December 21, 2023

7:45 am

Good Morning!

NDX futures bounced to a morning high (thus far) of 16689.60, short of the Cycle Top resistance of 16751.05.  The Cycle Top is now critical resistance to the rally.  There is a rising trendline near 16450.00 that, once broken, confirms the aggressive sell signal.

Today’s options chain shows Max Pain at 16575.00.  Long gamma may start at 16590.00 while short gamma may begin at 16570.00 .  Short gamma dominated the options chain this morning.

ZeroHedge observes, “1 – SPX – the short term view

The trend channel that has been in place since October lows remains intact. Note that we never tried the upper part of the steep channel. Short term supports are: 4750, 4720 and then the bigger 4700. Resistance is the 4850:ish area.

Source: Refinitiv

2 – NASDAQ levels to watch

NASDAQ’s steep trend channel remains intact, although yesterday’s bearish candle isn’t looking great. Resistance around the 17100 area. Supports: lower area of the channel around 16700 and then the 16400 ish area, right where the 21 day comes in.”

 

 

SPX futures have risen from 4701.90 to 4727.60, short of the 1987 trendline near 4745.00.  Yesterday’s move is called a Key Reversal, a highly recognized reversal signal. The trendline provides maximum resistance  while the Cycle Top support and rising trendline near 4700.00 provide confirmation of the new trend at their crossing.  The Cycles Model suggests a decline in the making to mid-January with a possible outright panic starting the second week of January.

Today’s options chain reveals Max Pain at 4720.00.  Long gamma may start at 4725.00 while short gamma begins at 4710.00.  However, the entire entire options chain is sorely contested.

ZeroHedge reports, “One of the ironic consequences of yesterday’s sharp, 0DTE-driven 1.5% selloff which was the biggest for the S&P since Sept 26 and which snapped a 9-day winning streak, is that with the market hitting the most overbought level in years earlier in the day, the liquidation reset the Relative Strength Indicator of the S&P back below 70, and thus no longer in overbought territory, which paradoxically has made a gradual year-end meltup even more likely once traders realize that nothing substantial has changed, the Fed has still pivoted dovish and that much of the technical overhang that prevented a move even higher may now be gone.”

 

VIX futures declined to 13.24 this morning, after exceeding a Intermediate resistance at 13.41.  This event may be used as an aggressive buy signal.  The signal becomes a confirmed buy above the 50-day Moving Average at 15.24.  The Cycles Model suggests the rally may continue to the third week of January.

Wednesday’s options chain shows Max Pain at 13.50.  Short gamma has shrunken to a single cluster at 12.50.  Long gamma begins at 15.00 and stays strong to 20.00.  We may see speculators fill in the long gamma to much higher levels.

 

TNX futures continue to drift lower, to 38.30 thus far.  The Cycles Model suggests that the reversal window is open but there may be another week of sideways-to-lower prices.  A possible target for this decline may be 33.00, suggesting a higher degree Wave [4] may be in progress.  Should that be the case, Wave [5] may be a monster blow-off with a possible target of 68.00 in the first half of 2024.

 

USD futures have declined to a morning low of 101.46.  The Cycles Model suggests another week of decline, possibly to the Cycle Bottom at 99.83.  Today is day 251 of the  current Master Cycle.

 

 

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One Response to December 21, 2023

  1. Its like you read my mind You appear to know a lot about this like you wrote the book in it or something I think that you could do with some pics to drive the message home a little bit but instead of that this is fantastic blog An excellent read I will certainly be back

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