10:00
BKX, our liquidity proxy, may have slipped beneath the trendline at 131.00 this morning. If so, the decline may resume, with an occasional bounce, through the end of the year. Even more bearish would be a bounce to the year-end, since the next Master Cycle may contain a further decline.
7:30 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!
The US 30 Cash futures (DJIA) declined this morning beneath the upper trendline of its year-long Ending Diagonal formation at 43700.00. It formed a double top above its trendline (throw-over) and made its final peak on December 6. You may ask, “Wait a doggone minute! Where is the rally?” Your eyes are not fooling you. The DJIA has been in decline since December 6 and has made a morning low at 43545.00, approaching its 50-day Moving Average at 43375.00. Yesterday its sell signal has been confirmed at Intermediate support at 43783.66. It is at an important pivot point. Either the DJIA joins it Tech brethren in a rally to the end of the year, or it resumes its decline to the end of the year. Choose wisely.
SPX futures declined to 6054.20 thus far this morning. It remains on an aggressive sell signal this morning. Further confirmation lies at its short-term support at 6038.56. The SPX is caught between the Blue Chips and Tech in a no-man’s land of non-performance, neither up nor down. The markets have reached a Cyclical pivot point. In the next two days a directional decision may be made. The Cycles Model infers that, whichever way it turns, it will be with strength. The current Master Cycle has a possible three weeks in which to run that decision.
Today’s options chain shows Max Pain at 6070.00. Long gamma kicks in above 6100.00. Short gamma may begin at 6050.00 and strengthens beneath 6030.00.
ZeroHedge reports, “There is only so much the US can “exceptionally” decouple from the rest of the world, and on Tuesday US futures finally succumbed to the persistent selling in markets around the world, as traders awaited the Federal Reserve’s final interest-rate decision for 2024 and its monetary policy forecasts. As of 8:00am, S&P futures dropped 0.3%, while Nasdaq 100 futs eased back 0.2% after the relentless rally in tech stocks pushed the gauge to a fresh all-time high on Monday as AAPL/GOOGL/AMZN/TSLA/AVGO all reached new ATHs. TSLA (+3% pre-mkt) on an u/g away while NVDA (-1.5% pre mkt) continues to be under pressure. Europe’s Stoxx 600 fell 0.4% as weaker crude prices weighed on oil-related stocks (FTSE -70bps/DAX +15bps/CAC +30bps). A key Asian gauge dropped 0.5% after erasing gains as concerns over China’s economy persist (Shanghai -73bps/Hang Seng -48bps/Nikkei -24bps). US rates rose with 10Y TSY yields rising +4bps @ 4.43%. The Bloomberg Dollar Spot Index adds 0.1%. The Aussie dollar is the weakest of the G-10 currencies, losing 0.5%. The yen outperforms with a 0.2% gain. Crude oil extended its drop as WTI dropped 0.8% to $70.15. Meanwhile, Bitcoin adds another +90bps to $107,040 as global equities chop around ahead of a slew of central bank rate decisions the next few days (FOMC tomorrow). There is a busy macro calendar today with retail sales, industrial/mfg production, business inventories and the NAHB housing index all on deck.”
NDX futures declined to 22009.60 thus far this morning. It is out on a limb (Cycle Inversion) with the nearest support being the Cycle Top at 21667.34. It is also losing internal strength as the Magnificent Seven (70%of all trading volume) may have whittled down to the Magnificent Two. NVDA, the bellwether of these leaders, has declined beneath its 50-day Moving Average and is on a confirmed sell signal. I am stating facts, not giving investment advice. NDX is at a pivot point from which it may finish off the year. This is not a good place to hitch your retirement plan.
Today’s options chain shows Max Pain at 22060.00. Long gamma resides above 22080.00 while short gamma appears to be scarce. This one-sided optionality may be courting disaster.
IBD reports, “Dubbed the Magnificent Seven stocks, Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta Platforms and Tesla lived up to their name in 2023 with big gains. And all of them boasted solid year-to-date gains in the final month of 2024.
Due to their outsized market capitalizations, Magnificent Seven stocks hold a disproportionate influence on the market-cap weighted Nasdaq composite and S&P 500 indexes.”
VIX futures have risen to a morning high at 15.22. It is on a confirmed buy signal above its 50-day Moving Average at 14.07. The Cycles Model may be confirming an upside panic in the VIX developing this week. Should it occur, the panic Cycle may last until early January.
The December 18 options chain shows Max Pain at 17.50. Short gamma resides between 13.00 and 17.00. Long gamma begins at 18.00 and shows strong support to 60.00. Do those out-of-the-money longs know something we don’t?
TNX rose to a morning high at 44.34 before pulling back in a brief consolidation. The Cycles Model calls for a surge of trending strength beginning today and lasting through the year-end. Don’t underestimate this rally, as it may break through the Cycle Top resistance at 47.55. T-bill issuance is likely to fall with the new administration. With it, liquidity provided by T-bills being recycled in RRP, providing further liquidity for the markets, is likely to dry up.
The Shanghai Composite has decline today to 3357.77, closing beneath Intermediate support at 3363.90. The sell signal is confirmed. The Cycles Model suggests the decline may strengthen by the week-end, creating a possible panic decline. This decline appears to be in place through the end of January.
FEZ (ETF for EuroStoxx 50) has had a brief spurt of strength before reversing back down today. This may be misleading, as analysts are calling the recent bounce a “tailwind” and peak bearishness is behind us. Unfortunately, not. The Cycles Model shows the decline resuming through the end of January.
Gold futures fell through its 50-day Moving Average on Friday. Yesterday it retested its 50-day at 2683.73, closing beneath it. Today it has decline further to 2646.19 thus far. The Cycles Model calls for a continued decline until the year-end. A potential panic may develop by the weekend. Analysts have moved the red line from the 50-day to the hundred day Moving Average at 2610.00. You can see that major support has already been broken. The Cycles Model infers a much deeper decline.
Crude oil futures have declined beneath the 50-day Moving Average at 70.35 yesterday and today it has plummeted beneath Intermediate support at 69.31. The Head & Shoulders neckline lies at 68.55. The Cycles Model suggests the decline may continue beyond Christmas, leaving crude oil at new lows.
USD continues its rally, reaching a new high at 107.08. Today, the USD is primed for a double shot of strength as it continues to rally into the year-end.