January 4, 2024

11:33 am

SPX may be at the end of a less-than Fibonacci retracement at 30.1%, a very weak rebound from this morning’s new low.  We may see the decline resume with strength within the hour.

 

 

7:45 am

Good Morning!

NDX futures have continued to decline to 16340.10 this morning.  It is due for a short-term bounce that may be complete by the end of the day.  The bounce target may be short-term resistance at 16608.00.    However, should NDX continue to decline beneath Intermediate support at 16268.10, the decline may resume uninterrupted.

Today’s options chain shows Max Pain at 16425.00.  Long gamma may begin at 15450.00, but without much conviction to 16475.00 to 16500.00.  Short gamma starts at 16410.00 an remains strong beneath it.

ZeroHedge remarks, “Hard to get excited

JPM’s positioning intelligence team, who nailed the melt up, summing up the view here: “… it’s hard to be excited about the market in the near-term from a positioning standpoint, given how much has changed in the past ~2 months.”

Lot of longs

Positioning is elevated.”

 

 

SPX futures are hovering near the low end of yesterday’s trading range.  Normally SPX would have bounced to 4750.00 today.  Instead, the bounce may have truncated at 4729.29 and the decline appears to have resumed to the close.  A gap down at the open may suggest a panic decline may be underway.  If so, the next support may be the 50-day Moving Average at 4511.13.  For most investors, the uptrend is still not broken.

Today’s options chain shows Max Pain (for investors) at 4705.00. Long gamma begins above 4710.00 while short gamma starts beneath 4700.00.  The options market may easily go out of control.

ZeroHedge reports, “After the worst start start to the year in almost two decades – it was just the third time in history that the Nasdaq started the year with back to back 1%+ declines (the other two years were 1980 and 2005) – markets took a breather on Thursday, with US equity futures posting small gains even as they remained toward the bottom of Wednesday session range. As of 7:50am, S&P futures gained 0.1% after swinging between modest gains and losses and supported by the Dec 20 0DTE flash crash lows, while Nasdaq futures were down 0.1%; Treasury yields resumed their ascent, edging closer to 4%, and last trading at 3.95% as part of a bear steepening, potentially a delayed reaction to the higher-for-long message from the Fed. The dollar is higher and the USDJPY is surging to the highest since mid-December, rising above 144, just as everyone was convinced the pair would tumble to 130 next. Commodities are also stronger led by Energy. Today’s macro data focus is on ADP, Jobless Claims, and Job Cuts all ahead of tomorrow’s Nonfarm payrolls which should help shape the macro narrative as we are about to enter Q1 earnings season.”

 

 

VIX futures remain flat, but at yesterday’s session high.  A breakout above yesterday’s high and the 50-day Moving Average at 14.22 produces a confirmed buy signal.  The target for this rally may be the March 2023 high at 30.81.

The January 10 options expiration shows Max Pain at 13.50.  There is little short gamma.  Long gamma begins at 17.00 and runs to 24.00.

 

TNX may be resuming its rally toward the 200-day Moving Average at 40.42.  A confirmed buy signal awaits above that level.  Mid-Cycle support/resistance lies at 40.90.  Above those resistances it may be clear that the decline has ended.

ZeroHedge remarks, “Today we get to see the cherry-picked highlights from The Fed’s ‘Great Pivoting’ in December.

 

Will they admit what we all think happened? Of course not

Since the ‘dovish’ flip-flop at the last FOMC meeting on December 13th, markets have mimicked ‘the QE trade’ – dollar down, everything else up (led by crypto)…”

Source: Bloomberg

 

USD futures have slowed their ascent at they approach Intermediate resistance at 102.75.  A pullback near 101.50 may be in order here before the advance resumes.  A good time to accumulate USD shares/futures.  We may continue to see predictions of the Dollar’s demise until it becomes painfully evident that USD is about to become stronger.

 

 

 

 

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