January 24, 2024

3:28 pm

SPX appears to be making a round trip back to the flat line.  Just be aware that the daily Cycle Top is at 4820.00 where an aggressive sell may be made.  We may have just seen the blow-off top that often comes with the end of a trend.  Dealers have now joined hedge funds and CTAs in becoming net short.  Indicators are poised for a reversal.  The “news” lags reality.

ZeroHedge remarks, “The VVIX crash

VVIX at new recent lows.

 

8:15 am

Good Morning!

NDX futures have risen to 17587.50 thus far this morning, on day 273 of the Master Cycle.  It is in throw-over and may be completing its final probe in this series.  Note the Triangle formation ending in October 2023.  It normally precedes the final burst to the top of a series of Waves.  Should this not be the top, an alternate formation is being considered.

Today’s options chain shows Maximum Investor Pain at 17400.00.  Long gamma is scarce.  Short gamma begins at 17350.00.

 

SPX futures are higher, having reached 4894.60 thus far.  4900.00 is expected.  It is day 273 of the current Master Cycle.  It is rare to see a Master Cycle go to 275 days.  There is a proposed limitation on this rally at 4938.00.  If exceeded, the formation jumps to a higher degree.  SPX is in throw-over with the Cycle Top at 4812.82 and the 1987 trendline near 4780.00.  Hedge funds and CTAs are net sellers into this rally.

Today’s op-ex shows Max Pain at 4850.00.  Long gamma may begin at 4860.00 while short gamma starts at 4830.00.

ZeroHedge reports, “After a three-peat of S&P records, stocks were set for 4th all time high as they extended overnight gains after an onslaught of positive earnings from technology companies reinforced the picture of a broadly robust corporate sector, while a “sudden” RRR cut by Beijing sparked hope that the Chinese rout may soon be over. S&P futures rose 0.5%, at 7:50am while Nasdaq 100 futures rose about 0.7%, lifted by a 10% surge in Netflix following blockbuster earnings as well as a rally across chipmakers and other tech firms. Tesla and IBM are due to report later. 10Y yields dropped 2bps to 4.11% while the dollar slid amid a strong rally in the yen which strengthened 0.6% as investors decided Japanese policymakers are gearing up to scrap negative interest rates soon after all. Swaps markets have ramped up bets on a 25 basis-point rate hike in April, following the Bank of Japan meeting on Tuesday.”

 

 

VIX futures are scraping the bottom at 12.47 this morning.  While the SPX Master Cycle is running late, the VIX Master Cycle is running early.  Both Master Cycles have the potential of matching up their top/bottom this week.

Today’s options chain shows Max Pain at 14.00.  Short gamma lies at 13.50 while long gamma begins at 15.00 and runs to 30.00.

 

TNX is in a  correction that may decline to the Intermediate support at 40.17 today.  That action may encourage the longs in the SPX/NDX to a peak frenzy.  However, by the end of the week we may see TNX back above the trendline at 41.00.

 

The Shanghai Composite made a higher low today, finding a potential floor for the time being.  However, having banned short sales (Coming to the US soon), there is little incentive to buy.  The Cycles Model suggests a bounce lasting to early February as high as the 50-day Moving Average at 2957.20 before motivated sellers step back in to the fray.

ZeroHedge observes, “In a move many said was very long overdue, this morning China which has paradoxically waited too long until deflation reigns across the country, said it will cut the required reserve ratio (RRR) by 50bps within two weeks and hinted at more support measures to come, which while coming largely in time with the easing ahead of the lunar new year was an unusually early disclosure that shows mounting urgency across President Xi Jinping’s government to shore up the economy and halt a $6 trillion stock-market rout. The cut was announced unexpectedly by People’s Bank of China Governor Pan Gongsheng during a press conference on Wednesday in Beijing and sends a new signal that officials are eager to curb the stock-market selloff, while also stepping up support for the broader economy.”

 

 

 

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