January 27, 2025

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.

 

3:32pm

SPX is being held at the 50-day Moving Average at 5981.00.  Dealers are doing their best not to let short gamma become shorter gamma.  Inevitably, SPX may still decline to the 100-day trendline at 5900.00.This decline may have been just too surprising for everyone.  Today ‘s move is called an island reversal, a classic reversal pattern.

ZeroHedge comments, “‘m not sure that “software will eat the world,” but it could consume the stock market bubble in a single gulp.

Is DeepSeek a Sputnik Moment? Let’s break it down. The Soviet Union’s October 1957 launch of the world’s first artificial satellite, Sputnik 1, stunned the U.S., which reckoned it had a commanding lead in “the Space Race.” (It turns out the U.S. had the capability of launching a satellite before Sputnik, but held off for various reasons.)”

 

:00 am

NDX was stopped at the trendline and Cycle Top resistance at 22069.86 and did not make a new all time high last week.  This morning NDX futures plummeted 6% to 20632.20, possibly finding support at the 100-day Moving Average at 20575.00 and the January 13 low at 20538.33.  It bounced, gaining back roughly 2% as I write.  But the damage is done.  Investors who bought the top tick in the NDX last week are trying to undo their trade at a loss in a possible limit-down day..  I had warned on Thursday that a Master Cycle high might be imminent last Thursday, but FOMO was too hard to resist for many.  This month we have a double directional change in the Cycles.  The Cycles Model tells us that the new decline may last until the end of March.

ZeroHedge remarks, “There is only one topic on traders’ minds this morning that threatens to upend the multi-year AI bull trend driving chip stocks to record highs: the (extremely) cheaper Chinese DeepSeek response to OpenAI’s ChatGPT, as noted in an overnight piece titled “Goldman Asks If China’s DeepSeek is AI’s Sputnik Moment.”

 

SPX futures declined to 5915.20, finding support at the 15-month trendline at 5900.00, a 3.5% loss over the weekend.    The SPX is not limit down but the NDX very nearly is.  It will be up to the authorities on how to handle this, making it an interesting day.

SPX options chain is in short gamma beneath 6075.00.  This will make it very difficult to recover.

 

VIX futures rose to 22.51 this morning, a 51.5% gain from Friday’s close.  It is on a confirmed buy signal and may continue to be so through the end of March.  Protection is no longer cheap.  In addition, once it climbs above the Cycle Top at 23.62, the pullbacks may be shallow, making it difficult to buy market protection.

Wednesday’s options chain shows only long gamma above 17.00, which strengthens above 20.00.  There is a singular lack of vision, as the top cache of calls has a strike at 30.00.

 

TNX has resumed its decline to the trendline at 44.00 or possibly mid-Cycle support at 42.23.  The Cycles Model suggests there may only be a few days left in the current Master Cycle, so the trendline has the more favorable outlook.

ZeroHedge observes, “The DOGE $2 trillion budget savings goal is crucial to the very future of constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine.”

 

Bitcoin sank beneath the 50-day Moving Average at98923.00 this morning before a comeback of sorts taking it back above 100,000.  The Cycles Model suggests another possible three weeks of decline may be left in the current Master Cycle.  The sell signal is triggered when BTC closes beneath the 50-day.

 

 

 

 

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