10:07 am
BKX may have brought the Cycle Inversion to a close and an early Master Cycle high at 135.50. With that in mind, the trendline support for the throw-over may be found near 128.00, offering an aggressive sell signal. Another aggressive sell signal may be found beneath the Cycle Top near 125.00.
8:15 am 2 Chronicles 7:14
“If my people, which are called by my name, shall humble themselves, and pray, and seek face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sins, and will heal their land.”
Good Morning!
SPX futures declined to 5984.60 after several attempts to overcome the 3-month trendline near 6020.00. Today is day 249 of the current Master Cycle, leaving an approximate week for the reversal. The rally is beginning to lose strength, so the turn may come sooner than expected. A decline beneath the Cycle Top at 5942.00 offers an aggressive sell signal. Confirmation may come beneath Intermediate support at 5803.00. While a sell signal may not have been given at this time, it may be wise to reduce long exposure, since a reversal may be rather abrupt. Investors are exuberant, leaving them vulnerable to a quick dose of reality.
Today’s options chain shows Max Pain at 5985.00. Long gamma may begin at 6000.00 while short gamma may emerge beneath 5970.00.
ZeroHedge reports, “The torrid five-day rally that pushed the S&P 500 to its 51st record close above 6,000 on Monday has finally reversed amid unease over nosebleed equity valuations and the composition of Trump’s incoming cabinet. As of 8:00am, contracts on the S&P 500 and Nasdaq 100 indexes slipped about 0.2% with Mag7 and semiconductors under pressure, while Tesla also dropped in after a post-election surge that lifted its valuation past $1 trillion; healthcare names among the notable gainers. Europe’s Stoxx 600 gauge lost 1% as the rout in Asia continued and the MSCI Asia Pacific Index dropped as much as 1.3%, with chipmakers TSMC and Samsung among the biggest drags. Bond yields are 3-6bps higher as the curve twists flatter; yields are pulling the dollar higher. Commodities are weaker with Energy outperforming. Other Trump trades remained in play, however, with Treasuries falling, the dollar hitting a one-year high and Bitcoin hovering just below $90,000. Today’s macro data focus is on SLOOS, 1-year inflation expectations, and Small Business Optimism, as well as five Fed speakers.”
The Shanghai Composite Index reversed down from the 61.8% Fibonacci retracement level at 3486.98. The world-wide surge in liquidity may have reached its end, with a potential sell signal for the Shanghai at 3344.00.
ZeroHedge observes, “It was almost one year ago, when we first reported that in the third quarter of 2023, China’s foreign direct investment had turned negative for the first time on record. Fast forward to today, when capital flight from China has become relentless as foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth.”
VIX futures consolidated within yesterday’s trading range, although easing higher. A buy signal may be made above the mid-Cycle resistance at 15.98. Should the new Master Cycle be underway, it may last until early December. It may be possible for the VIX rally to extend into February 2025. Is that a portent of trouble ahead?
Tomorrow’s options chain shows Max Pain at 15.00, with no short gamma. Long gamma may begin at 18.00 and extend as far as 50.00.
TNX is rising again, as trending strength returns. The Cycles Model suggests an ongoing, higher trend through the end of the year. Since Yellen has issued short term debt to fund the deficits this year, all of it will come due early next year along with any new deficit spending that may need financing. Potential levels of resistance to the rally are: 53.16, 68.23 and 81.62.
ZeroHedge remarks, “Former Wall Street money manager Ed Dowd is a skillful financial analyst who said in May the economy was skidding. Now, Dowd predicts the economy is poised to “roll over” and soon. “
Gold futures have made an overnight low at 2595.95 and may be bouncing to test the underside of the 50-day Moving Average and the 8.5-month trendline at 2659.48. It is on a confirmed sell signal with a possible decline for another 1-2 weeks. A possible support may be the mid-Cycle support at 2427.44. The next support may be found at 2300.00. Gold has been looked upon as an inflationary hedge. However, it is a better indicator of political instability, especially the prospect of war, which is being dialed back.
ZeroHedge opines, “As economic risks escalate, gold has become a crucial safe-haven asset for investors fearing inflation and even the potential for hyperinflation. ”
Crude oil futures dipped to 67.75 before a mild bounce to test the Head & Shoulders neckline at 68.55. Crude is on a confirmed sell signal beneath the Head & Shoulders neckline. The Cycles Model suggests a continued decline through the end of the year.