10:40 am
BKX is testing its upper trendline at 131.00 for support. Should it hold, the banking index may bounce to its Cycle Top at 135.05 by year-end. However, a break of the trendline may bring BKX considerably lower by year-end.
8:00 am The Lord’s Prayer
Our Father, who art in heaven, hallowed be thy name. Thy Kingdom come, Thy Will be done, on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. Amen.
Good Morning!
SPX futures rose to 6066.10 this morning, bouncing off Short-term support at 6029.00. SPX has gone sideways since it made its all-time high on December 6. While corporate analysts project a new all-time earnings record for 2025, their estimates may be as much as 30% off their actual mark. Current indications are the economy is slowing, raising the risk of an earnings slowdown that may leave investors high and dry. The Cycles Model is not based on corporate earnings, but on human behavior. A note of caution is in the air. telling us that, after 4.3 months of nonstop growth, the chance of error is rising. What can possibly go wrong? This week may bring clarity as the Cycles Model calls for a decline.
Today’s options chain shows Max Pain at 6050.00. Long gamma may begin above 6075.00 while short gamma lurks beneath 6040.00.
ZeroHedge reports, “The last full week of 2024 started off with a burst of US exceptionalism which helped US equity futures shrug off downbeat performances in other global markets as traders prepared for a slate of interest-rate decisions by major central banks due later this week. S&P and Nasdaq futures both traded at record high, as did Bitcoin which hit a fresh all-time high of $106,000. As of 8:00am ET, S&P futures were 0.3% higher and Nasdaq futures gained 0.5% as the panic chase of momentum, which pushed the index at an all-time high on Friday, continued. MicroStrategy advanced more than 6% in premarket trading, fueled by its pending inclusion in the index following the software maker’s transformation into a leveraged bet on Bitcoin. Monday’s US stock performance stands in stark contrast with broad losses in Asia and Europe as weaker-than-expected retail data in China weighed on sentiment. A contraction in the euro-area’s private sector also dragged on European equities. Treasuries climb, pushing US 10-year yields down 2 bps to 4.38%. The Bloomberg Dollar Spot Index falls 0.1%. Oil dipped with WTI falling 0.9% to $70.60 a barrel. Today’s key macro events are the Empire Fed Manfuacturing index and S&P Global PMI prints for the US.”
VIX futures have risen to a weekend high at 14.40, above the 50-day Moving Average at 14.23. This gives the VIX buy signal. The Cycles Model called the Master Cycle low on December 6. Since then its has risen to the 50-day, but not exceeded it until this morning. While VIX has been consolidating until now near its floor, the VIX Volatility (VVIX) has been steadily rising, suggesting internal turmoil. At the same time, speculators have been running big shorts on the VIX. They are chasing nickels on the downside while the real dollars may be on the upside.
Wednesday’s options chain shows Max Pain at 17.50. Short gamma is heavily lodged between 13.00 to 17.00. Long gamma may begin above 118 and is attracting large positions up to 60.00.
NDX futures have reached a marginal new high (above Friday’s high at 21886.74), reaching 21896.60 this morning. NDX has been finding support at its Cycle Top at 221607.98 thus far. This raises the possibility of the NDX continuing its panic momentum until the end of the year. However, note that only 5 companies have been pulling the weight of the NDX.
RealInvestmentAdvice observes, “Understanding the trajectory of corporate earnings is crucial for investors, as these earnings significantly influence stock valuations and market performance. Economic indicators such as Gross Domestic Product (GDP), the Institute for Supply Management (ISM) Manufacturing Index, and the Chicago Fed National Activity Index (CFNAI) provide valuable insights into the economic environment that shapes company profitability. These indicators can also help investors evaluate whether Wall Street’s earnings estimates are realistic.”
Bitcoin has exceeded its December 6 all-time high this morning. It is now sporting a double top that may extend over the next week. Since Bitcoin is an international speculator’s haven, it may be indicative to money exiting other countries as well as a touch of speculative fever domestically. Please note the charts below. Speculative fever may take Bitcoin to 110000.00 to 112000.00.
12:30 pm
ZeroHedge remarks, “Bitcoin’s price rallied almost 5% over the weekend to set a new all-time high above $106,000 amid speculation that it may become a United States reserve asset.
CK Zheng, chief investment officer of ZK Square, told Cointelegraph that Bitcoin has likely entered “Santa Claus mode,” as many investors fear missing out and look to allocate more capital into the asset class.”
2:20 pm
ZeroHedge explains, “Last October, when we pointed out that China’s FX outflows had just hit a whopping $75BN – the single biggest monthly outflow since the 2015 currency devaluation – we concluded that the “unfavorable interest rate spread between China and the US will “likely imply persistent depreciation and outflow pressures in coming months”, or in other words, September’s biggest FX outflow in years is just the beginning, and very soon – in addition to geopolitics and central banks – the world will also be freaking out about the capital flight out of China… not to mention where all those billions in Chinese savings are going and which digital currency the Chinese are using to launder said outflows.”
The Shanghai Composite has fallen beneath its Cycle Top at 3468.22 on Friday. Today is slipped a bit lower as it is on a Cyclical sell signal. The 50-day Moving Average at 3335.12 is a universally recognized support level, implying a sell signal beneath it. Should SSEC fall beneath that level, we may see liquidity moving from China to Bitcoin as a safe haven.
FEZ (ETF of the EuroStoxx 50) decline to 49.59 thus far today, beneath its 50-day Moving Average at 49.92 today. This implies a sell signal may have been recognized by European investors. Europe has no tech sector, so the NDX may be logical choice for European investors. Bitcoin may also be considered a haven.
ZeroHedge reports, “Europe is disintegrating as legacy political regimes are collapsing over across the world.
Just one week after Marine Le Pen precipitated the collapse of the French government, on Monday, Chancellor Olaf Scholz lost a confidence vote in the German Parliament on Monday, a defeat that effectively ended the increasingly unpopular government he has led since 2021 and ushered in elections early next year.
German lawmakers voted to dissolve the existing government by a vote of 394 to 207, with 116 abstaining.”
TNX is consolidating beneath Friday’s high at 44.03, having decline to 43.61 this morning. It may pull back to Intermediate support at 43.13. However, the Cycle Model suggests a burst of trending strength awaits TNX as early as tomorrow. The current Master Cycle continues its upward surge through early January. The next target may be the Cycle Top at 47.53.