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 rose to 5934.70 as it attempted to close the gap left last Friday at 5942.78. It has failed thus far. The fractal may be complete, but with reservations. The Cycles Model suggests that the SPX may be beginning a three-day period of high volatility that may either bring about a new all-time high or a panic decline, depending on which direction it breaks. A look at Wave 3 gives some clues as o the shape of the current fractal. It may allow a final probe higher (above 6100.00)…or a breakdown beneath the 50-day Moving Average at 5777.13. Emotions are extremely high, despite threats of war in Europe.
Today’s options chain shows Max Pain at 5905.00 Long gamma may begin at 5910.00 while short gamma lies beneath 5900.00. This is a very tightly wound spring in both directions.
ZeroHedge reports, “US equity futures are higher as traders hoped earnings from Nvidia after the close would unleash fresh buying momentum and wash away the bitter taste from Target’s catastrophic earnings this morning. As of 8:00am S&P futures rose 0.2% as small caps lagged after Wall Street benchmarks recovered from a bout of volatility following the escalation in Russia’s war against Ukraine; Nasdaq futures also rose 0.2% with Mag 7 stock mixed premarket and led by MSFT (+0.6%) and NVDA (+0.5%). Sentiment was also boosted after Putin said he was open to discussing a ceasefire deal with Trump, but is ruling out any territorial concessions (Moscow would freeze the conflict along the present battlelines) and wants a guarantee that Ukraine won’t join NATO. Bloomberg’s dollar gauge rose 0.3%, rebounding from a three-day drop. The 10-year US Treasury yield climbed three basis points after falling yesterday as investors fled to haven assets. On Commodities, oil and base metals are higher while precious metals are lower; Bitcoin is back to all time highs just around $94,000. All eyes on NVDA earnings after market close. Expectations remain higher with crowding positioning (more in our preview later). JPM’s TMT specialist Josh Meyers says that that “a nice beat seems widely anticipated tomorrow, with expectations for the guide starting at $38b and going up a bit from there”, but Goldman’s trading desk is more cautious warning that all the good news may already be in the priced-to-perfection stock.”
VIX futures are hovering above mid-Cycle support at 16.01. Today’s op-ex has massive positions on either side of 18.00 (Max Pain). A decline beneath the mid-Cycle support may allow the shorts to cash in. Once today’s expiration passes, the downside pressure on VIX may be lightened considerably.
The 10-year Treasury futures have resumed an upward climb. Trending strength may be returning this weekend. The rally may continue through early January. This has all the properties of a very powerful Wave to new highs. The Cycle Top resistance may offer the next test of the strength of this rally.
Bitcoin has resumed its rally to a new all-time high, as mentioned on Monday, when I had estimated the potential target to be 100000.00. Further information reveals a slightly higher estimated target near 100900.00. The Cycles Model suggests a possible week may be left in this uptrend. The reversal may leave a lot of speculators empty-handed, as the decline may be swift and sharp.
The Shanghai Composite Index rose to 3375.25, challenging the Cycle Top at 3374.50. The Cycle Top resisted, sending the Shanghai lower. The Cycles Model now suggests the decline may resume in earnest. It may have the potential to reach the Cycle Bottom at 2702.67 in about 2 weeks.
USD futures declined to 106.07 before reversing course to 106.65 this morning. It has just a few days left to reach its target at 108.00-109.00 and the end of the current Master Cycle. There is an outside possibility that this morning’s low (or a deeper low by the end of the week) may have ended the Master Cycle. We may not be certain until the dust clears from this week.
Crude oil futures hit an overnight high at 69.96, testing the 50-day Moving Average at 70.33. The Cycles Model suggests it may roll over to resume its decline shortly. Be warned that this decline may continue until the year-end. This allows enough time to meet the Head & Shoulders target shown in the chart.
Gold futures rose to 2649.80 this morning as it tests the 50-day Moving Average at trendline at 2666.73. Once the test is complete (failed), the decline may resume toward the Cycle Bottom at 2101.18. A reversal at the 50-day may mark the end of the current Master Cycle, as well.
ZeroHedge reports, “Ukraine’s armed forces fired British cruise missiles at military targets inside Russia for the first time, a Western official familiar with the matter said.
As Bloomberg reports, the strikes using Storm Shadow missiles were approved in response to Russia deploying North Korean troops in its war against Ukraine, a move by Moscow that the UK government considered to be an escalation of the conflict, according to the person who spoke on condition of anonymity because of the sensitivity of the matter.”