3:33 pm
SPX has declined beneath the daily Cycle Top (not shown) at 5964.60, putting it on an aggressive sell signal. An aggressive sell at this point suggests lightening the long positions. There is still a chance of a blow-back to a new high, but it may be diminishing, as fatigue is setting in.
8:00 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 remain trapped between the upper trendline of the 3-month trading channel at 6020.00 and the Cycle Top support (thus far) at 5957.07. SPX has meandered sideways for the past 3 days since its all-time high and is due for a change in routine by the end of this week. It is day 251 in the Master Cycle, putting it within a possible week of staging a reversal, if not already. The upper boundary of the trendline may allow another high near 6020.00-6025.00 (with an outside possibility of reaching 6100.00) while a decline beneath the Cycle top at 5957.00 may offer an aggressive sell signal. Once the decline has begun, it may last through the end of the year.
Today’s options chain shows Max Pain at 5995.00. Long gamma may begin at 6000.00 while short gamma resides beneath 5990.00. A very tight set of parameters.
ZeroHedge reports, “US equity futures have reversed the weakness of the prior two days and are higher, led by small caps as bond yields stabilize after the recent rout sent the 10Y yield to 4.45%. As of 8:00am ET, S&P and Nasdaq futures are up 0.1%, as investors wait to see if upcoming price data and a speech from Jerome Powell will boost expectations for a December interest-rate cut. Mag7 stocks mixed, but Semis have caught a bid after falling 6.3% over the last four sessions: as JPM puts it the pair trade of long Software vs. short Semis is +14.5% over the last 5 sessions. Treasury yields ticked lower, after Wednesday’s CPI data kept alive the hope of a December rate cut; however, Trump trades keep on trucking and the dollar index extended its rally on track for its 7th consecutive weekly gain and the strongest gain since April 2022 while Bitcoin traded at about $91,000, holding close to Wednesday’s record high. Commodities are lower but WTI is flat despite an IEA report of a more than 1 million barrel oversupply in 2025, driven by weaker Chinese demand. Today’s macro focus is on Jobless data and PPI, the latter to seek confirmation of CPI trends from yesterday. There are four Fed speakers today, including Jerome Powell himself.”
VIX futures rose to 14.21 this morning as its reverses out of its Master Cycle low at 13.77 on day 252 of its Master Cycle. The unmistakable Triangle tail is a very long one, leading to some confusion about VIX continuing its decline to the end of the year. On the contrary. The new Master Cycle anticipates higher values through early February. I double checked the Model and can find no alternative.
The November 20 options chain shows Max Pain at 18.00. There is massive short gamma between 13.00 and 17.00. Long gamma is also building massively from 20.00 to 55.00.
TNX futures rose to a morning high at 44.88 before the cash market opened at 44.83. In either event, TNX made a new Cycle high and shows the likelihood of going much higher. The Cycles Model shows that strength may increase by the end of the week and the trend may continue until early January. Not only is there higher inflation in the air, but Yellen has put her thumb on the scale to keep duration and yields of treasuries low in 2024. That is due to change dramatically over the next two months.
ZeroHedge observes, “After yesterday’s in line – but really cooler than whispered – CPI which restored hope in a December rate cut, all eyes are on this morning’s PPI print to boost dovish hopes that the Fed’s easing cycle would remain on track. It was not meant to be, however, as the PPI came in hotter than expected across the board on both a monthly and annual basis.
Starting at the top, headline PPI rose 0.2% MoM (in line with the +0.2% expected) but September was revised higher from 0.0% to 0.1%; meanwhile on an annual basis, headline PPI rose 2.4%, higher than the 2.3% expected, with the last month also revised higher from 1.8% to 1.9%”
The Shanghai Composite Index declined strongly to 3376.15 today, closing just above its Cycle Top support at 3357.02. The Cycles Model suggests a surge in trending strength tomorrow, indicating a possible breakdown and sell signal. The decline may continue through the first week in December.