2:30 pm
The SPX denominated in Yen tells the story. For Japanese investors, the SPX gapped higher at the open by.9% and rose to an intra-day gain of 1.5%, while the SPX in USD gapped .7% higher while topping out with an intraday gain of 1.33%. This tells us the Japanese investors led the market at the open, but may end up flat by the end of the day. Sayonara!
1:00 pm
SPX has been repelled at the Ending Diagonal trendline at 6021.04 and has declined beneath Intermediate support/resistance at 6007.40 to offer a confirmed sell signal. The setup is being made for a Key Reversal or an Island Reversal
7:45 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 Christmas season ends today for many Christians…..The feast of the Epiphany – Three Kings Day.
SPX futures are challenging the Intermediate resistance at 5986.64 as I write, and may possibly test round number resistance at 6000.00 and the 4-month Ending Diagonal trendline nearby, bringing the retracement to a possible end this morning. Last week I discussed the impact that overseas investors have on our domestic equities. Both Europe and Japan have had weakened currencies, making the US market more attractive than their own. That, coupled with the rising US Dollar have contributed to our seemingly “stable” equities market. That is about to change.
The USD index has fallen beneath its Cycle Top over the weekend, as suggested last week, putting it on an aggressive sell signal. The Cycles Model suggests the USD may decline through the end of January, making US equities and bonds unattractive to foreign investors and blunting the overnight rallies often seen in the past several months. Commentators are discussing the huge momentum move it made last week, but don’t see the possibility of a reversal.
ZeroHedge reports, “US stock futures gained, led by tech as news reports of Microsoft’s spending plans underscored the sustained demand for AI infrastructure (even though the same and more has been said about Facebook and yet the company’s massive capex spending plans have yet to materialize). S&P 500 futures were up 0.6%, set to rise for a second day after ending the longest losing streak since April on Friday; Nasdaq 100 futures advanced 1%, with chip giants Nvidia and AMD rising more than 2% in premarket trading. In Europe, the Stoxx 600 also edged higher, fueled by ASML’s biggest daily gain since October. The dollar, which recently traded at a more than two year high tumbled on a Wapo report that Trump aides are looking at targeting import taxes at certain industries, rather than across the board resulting in a less strict tariff regime (spoiler alert: not only is this fake news, if anything Trump will double down on tariffs and make them even stricter). The news sent both the dollar and treasuries higher, with the former slipping earlier ahead of a sale of three-year debt as well as auctions of 10- and 30-year notes later this week, with the 30-year yield climbing overnight to the highest since November 2023 before retracing the move. On today’s calendar we get the S&P service PMI, as well as factory/durable orders report.”
VIX futures are consolidating near the mid-Cycle support at 16.27 this morning. While VIX remains beneath the 50-day Moving Average at 16.62, it may probe deeper to complete its correction. However, that is due to end this morning and a resumption of the uptrend may follow a bounce above the 50-day.
TNX appears to be consolidating, but is due for a surge in trending strength today. It appears to be decoupling from the USD (or vice-versa) as the USD weakens. The Cycles Model suggests a continued rise in the 10-year yield possibly until the end of the week. The most likely target for this uptrend may be the Cycle Top resistance at 47.91. Reaching that target may end the uptrend temporarily.
Yen futures rose to 64.04 this morning, ending a possible Cycle inversion. The Cycles Model infers a rally in the Yen that may last through mid-March, upending the Yen carry trade.
BKX may be about to make a key reversal today, extending its Master Cycle (to today) as well. The Cycles Model suggests trending strength today, which may complete the Cycle at the 50-day Moving Average at 130.44. A sharp reversal into a panic decline may follow. The reason is a cluster of trending strength days starting on Tuesday and lasting the next two weeks.
ZeroHedge remarks, “Money market assets surged again in the last week of 2024 to a new record high of $6.848 trillion and at the same time money flowed into bank deposits for the fifth straight week, recovering all the outflows from the SVB crisis…”
Bitcoin may also be about to make a key reversal today, day 259 of the Master Cycle. It may rise as high as the Cycle Top at 105689.31 during the day, as today is a double strength day. It also denotes the high probability of a reversal today.