February 13, 2024

1:30 pm

SPX is hovering above its Ending Diagonal trendline at 4950.00.  It has already declined to 4945.00, indicating a deeper decline to come.  The Daily Cycle top is at 4925.00.  So, an aggressive sell signal may be had between 4925.00 and 4950.00.  Confirmation of the Sell signal comes at the 1987 trendline and Intermediate support at 4846.00.  Loss of that support may trigger a waterfall event.  Analysts are still calling for an even higher blow-off top.

ZeroHedge remarks, “With equities surging higher, the signs of rampant bullishness are percolating. Year-to-date, broad based equity indexes, like the S&P500, are +5.8%, while leading sectors like the SMH (Van Eck Semi ETF) have surged an eye-watering +17.8%.

But, how do you know when the bullishness has gone from a “strong trend” to “exuberance”?”

 

12:21 am

BKX dropped into a confirmed sell signal beneath the 50-day Moving Average at 93.53.  The trap door is now open for business.  The next critical support is at the Cycle Bottom at 70.25.  The current decline may last until the end of February before a bounce.  The decline is likely to be a multiple of the March decline of approximately 34 points.

 

8:20 am

Good Morning!

NDX futures are down to 17734.10 this morning.  Critical support is at the Cycle Top at 17470.72.  Beneath that is an aggressive sell signal.  Further support is at the trendline and Intermediate support at 17128.38, beneath which lies a confirmed sell signal.  Investors are concerned that CPI may come in hotter than expected.

Today’s options chain shows Maximum Investor Pain at 17890.00.  Long gamma is above 17900 while short gamma lies beneath 17875.00.

 

SPX futures are testing round number support at 5000.00.  One may take aggressive steps beneath it.  Further support lies at the Cycle Top and Diagonal Trendline at 4917.47 for an aggressive sell signal.  Confirmation of the sell signal lies at Intermediate support and the 1987 trendline, currently at 4840.05.

Today’s op-ex shows Max Pain at 5030.00. Long gamma begins at 5030.00 while short gamma may begin beneath 5025.00.

ZeroHedge reports, “US equity futures and European bourses slumped before the release of closely watched CPI data that could set the stage for the timing of the Federal Reserve move to interest-rate cuts. Contracts on the Nasdaq 100 slid 0.6% while those on the S&P 500 fell 0.4%, extending Monday’s decline in the main US stock gauge from a high of near 5,050. Nvidia dropped 1% in premarket trading with all Mag 7 stocks down. Bond yields are down 3bps, the dollar fell and bitcoin traded around $50,000, the highest in over two years. Commodities are higher pre-mkt led by both Energy and Metals. CPI is the key macro focus for today but we also receive Small Business Optimism; full CPI preview and scenario analysis is below.”

 

 

VIX futures have risen to 14.14 thus far.  It is on a Cyclical buy signal, which most analysts won’t recognize until it breaks above 15.40.  VIX has been schlepping along the bottom of its historic trading range for two months and may be ready for a violent reaction.

Tomorrow’s op-ex shows Max Pain at 14.50.  Short gamma inhabits the domain between 12.50 and 14.50.  Long gamma begins at 15.00 and may extend as high as 55.00.

ZeroHedge observes, “VIX

Vols catching bids lately. VIX has closed higher once since Jan 18. SPX is up 220 points since then…”

 

 

TNX leaped above mid-Cycle resistance this morning as the CPI numbers gave yields a boost.  Recent buyers of T-bonds and notes have reason to be worried, since the expectation of a tailwind in bonds has just been trashed.  The Cycles Model suggests yields may continue to increase through mid-April.

ZeroHedge remarks, “Expectations were for a big drop in the YoY consumer price index (from +3.4% to +2.9%) but instead it surprised to the upside (just as we warned) with a +3.1% YoY print for headline CPI (spoiling the sub-3% partiers). Consumer prices rose 0.3% MoM (more than the 0.2% exp) but the headline did decline from +3.4% to +3.1% YoY…”

 

 

 

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