BKX is on a bounce – 24.4% thus far. Overhead resistance is at 93.08 which, if attained, would give a 30% retracement. A normal retracement would seek the Cycle Top at 95.49, but the situation is eroding enough to disabuse that target. Should TNX continue its rise, there may be some banks ready to “throw in the towel”.
ZeroHedge cautions, “Money-market fund assets notched their first net weekly outflows in a month, led by declines in government funds as investors reallocated portfolios in the early days of the new year. Total assets dropped $14.1BN to $5.961TN from $5.975TN the week prior, which was a record high…”
NDX futures reached a morning high of 17124.30, but has pulled back from there. Today’s action may be the final probe in an Ending Diagonal formation, a series of zigzags. Should that structure be accurate, the absolute limit on this rally may be 17202.00. However, the Cycle Top resistance is at 17044.66, suggesting any probe above that level may meet maximum resistance.
Today’s (morning) options chain shows 16980.00-16990.00 to offer Maximum Investor Pain. Long gamma may start at 17000.00. Short gamma may begin at 16975.00.
ZeroHedge notes, “Mighty NASDAQ
Futures trading above the range that has been in place since mid December. The latest decoupling from rates is “interesting”.”
SPX futures have risen to 4809.40 thus far this morning. SPX is the last major index to hit an all-time high. While the Cycle Top resistance is at 4795.00, the Ending Diagonal structure allows the SPX to challenge the all-time high at 4818.60. However, This morning’s probe may be the final attempt at the ATH. Today is day 267 in the current Master Cycle. Meanwhile Goldman is warning of a melt-up to follow op-ex. To make matters interesting, Nomura fears a “crash down“.
This morning’s options chain shows Max Pain between 4750.00 and 4800.00, where numerous puts and calls are evenly matched. Long gamma starts at 4800.00 while short gamma may rule beneath 4700.00.
ZeroHedge reports, “After starting off the week with whimper, renewed hopes for a soft Goldilocks landing as well as two consecutive upgrades of Apple have not only reversed the bitter taste from the preceding two downgrades (today the company was added to Evercore ISI’s tactical outperform, following yesterday’s BofA upgrade which fueled the best day for Apple since May), but have also sparked “banging” trader sentiment which pushed US futures higher in premarket trading while lifting the Nasdaq 100 to a recorder high. As of 7:40am, contracts on the Nasdaq 100 climbed about 0.7% after hitting an all time high on Thursday, while S&P 500 futures were up 0.4%. Treasury yields were flat at 4.14% and the dollar dropped after frenetic repricing of the policy outlook earlier in the week. Investors will pay close attention to UMich inflation expectations and Fed speakers today for further cues on the timing and extent of rate cuts. Traders now see the prospect of easing in March at little more than a coin toss, down from almost 80% at the end of last week.”
VIX futures have reached a morning low at 13.60, maintaining above the 50-day Moving Average at 13.27. Trending strength may reappear as early as today and show more vigor next week.
The January 24 Options Chain shows Max Pain at 14.00. Short gamma is in short supply while long gamma stretches from 15.00 to 30.00.
It staggers the imagination that the SPX is challenging new all-time highs while the NYSE Hi-Lo Index shows only 16 more companies making new 52-week highs than 52-week lows. This shows how thin the NYSE is today.
TNX continues its rally above mid-Cycle support and the trendline at 41.09. The 50-day Moving Average is right above it at 41.91. Current activity is already raising alarms and the 50-day is one more hurdle that may dramatically change the outlook on Treasuries.