8:30 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.
NDX futures rose to 21307.50 this morning, testing the trendline near 21300.00. It has pulled back since then and is hovering on the positive side. A retest of resistance usually means that equities may go lower. The next support is the Intermediate at 21225.38 followed by the 50-day at 20926.01. Selling pressure may be heavy due to pension rebalancing and year-end profit-taking.
ZeroHedge observes, “It’s true that stocks usually go up most of the time, but the market’s latest two-year run makes any cliché sound like an understatement.
Since bottoming in October 2022, the S&P 500 has returned roughly 66%.
The index is on track for back-to-back annual returns of more than 20% for the first time in over two decades, handily outpacing the 10% gain seen in an average year.
As you might guess, no one on Wall Street expects stocks to fall in 2025.”
SPX futures rose to 5931.80, testing the underside of the 50-day Moving Average at 5938.28, then pulled back. A failed test usually means that the next lower support may be tested. That may be the 100-day Moving Average at 5786.96, coinciding with the (red) 14-month Diagonal trendline. This is critical, since once the Ending Diagonal trendline is broken, the index may fall to its point of origin on October 27, 2023.
ZeroHedge reports, “With the Santa rally dead and buried after the S&P saw two back-to-back 1% drops for the first time since August and sending the S&P sliding back under 6,000, US equity futures finally rose on the last day of 2024, setting stocks on course to snap three days of losses and build on this year’s powerful Wall Street rally. As of 8:00am, S&P futures rose 0.3% and Nasdaq futs were 0.4% higher, with all Mag7 stocks higher. European trading was muted, with several markets shut on New Year’s Eve and shortened sessions in London and Paris. 10Y yields extended their drop, sliding 1bp to 4.52% while the Bloomberg dollar index gained, capping the best year for the US currency since 2015. Bloomberg rebounded and oil dropped. The last day of the year has a sparse macro calendar and includes the Case-Shiller and the December Dallas Fed service activity index.”
VIX futures slid to 16.68, above the mid-Cycle support at 16.24. Should it hold there today, it’s next target may be a breakout above the December high at 28.32. Weekly options expire today. The largest options holdings are short between 14.00 and 19.00.
TNX is consolidating after last week’s push higher. The pullback may be brief, as trending strength reappears later this week. The current Master Cycle has a week left to run its course. The Cycle Top resistance at 47.86 appears to be the likely target, although there is an outside probability of reaching 50.00 in that time period.
Bitcoin may be testing the underside of its 50-day Moving Average at 96528.00 this morning. Should it be rejected, it may have a week-long decline ahead with no visible support until the mid-Cycle level appears at 72196.30. Good luck and good trading.
I wish you all a Happy New Year!