January 18, 2024

2:47 pm

The SPX rally was stopped this morning at the Ending Diagonal at 4766. 10.  The afternoon rebound may have hit resistance at the 1987 trendline at 4775.00.  The retracement may have gone sufficiently high enough to allow the decline to resume.  Cycle Top resistance is at 4794.83 as an alternate resistance.  The NDX made a nominal new high (ATH) at 16977.58.  The air is very thin at these heights.

ZeroHedge observes, “Tech leaving rates behind

The short term gap between NASDAQ and the 10 year (inv) is getting rather wide. Is leaving the rates narrative even possible?”

Further commentary from ZeroHedge, “The ‘good news is bad news’ narrative may not be entirely evident in equity index levels (mainly due to rotation), but it is very clear in the shift in rate-cut expectations and concomitant to that, in equity risk hedge demand.

Source: Bloomberg

As Nomura’s Charlie McElligott highlights:

“Incrementally hawkish” data and “less dovish” Fed rhetoric means that the “deep rate-cuts / hard-landing”-tail is losing delta rapidly.”

 

8:00 am

Good Morning!

NDX futures have risen to 16897.00 thus far this morning.  Whether it is threatening a new high is uncertain, since a Wave 2 may rise up to, but not exceed the December 28 high at 16969.20.  The current structure may not support a new high.

Today’s options chain shows Maximum Investor Pain at 16790.00.  Long gamma may begin at 16800.00 while short gamma starts at 16780.00.  This morning’s bounce has all the earmarks of dealer collusion to raise NDX out of short gamma as it approaches monthly options expiration on Friday.

ZeroHedge remarks, “Over the last three decades, the growth of tech companies has driven a shift in the ranking of the most valuable companies in the United States.

In this graphic, Visual Capitalist’s Marcus Lu and Bruno Venditti utilize data from the American Business History Center to present the history of America’s most valuable public company from 1995 to 2023. Valuations are for March 31 of that year, and are not adjusted for inflation.

 

 

SPX futures are on a bounce to 4762.40 thus far.  The 1987 trendline provides resistance at 4775.00 while the Cycle Top resistance is at 4790.00.  This morning’s action may prove to be a close call.

Today’s option chain shows Max Pain at 4730.00.  Long gamma may begin at 4745.00 while short gamma may start at 4725.00.

ZeroHedge reports, “Global stocks and US futures rebounded from three days of losses, and climbed on Thursday as JPM suggests a relief rally may be starting as traders turn their attention to corporate news after conceding that rate cuts may be delayed beyond the first quarter. As of 8:10am, S&P futures rose 0.4% while Nasdaq 100 contracts gained 0.8%. A positive earnings report from Taiwan semiconductor giant TSMC is boosting AMD and NVDA. Europe’s Stoxx Europe 600 index edged higher, having slumped almost 2% in the first three days of the week. China’s benchmark CSI 300 Index advanced 1.4% as a surge in ETF trading pointed toward state funds’ involvement to reverse an earlier rout. The dollar is flat while 10Y yields dipped by 1basis point to 4.09%. Heightened military action in the Middle East is pushing WTI up less than 1% with natgas appearing to react more to the cold snap in the US. Metals are weaker and Ags are rallying. Today’s macro data focus in primarily housing data plus weekly jobless data.”

 

 

VIX futures have pulled back from their new high to a morning low at 13.89.  The Cycles Model has suggested that trending strength may continue, so this may be a volatile day for the VIX and possibly the SPX.  VIX remains on a buy signal.

The January 24 op-ex shows Max Pain at a contested 14.00.  Long gamma may begin at 15.00 and currently extends to 30.00.

 

TNX rose to 41.32 this morning as trending strength continues to influence rates.  Should TNX maintain its elevation above the trendline at 41.00, TNX may experience a multi-month rally, especially above t.

 

 

 

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