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 made a morning low at 5905.40 before a mild bounce. It declined beneath the Cycle Top support at 5964.80 yesterday afternoon, giving an aggressive sell signal. The next target may be the short-term support at 5874.00, followed by Intermediate support at 5824.34, beneath which the sell signal becomes confirmed. SPX is deep into short gamma beneath 5950.00. Should it bounce above that level, a reprieve may be at hand. Keep in mind that $1.4 trillion SPX options expire at the open while another $375 billion expire at the close. Investors are overweight on the long side, so yesterday’s announcement by Powell was an unwelcome surprise.
The am options chain shows Max Pain at 5960.00. Long gamma may begin above 5980.00. Short gamma resides beneath 5950.00.
ZeroHedge reports, “US equity futures drop, and global stocks slide after Fed chair Jerome Powell signaled the Federal Reserve was in no rush to cut interest rates, and unease built over the composition of Donald Trump’s cabinet. As of 8:00am ET, S&P futures were down 0.5%, off session lows; and pointing to a second day of declines; Nasdaq 100 futures were down 0.9% with Mag 7 mostly lower: AAPL, MSFT and META are all 1.0% lower. Drugmakers Moderna, Novavax and BioNTech all slid in New York premarket trading after Trump picked vaccine-skeptic RFK Jr, as his Health secretary. Domino’s Pizza Inc. was among the prominent gainers, after Buffett took a small stake in the restaurant chain. Europe’s Stoxx 600 index slipped 0.3%, on track for its fourth weekly drop, with pharma sector among the biggest laggards, while the MSCI Asia Pacific Index climbed as much as 0.7%, snapping a five-day loss. Bond yields are modestly lower, and the USD retreated, trimming its weekly gain, as some market participants took profit before key data later on Friday and ahead of speeches from Federal Reserve policymakers despite Powell’s clearly hawkish comments. Commodities are mixed, with oil flat, reversing an earlier loss of -1.4%; base metals are lower, while precious metals rise.”
The Shanghai Composite fell to a low of 3330.70 today, beneath the Cycle Top at 3361.05. This creates a confirmed sell signal. Supports may be found at 3261.75, 3103.37 and 3029.51 on the way down, causing potential short-term bounces. The Cycles Model informs us that the decline may last another 3-4 weeks, which allows a possible decline to the Cycle Bottom at 2697.97. Shold the Shanghai Composite decline beneath that level, shorts may be banned or trading may be halted.
VIX futures rose to 15.11 this morning, taking short volatility investors by surprise after making a Master Cycle low yesterday at 13.59. on day 258 (bullseye). There may be a buy signal above the mid-Cycle resistance at 15.97. Sophisticated investors may rely on the 50-day Moving Average at 18.43 for their buy signal. Sentiment in the VIX is overwhelmingly bearish. The reversal may inflict maximum pain on these investors.
The November 20 options chain shows Max Pain at 18.00-19.00. Short gamma resides between 13.50 and 17.00. Long gamma may begin above 20.00 and extends to 55.00.
TNX may be consolidating after yesterday’s breakout, but trending strength may come roaring back today, confirming the rally may be far from over. In fact, the Cycles Model suggests the uptrend in yields may last until early January. 5.00% yields may be possible.
ZeroHedge observes, “Prospective homebuyers in Manhattan were sidelined last month as the rate on a 30-year mortgage topped 7%. As a result, rents in the borough rose to three-month highs due to sliding housing affordability.
Bloomberg cited new data from brokerage Douglas Elliman Real Estate and appraiser Miller Samuel that showed the median Manhattan apartment rent climbed 2.4% from a year earlier to $4,295. This was the first annual gain since April.”
Gold futures bounced this morning, leaving yesterday’s low at 2541.50 as a potential Master Cycle terminus on day 251. If correct, the bounce may continue to test the 9-month trendline and 50-day Moving Average at 2662.46 (an approximate 50% retracement). Despite all the wailing about how oversold gold is, there are another 7 days to make a possible deeper low. Those still long may consider lightening their positions at the bounce. Once the retracement is made, gold may resume its decline to the end of the year.
Crude oil futures declined to 67.51 before bouncing to test the neckline of the Head & Shoulders formation at 68.55. The formation has been triggered and the Cycles Model affirms a decline may be in place to the end of the year. The Head & Shoulders target may be realized in that time.