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.
12:11 pm
BKX has not been able to exceed its November 25 high which, in turn, is beneath the January 2022 all-time high at 148.96. The deterioration of liquidity has been barely noticeable by investors. However, the rising rates by the Bank of Japan may have a knock-on effect on our domestic liquidity, especially the banks, where rising domestic rates are causing issues..
11:15 am
The Japanese Yen has been consolidating above its Master Cycle low of 62.94 on January 10. The Bank of Japan is planning on raising their core rate from .10% to .25%, a massive move that may send the Yen skyward. The BOJ has been lending prodigiously, trying to bolster their own economy. That effort has spilled over into the Yen Carry Trade, where US investors may borrow from the BOJ at .10%. That is not a misprint. In addition, investors who borrowed in Yen last August are now ahead due to the decline of the Yen, creating a currency profit to the borrower. That may be reversed tomorrow, further tightening the liquidity supply in our country. The Yen is poised to rise above the 50-day Moving Average at 64.64 as early as tomorrow, creating a buy signal for the Yen and a potential disaster for those in the Yen Carry Trade..
11:05 am
The SPX denominated by Japanese Yen has hit trendline resistance short of the December ATH. The Nikkei Index All-Time-High was on July 11. It has since not been able to overcome its severe deficit. Thus, Japanese investors have turned to the US markets where they have been richly rewarded until the December 13 high. Should the SPX falter here, it may destabilize the US market as the Japanese markets are at the cusp of a serious decline. The Bank of Japan is scheduled to raise its core rate tomorrow. You may recall that they did so in early August, causing a serious decline in our own markets as well as theirs.
8:15 am
Good Morning!
SPX futures hit a morning low of 6066.40 before a small bounce. The 1-week steep Ending Diagonal at 6075.00 is being broken , allowing an aggressive sell signal. Intermediate support is at 5981.47, with the 50-day just beneath it at 5971.64, where a confirmed sell signal awaits the decline. Yesterday may have been an early Master Cycle high, giving further credence to a major change in trend. Many view the January 13 low as a “bump in the road.” It is more like a pothole that SPX just barely emerged and the NDX could not overcome, leaving the December 13 high as its ATH.
Today’s options chain shows Max Pain at 6080 .00. Long gamma begins at 6110.00 while short gamma reaches potency at 6060.00. There seems to be a growing awareness that this rip may only be temporary.
ZeroHedge reports, “US equity futures are slightly lower as markets look to take a breather after making a new intraday all-time high in the US and Europe on Wednesday. As of 7:30am, S&P futures dipped 0.1% after the index closed on the brink of record peak, propelled by optimism over – what else – artificial intelligence, and a solid batch of earnings from corporate heavyweights. Nasdaq 100 futures fell 0.5% with all Mag7 names lower ex-META and Semis also weaker with NVDA/AVGO lower. Bond yields are higher, with the 10Y rising 2bps to session highs at 4.64% the highest since Jan 16, while the USD also rose. The commodity complex is under pressure with the exception of energy as WTI trades near session highs around $79.4. Today’s macro data focus is on jobless data and regional activity indicators ahead of tomorrow’s Flash PMIs.”
VIX futures are consolidating beneath the 50-day Moving Average at 15.94. While not reaching its intended target at 14.27, it may have completed its Wave structure at the higher level of 14.59. SPX implied volatility has come down hard in the past week, leaving little room for further decline. In addition, the “floor” is rising from the July low at 10.62 to the December low at 12.70. Better yet, the low may now be at 14.27. Calling the VIX “mean reverting” doesn’t do justice to its ultimate capabilities in hard times.
TNX futures hit a morning high at 46.48, giving the equities market pause. Today is day 252 of the current Master Cycle, giving an approximate week to let the dust settle. A burst of volatility may hit the bond market tomorrow, according to the Cycles Model. The anticipated path continues to be a decline as far as the mid-Cycle support at 42.23.
Bitcoin may be consolidating above the 50-day Moving Average at 98598.00. There may be a retest of the high over the next week, but resistance lies at 107700.00 to 108400.00. Once the probe is complete, the Cycle dynamic takes over with a decline through mid-February. Global excess liquidity is falling with money growth falling beneath economic growth. This, in turn affects the markets , especially the speculative ones.