SPX futures consolidated between 4752.00 and 4766.00 this morning. The markets are thinly traded and large institutions seem to be absent from the scene. The Cycles Model shows the SPX being calm for the balance of the year, but the VIX shows otherwise.
Today’s options chain shows 4750.00 to be a highly contested layer for both puts and calls. Long gamma may begin at 4760.00 while short gamma may start at 4735.00.
ZeroHedge reports, “The Santa rally grinds on, with US equity futures edging modestly higher in very thin volumes while interest yields were flat as trading resumed after the Christmas holiday amid growing expectations for earlier and deep interest rate cuts next year which supposedly will prevent a recession from materializing. As of 8:00am, S&P futures rose 0.1% while Nasdaq 100 futs gained 0.2%. Most European markets are closed, while Asian stocks are mixed in a thin trading session with markets including Hong Kong, New Zealand and Australia also shut. The dollar was little changed while bitcoin slumped during its now traditional Asian session meltdown.”
VIX futures are trading near the upper end of Friday’s trading range. The Cycles Model shows a double dose of trending strength appearing today. It also shows that a rally may persist through the third week of January. VIX has made a basic breakout, giving it an aggressive buy signal. Confirmation comes above the 509-day Moving Average a15.12.
Tomorrow’s options chain shows Max Pain at 13.50. Short gamma dwells at 13.00 while long gamma begins at 15.00 and runs to 24.00. The perception is a quiet market ahead.
ZeroHedge remarks, “Santa rally happening right now
The “Santa Rally” is the period of time including the last 5 trading days of the year followed by the first two in January. The S&P 500 has rallied during this period of time each of the last 7 years and 79% of the time since 1950.”
TNX is hovering near its Friday close after making a possible early Master Cycle low on Thursday. This low may be challenged for another week or so. Therefore there is no signal at the present. January may prove to be a choppy time for bonds. The long view is that yields are going much higher than anyone expects. It won’t be long before that becomes evident.
ZeroHedge remarks, “A few days ago we had some fun at the expense of the Fed’s technocrats, when we concluded that “inflation had been defeated”…
… by looking at the roundtrip in CPI inflation from 1972 to 1976. Of course, inflation was anything but defeated as everyone knows what happened in the late 1970s and early 1980s, and how Paul Volcker just barely managed to put the inflation genie back in the bottle, and certainly not before hiking rates to 20%.”
USD futures are probing the low, reaching 101.21 this morning. It may be likely that USD reached its Cycle Bottom at 99.80 by the end of the week. The Cycles Model suggests that January may show a rising USD lasting rough the end of February.
ZeroHedge observes, “China’s yuan has overtaken the Japanese yen to become the fourth-most used currency by value in global payments for the first time in almost two years, according to a monthly tracker of the Chinese currency released by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The share of the yuan as a global payment currency climbed to 4.61% in November from 3.6% the previous month, according to data compiled by SWIFT and released on Thursday. According to Caixin, the redback surpassed the Japanese yen, whose share came in at 3.41% in November, down from 3.91% the month before.”
Crude oil futures rose this morning to 75.71, crossing Intermediate resistance at 74.49 and making a confirmed buy signal. The buy signal may persist until early February. There may be resistance at the 50-day at 78.18, but once above it, crude may rise to the neckline of the Head & Shoulders or higher by February.
Gold futures are consolidating above the Cycle Top support at 2065.00. Today is day 257 of the Cycles Model. We may be anticipating a decline beneath the Cycle Top, setting off a sell signal for gold. There may be a strong decline to the middle of January, according to the Cycles Model.