviction on the long side, but that is how reversals happen at tops and bottoms.

ZeroHedge observes, “VVIX squeezing

The VVIX squeeze we outlined last week continues. The gap vs VIX is huge. Last time the VVIX was here, VIX was at 19 ish…”

 

TNX is pulling back from yesterday’s high at 43.52.  Support lies near 43.00, while a breakout above 13.52-43.75 offers an aggressive buy signal.  Trending strength returns early next week, giving TNX a boost higher.

ZeroHedge remarks, “Remember, remember, the surge of November…

Global bond and stock markets added over $11 trillion in capitalization in November. That is the second biggest monthly gain in history (Nov 2020 added $12.5 trillion)…

Source: Bloomberg

Who could have seen that coming?”

 

 

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