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.
2:19 pm
SPX may have completed its initial downside fractal. The reason for the bounce is because the energy of the decline must be dissipated before the next decline. Once beneath the 50-day Moving Average, another panic event may occur. The next target for the decline is likely to be the Cycle Bottom shown in the chart at 5812.43.
8:15 am
Good Morning!
NDX futures challenged the 50-day Moving Average at 21238.36in the overnight session, but could not climb above yesterday’s intraday high. It has since fallen back beneath the 50-day. Goldman’s trading desk relates that, “No one was buying.” on the way down yesterday. The NDX made a 70% retracement of a 2-week rally in a day. The view on AI may have been fundamentally changed, as players walk off the field , protesting, “It was only a flesh wound.”
The NDX options chain remains deep in short gamma, while the longs were hung out to dry.
ZeroHedge comments, “The entire AI complex sold off violently on Monday after China’s “AI Sputnik” moment, driven by the low-cost DeepSeek chatbot, raised doubts about the market’s future expectations for massive investments in new computing infrastructure and upgraded power grids to support large language models and other AI technologies.
Uh-oh, Mag5… ROI concerns now enter the picture.”
SPX futures rose to 6040.40 in the overnight session, mostly on a technical bounce. It remains above the 50-day Moving Average at 5982.17, which may bear watching today. The Cycles Model suggests negative momentum may be building toward the weekend, when we may see another burst of downside energy.
Today’s options chain shows that Max Pain is at the hotly contested 6000.00 strike. Long gamma may strengthen above 6050.00 while short gamma resides beneath 5975.00. Sentiment is leaning short.
ZeroHedge reports, “US futures rose slightly after Monday’s rout over valuations in the artificial-intelligence sector, while the dollar advanced after US President Donald Trump said he wants to enact across-the-board tariffs that are “much bigger” than 2.5%. After suffering a record drop on Monday, Nvidia led a rebound in premarket trading one day after Chinese upstart DeepSeek prompted traders to rethink the extent of US tech dominance. As of 8:00am ET, futures on the Nasdaq 100 rose about 0.2% after the tech index suffered its worst one-day drop since mid-December as Nvidia shares climbed as much as 5% in premarket, poised to claw back some of their 17% slump. Contracts tracking the S&P 500 gained 0.2% with semis poised to recoup some of yesterday’s losses. In Europe, stocks climbed on the back of upbeat earnings. Keep an eye on USD and bond yields, which moved higher as Trump looked set to add a blanket tariff on Feb 1 which could start with a 2.5% blanket tariff and ramp from there. The commodity complex is seeing strength in Energy, weakness in Ags, and Metals are mixed. Today’s macro focus is on Durable/Cap Goods, Housing Pricing, Consumer Confidence, and regional activity indicators ahead of tomorrow’s Fed decision. Starbucks, GM and Boeing are among companies to report results today.”
VIX futures edged down to an overnight low at 17.46, but appears ready to spring back into action. The Cycles Model shows a buildup of trending strength, which may show itself over the weekend again. (Are the Chinese preparing another surprise?)
TNX may have made its Master Cycle low yesterday, on day 256. There is a diminishing possibility of yet another low. However, time is not favorable for such an event. This is yet another double reversal event happening during the month of January. $44 billion in 7-year Treasury Notes will be at auction today.
ZeroHedge reports, “90 minutes after a mediocre 2Y auction hit the tape, the Treasury sold $70BN in 5Y paper in the day’s second auction to start the Fed-abbreviated week, which also sees a 7Y sale tomorrow before the FOMC on Wednesday.
The auction stopped at a high yield of 4.330% which was down from 4.478% in December, and also stopped through the When Issued 4.336% by 0.6bps – this was the third consecutive through auction in a row and followed 4 consecutive tails as sentiment has clearly improved toward the belly of the curve.”
Bitcoin is in consolidation today. The Cycles Model suggests a possible three weeks of decline ahead. Volatility is due to increase imminently, which may accentuate the decline.