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.
3:31 pm
The Powers that be rescued SPX from short gamma beneath 6025.00 and may attempt to keep it near Max pain at 6050.00, where the options payout is the least. From there we await the earnings deluge after the close.
ZeroHedge points out, “The S&P 500 is down 32bp as AI continues to dominate headlines ahead of Microsoft ($3.3TN), Meta ($1.7TN) and Tesla ($1.3TN) results on Wednesday evening. AI Power is retracing, up 1.4%, whilst AI Software Pioneers are 2.1%, reversing some of the basket’s outperformance from the last two days. AI Semis are lower by 80bp and subdued with Nvidia down 5%. Bullish arguments around the secular theme focus on competition fuelling technological advances which will only increase the proliferation/adoption of AI in the long run. Meanwhile, some are questioning the veracity of DeepSeek’s claim around training costs.”
8:00 am
Good Morning!
NDX futures are hovering above the 50-day Moving Average at 21245.00 this morning, as the FOMC announcement at 2:00 pm is made ready. The FOMC exerts tight control over the market movements on announcement day. The expectation is that there may be no immediate cuts as of announcement day, but a possible .25% cuts may come later with good data. The January meeting may not offer any surprises or new information. Watch for a possible decline beneath the 50-day which may announce the resumption of the decline. The Cycles Model provide little detail of upcoming events until this weekend, where volatility spikes may occur.
ZeroHedge observes, “ASML shares surged as much as 12% in European trading, the biggest intraday gain since 2020, after the chip equipment maker posted quarterly bookings that topped Bloomberg Consensus estimates. Despite concerns over weaker demand from key clients Intel and Samsung, JPMorgan analysts believe that strong orders came from Taiwan Semiconductor Manufacturing Co. and other high-end chip producers.”
SPX futures may have slowly begun to fade yesterday’s close. As mentioned, we await the crossing of the 50-day Moving Average at 5982.64 to offer a potential sell signal. The 15-month trendline awaits at 5863.86, where the uptrend is finally broken.
In today’s options chain, Max Pain may appear at 6050.00. Long gamma begins to strengthen at 6070.00 and becomes very strong above 6100.00. Short gamma emerges at 6025.00 and below.
ZeroHedge reports, “Futures are flat with Tech/Small-caps big higher as the market looks to recover from Monday’s tech plunge. As of 8:00am S&P futures are unchanged, erasing a modest earlier gain during the European session; Nasdaq futures extend their Tuesday rebound and rise 0.4% after rising 2.0% on Tuesday; Mag7 names are mixed (GOOGL +0.5%, AMZN +0.9%, AAPL -1%, MSFT flat, META +0.5%, NVDA -0.7% and TSLA -0.2%) with semis rallying but this may not mean the end of the Semis-to-Software rotation which is +10% this week. Europe’s Stoxx 600 index rose 0.6% after chip giant ASML soared 11% after order bookings beat estimates, spurring gains for semiconductor stocks. Bond yields are flat to down 2bps to 4.52% ahead of what is expected to be a dovish pause by the Fed today (full preview here). USD strength continues, given the likelihood of new tariffs announced this week or weekend. Commodities are mixed as Ags and Metals are bid. Looking to the day ahead, the main highlight will be the Federal Reserve’s policy decision, along with Chair Powell’s subsequent press conference, while the Bank of Canada will also be making their own policy decision. Data releases include December advance goods trade balance and wholesale inventories (at 8:30am ET). Finally, today’s earnings releases include tech giants Tesla, Microsoft and Meta.”
VIX futures rose to 16.89 this morning, above the 50-day Moving Average at 16.03. This is an actionable buy signal. The Cycles Model suggests a continuation of thee rally through the end of March. Hang on for volatility! Today is VIX weekly ooptions expiration day.
The February 5 options chain shows Max Pain at 17.00, with a small short gamma at 15.00. Long gamma may begin at 18.00 and shows positive sentiment to 30.00.
TNX extended its Master Cycle low to this morning at 45.12 (45.10 in the futures). Today is day 258, the “ideal” reversal date. This afternoon’s FOMC announcement may be accompanied by a “sudden” reversal in TNX, as it did in September.
ZeroHedge comments, “Personal consumption represents over two-thirds of economic activity.
Therefore, consumers’ ability to spend, i.e., income, is vital to the economy.
Taking it one more step, RealInvestmentAdvice.com’s team notes that confidence in the security of our jobs and wages drives the marginal consumption behaviors of most citizens.
With that, we share a chart that should worry the Fed.
The chart below shows that the University of Michigan survey of real household income expectations is plummeting.
Moreover, the index is at its lowest since record began…”