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 new all-time high at 6069.00 this morning. It has traded above the Cycle Top at 6050.51 and may be challenging the 3-month upper trendline at 6100.00. I have been commenting for several weeks that 6100.00 may be a possible resistance and now it seems likely. What may be the source of the overnight ramps so prevalent for the lst several weeks? The best answer is that European investors are moving their money to the US, prolonging the rally (see the chart below). Time is running out on the current Master Cycle (day 271). It is possible that the new Cycle may decline to the 1987 trendline by the end of the year.
Today’s options chain shows Max Pain at 6045.00. Long gamma lives above 6050.00 while short gamma may dwell beneath 6030.00.
ZeroHedge reports, “Futures are higher following yesterday’s geopolitical events in France and S. Korea – which ironically highlight the stable exceptionalism of the US and its markets. As of 8:00am ET, S&P futures are 0.3% higher, and on pace for a 56th record high in 2024, after closing at the 55th yesterday; Nasdaq futures surge 0.6% boosted by positive earnings from CRM (+13.4% pre-mkt) and MRVL (+13.1% pre-mkt). All of Mag7 are also higher pre-mkt with Semis seeing a bid. The yield curve is twisting steeper with 10Y yield +4bps to 4.26%; the USD is reacting positively and is also higher. The commodity complex is under pressure with crude the outperformer while gold dips. Today’s macro data focus is on Mortgage Applications, ADP and ISM-Services. Fed chair Powell speaks at the Dealbook conference at 1:45pm ET. Shortly after 10am ET, France will hold a no confidence vote that is expected to topple the government of PM Michel Barnier and plunge France into an even deeper crisis.”
The EuroStoxx 50 show a miniscule 26% retracement of its 12.5% decline beginning in October. The political environment is also falling into disarray. For European investors, there is no alternative but the US.
VIX futures hit a new Master Cycle low this morning at 13.05. This is a very long tail (Wave (E)), lengthening the Triangle formation which is already one of the longest sideways formations on record. Today is day 258 of the Master Cycle, matching up precisely with the Model. While this formation may be interpreted as an indication of calm in the markets, it is just the opposite, since it portends an imminent panic rally. Think of the next move as a slingshot about to be released.
The December 11 options chain shows no short gamma, while long gamma may begin at 13.00. This is the ultimate position to begin hedging against a market panic decline.
The Shanghai Composite topped out at 3488.02 may have begun its decline from its Cycle Top resistance at 3415.51 on day 259 of its Master Cycle. The Cycles Model calls for a two-month decline with a minimum target being the Head & Shoulders neckline and Cycle Bottom at 2700.52. Given the time allotted to the new Master Cycle, it may decline beneath the neckline, triggering that formation.
In addition, the Nikkei 225 index may have begun a new Master Cycle decline today.
TNX has risen above its mid-Cycle support/resistance at 42.06, creating a buy signal. This morning it was set back by Intermediate resistance at 42.97, but the Cycles Model calls for strength to return as early as tomorrow, lasting for the next two weeks. Today and tomorrow the US Treasury will be auctioning off $229 billion in treasury notes. These auctions will set the tone for the rest of the month, when notes and bonds come into the market.
Bitcoin is breaking beneath its 17-day Moving Average at 95634.09. While this is a very short-term indicator, bitcoin has failed to make a new high this week. Should it trade above that level, there may be another attempt at the high. The inability to make a new high may be in itself an aggressive sell signal (lighten positions). A more concrete sell signal may come beneath the Cycle Top support at 89928.06.
USD futures are rising again, with an upper range at the Cycle Top at 107.46. The Cycles Model shows no strength here, so the likelihood of an early reversal is present. The ultimate target is generally the mid-Cycle support at 103.95.
Japanese Yen futures may have completed a brief correction today with a low at 66.13. The Cycles Model shows imminent strength, beginning tomorrow and lasting up to two weeks. The Yen carry trade may be challenged mightily should this take place.