3:11 pm
NDX has gone negative again. It appears to lead the indices lower starting today and possibly the next week. There are a couple more short-term supports that may cause a bounce, but there are at least two more weeks of decline ahead.
11:10 am
The Agricultural Index is declining from its Master Cycle high on December 11, offering good news to consumers (maybe not to farmers). The Cycles Model suggests a decline to mid-January. However, that may come with growing shortages after the holidays. The normal corrective decline usually goes to either the 50% retracement at 359.66 or the 61.8% Fibonacci retracement value at 353.59. However, we may see the decline go to the Cycle Bottom at 336.30. Note that the longer term downtrend was broken this month.
10:08 am
Yesterday BKX declined beneath its 50-day Moving Average, giving a confirmed sell signal The Cycles Model indicates a lower target by year end. The next support may be the mid-Cycle level at 113.14. Should that be exceeded, the Cycle Bottom at 90.67 may be the primary target.
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 NDX Cycle inversion stopped abruptly at the FOMC announcement yesterday. It declined and closed beneath the upper Ending Diagonal trendline near 21350.00. In the overnight market, the NDX futures bounced to 21326.00 thus far, back-testing the trendline. Declining beneath the Cycle Top at 21725.50 and the trendline gave us aggressive sell signals (lighten the long positions). Today the next support is the Intermediate support at 21018.79 while the 50-day Moving Average lies at 2755.85. Both are confirmed sell signal (sell all /sell short). The Cycles Model indicates the decline may continue through the holidays. While some advisors may advise to “buy the dip,” the Cycles Model says the opposite, “Sell the bounce.”
The NDX options chain turned short gamma beneath 21300.00. That is why the dealers are attempting toraise the bar on today’s options chain. Otherwise the dealers will suffer Max Pain instead of the speculators.
SPX futures have bounced to a morning high thus far at 5913.50, testing the underside of the 50-day Moving Average at 5914.85. The 50-day Moving Average is commonly recognized as an important support/resistance point, beneath which may lie a confirmed sell signal. Yesterday was a Cyclical pivot day that may lead to another two weeks of decline in the SPX. People ask, “How bad can it get?” The next major support beneath the 50-day is the 1987 trendline at 5300.00. Should that not hold, the next level is the Cycle Bottom at 4958.48.
Today’s options chain shows a possible Max Pain level near 6000.00. Long gamma may begin above 6100.00 while short gamma rules beneath 6050.00. The market may decline “For no good reason.”
ZeroHedge reports, “US futures staged a partial recovery on Thursday after the worst Fed day rout since the 2013 Taper Tantrum, suggesting the selloff after the Federal Reserve’s hawkish pivot was overdone, even as stock indexes in Europe and Asia retreated as equity markets caught up with post-Fed moves in the US. As of 8:00am, S&P futures advanced 0.5% following the US benchmark’s biggest lost for a scheduled Fed decision day since 2001. Nasdaq 100 contracts rose 0.4% even as chip leader Micron crashed 13% on disappointing guidance. 10Y yields rose again, hitting 4.53%, the highest level since May and nearly 100bps higher than the 2024 lows reached in September. The dollar retreated after soaring on Monday even as the yen cratered after the Bank of Japan left rates unchanged, disappointing a lot of generally clueless strategists who were expecting a hike. Oil and bitcoin also rebounded after sliding on Wednesday. Key events today include the latest GDP revision, initial and continuing claims, existing home sales as well as the October TIC flows data.”
The NYSE Hi-Lo Index has turned negative last Friday by closing beneath 0.00 for the first time since August 5. The Cycles Model indicates that the downtrend in New Highs/New Lows may continue until the end of January. The minimum anticipated decline appears to be -650.00 out of over 3000 equities found in our domestic markets. That may be the lowest since October 2022.
VIX futures have given back approximately half of their gains, settling at 20.52 thus far. Yesterday gave us the second largest one-day spike in VIX history. The Cycles Model calls for another two weeks of rally before some respite may be seen.
The December 24 options chain shows a residual short gamma cluster between 14.00 and 16.00. Long gamma has a weak presence at 20.00, but no conviction above it. The December options chain shows short gamma between 14.00 and 15.00, but no appreciable long gamma residing above it. It appears that the options market was caught like “deer in the headlights.”
Bitcoin has bounced from its Cycle Topo at 99220.55 this morning. It has an aggressive sell signal, suggesting speculators may wish to lighten their longs.” Intermediate support lies at 97773.55, where a confirmed sell signal may be found. Those waiting for the “ideal” exit may not find it, as BTC makes high volatility moves in both directions. Be warned that the Cycles Model indicates an increase in trending strength by the weekend.
TNX futures rose to a morning high of 45.53, breaking above its prior high at 45.05 on November 15. There may be a short-term pullback over the weekend to test Intermediate support at 43.31, but the trend is still higher through the New Year. TNX has erased all indications of a downtrend, lending confusion to the markets expecting lower rates.
Gold futures declined to 2596.91 this morning before a bounce. The Cycles Model anticipates another week of decline before a meaningful bounce. While there may only be a week of decline, the minimum target appears to be near 2300.00.
Crud oil futures have declined beneath their Intermediate support at 69.45, giving a sell signal. Further decline beneath the Head & Shoulders neckline at 68.55 confirms the sell signal with potential subsequent results shown in the chart.
ZeroHedge remarks, ” Oil prices are higher this morning after API’s overnight report signaled a sizable drawdown in US commercial crude inventories and Kazakhstan pledged to comply with OPEC+ production quotas.
The cartel member had earlier unsettled markets by signaling that it would adhere to its original plan of raising oil output by 190,000 barrels a day, according to Rebecca Babin, senior energy trader at CIBC Private Wealth Group, despite OPEC’s decision to delay production hikes.
Still,“the rally remains fragile, with broader macroeconomic factors continuing to dominate price movements,” Babin said.”
USD opened higher this morning after yesterday’s anticipated spike to the Cycle Top. There may be a bit more to this rally until the weekend. However, USD may decline over the following two weeks as it back-tests support, most likely at the Intermediate level (106.17).