BKX has declined beneath its Cycle Top support at 94.77. Further confirmation lies beneath Intermediate support at 91.61. The Cycles Model calls for an intensification of the decline beginning next week, so a prompt reaction may be necessary for longs. This is a dangerous juncture for bank stocks.
SPX finally exceeded its December 28 high, as indicated this morning and may have reversed beneath critical support at 4775.00 (Cycle Top) and 4770.00 (1987 trendline). It may spend the rest of the morning testing those support/resistance areas, but the final decision of the day may be after 1:30 when the results of the 30-year Treasury Auction are released. Current structure may allow a possible test of the 4818.62 high.
ZeroHedge gives analysis, “Just as we predicted in our CPI preview, where we said that “a hawkish print is more likely than a dovish print”, moments ago the BLS reported that both headline and core inflation came in slightly hotter than expected in December, driven as usual by shelter inflation (food prices hit an all time high but that was expected) which not only accounted for more than half of the “all items” increase, but was also the largest factor in the monthly increase for core items.
That was not a surprise; what was is that according to the BLS, the used car CPI index rose 0.5% after rising 1.6% in November, even though the much more accurate Manheim index has tumbled to the lowest level in three years.”
NDX futures reached a morning high of 16903.80 on day 260 of the (current) Master Cycle. The peak on December 28 is currently being marked as the top. There are likely only two days left to make the new all-time-high. The current formation may be a “shadow high” that may fail the new ATH.
Today’s options chain shows Maximum Investor Pain at 16780.00. Long gamma starts at 16800.00 while short gamma may begin at 16750.00.
ZeroHedge remarks, “Decoupling
NASDAQ’s rates obsession has been strong since the summer. Note the latest gap becoming rather short term wide.
The power of the doji
On Sunday we pointed out the rare doji in SPX. We wrote: “SPX put in a big rare doji candle on Friday. It could be a possible exhaustion signal post the latest sell off, but we need confirmation candles”. The market has squeezed rather hard since then. 4850 is the big short term resistance to watch.”
SPX futures have hit an overnight high of 4802.70, testing round number resistance on day 260 of the Master Cycle. The high made on December 28 may have been surpassed. Critical support of both the 1987 trendline and the Cycle Top remain at 4770.00. The next question is, can it exceed its all-time high at 4818.62 in the next couple of days? Decision making on rates may have been turned over to Yellen. Today’s 30-year Treasury auction and this morning’s CPI may tell us whether that move was a wise one.
Today’s options chain shows Maximum Investor Pain at 4770.00. Long gamma has it above 4775.00 while short gamma may begin at 4755.00.
ZeroHedge reports, “US equity futures tracked European and Asian stocks higher, but were off session highs as investors prepared for inflation data that will help clarify the path for Fed rates. As of 7:50am, S&P 500 futures pointed to small gains of about 0.1% after the gauge wiped out all losses from the start of the year and closed just short of an all-time high set two years ago on the back of the latest gamma squeeze in Mag 7 stocks; nasdaq 100 futures however continued their relentless meltup, and were 0.4% higher. After ramping all day, stocks eased off in the last minutes of trading during Wednesday’s session, after the NY Fed’s incompetent president John Williams said monetary policy is now likely sufficiently tight to guide inflation back to the 2% target, but that more evidence will be needed before any rate cuts emerge. JPM Asset Management, however, thinks Fed rate cuts could top current forecasts. Cryptocurrency stocks extended an advance in premarket trading after regulators approved exchange-traded funds that invest directly in Bitcoin, which jumped but it was ether that soared higher as the market attention now turns to frontrunning it ahead of its own ETF approval in a few months. US Treasuries climbed, with the yield on the 10-year benchmark dipping below 4%. Oil prices jumped after an oil tanker was boarded by Iranian military off the coast of Oman. WTI rises 1.6% to trade near $72.50 while Brent is above $78 a barrel.”
VIX futures continue to consolidate at the lows. Today is day 255 of the current Master Cycle. Support lies at 12.36 in a probable flat correction.
Next Wednesday’s (January 17) options chain shows Maximum Investor Pain at 15.00. Short gamma rules from 12.00 to 14.00. Long gamma begins at 16.00 and runs hot to 47.50.
TNX had been declining to 39.37 when the CPI was released this morning, prompting a sharp reversal back toward the 200-day Moving Average at 40.56. There is a buy signal above the 200-day which may be confirmed above the neckline at 41.00.
ZeroHedge reports, “Headline Consumer Price Inflation printed hotter than expected in December, +0.3% MoM vs +0.2% exp and +0.1% prior, pushing the YoY headline CPI up to +3.4% (from +3.1% prior and hotter than the +3.2% exp)…”