8:15 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.
3:30 pm
SPX is challenging the 100-day Moving Average and 15-month trendline at 5820.00. Should it break through, the next visible support on the daily chart is the mid-Cycle support at 5604.00 followed by the 1987 trendline near 5350.00. However, once the Ending Diagonal trendline is broken, the ultimate target may be the very start of this rally on October 27, 2023 at 4103. 78, a possible 33% decline…and it may just happen in the next 4 weeks.
Good Morning!
SPX futures plunged to 5880.20 in the overnight session, then bounced. It is currently consolidating near 5900.00 as it awaits the December payrolls. Here is a link to the report. All signs point to a miss. The Cycles Model does not exhibit strength in the decline yet, but the SPX is clearly beneath the 50-day Moving Average at 5946.82, showing a technical sell signal. The 100-day Moving Average lies at 5818.50 with the 1-year trendline near 5800.00.Most analysts view the latter as the “must hold” level. The Cycles Model suggests the the decline may last through the first week of February with the 1987 trendline at 5350.00 being the initial target.
Today’s options chain shows Max pain at 5915.00. Long gamma may begin at 5950.00 while short gamma may strengthen beneath 5900.00.
ZeroHedge reports, “US equity futures are lower as traders took a cautious stance ahead of US jobs data that will offer fresh insight on the state of the economy. As of 8:00am, S&P 500 and Nasdaq 100 futures fell 0.2%, while in China stocks pushed toward a fresh bear market. Europe’s Stoxx 600 was little changed. Bond yields are largely unchanged, with the 10Y trading at 4.69%; while the week’s broad pullback in European government bonds persisted, pushing the yield on 10-year gilts remaining stuck near the highest level since 2008. Commodities are higher led by 2.3% gain in oil and 1.6% gain in aluminum. All eyes on NFP release today as equities continue to weigh on bond markets reaction. Consensus expects 165k jobs being added, with the unemployment rate unchanged at 4.2% (average hourly earnings are expected to rise +0.3% MoM and +4.0% YoY). In addition, Q4 earnings will begin today with DAL, STZ and WBA all reporting today. We will also receive the decision on TikTok’s SCOTUS hearing. Power utility Edison International and major US insurers slid in premarket trading as estimates of wildfire-related damages in Los Angeles soared.”
VIX futures are hovering just beneath the high at 19.50. A breakout may propel the VIX above the December high at 28.32.
The January 15 options chain shows Short gamma residing between 15.00 and 16.00. Long gamma is sparse thus far, with a solitary cluster of calls at 30.00.
TNX leaped to 46.93 this morning on the payroll news, testing the Cycle Top resistance at 47.99. This may complete the current Master Cycle, as previously discussed. The Cycles Model calls for a possible 3-week decline to relieve the overbought condition. A likely target may be the mid-Cycle support at 42.22.
ZeroHedge observes, “Look out above… for yields
The headlines look very strong.
- Big beat (256k vs 165k expectations) on the Establishment data. The beat was all in private payrolls (very good). Downward revisions, but only 8k (not bad).
- Unemployment rate drops to 4.1% (the Household survey added 478k – which catches up on some recent weak prints relative to the Establishment Survey).
- Annual earnings ticked down marginally, but hours worked remained the same – call it a “wash”?
I continue to believe that seasonal adjustment factors overstate data this time of the year (our main reason for thinking we would get a strong report), but in any case markets will have to react to this data.”
Bitcoin is bouncing toward its 50-day Moving Average at 97563.00, near the 50% retracement level at 97603.00. The bounce may last through the weekend, but the decline appears to resume by mid-week.
ZeroHedge remarks, “There’s a growing belief that regulatory clarity in the US will lead to a lot more tokenization, including for bank deposits. I agree with the first half of that thesis. Tokens are a superior form factor for a digital economy. But just because you can tokenize something doesn’t mean that you should. For too long, people have treated tokenization like it’s a supply side problem. If you tokenize it, they will come. What actually matters is demand, and that’s where tokenized bank deposits will fall short.”
The Shanghai Composite Index has resumed its decline to 3168.52 today. The October low at 3152.82 is a “must hold” level, with the mid-Cycle support just beneath it at 3100.73. The Cycles Model suggests the decline may persist to the end of the month. Once the above support levels are broken, the likely target for this decline may be the Cycle Bottom at 2685.98.