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.
3:36 pm
SPX elected the 5-day fractal, confirming the January 24 Master Cycle high at 6128.18. The decline may extend to the end of March, with the first likely panic day on Monday. A possible target may be the 15-month Ending Diagonal trendline at 5925.00. Take note: short selling in January was 10 times long buying.
7:45 am
Good Morning!
NDX futures rose to 21697.60 thus far this morning, above Intermediate support at 21410.75. NDX may have completed a 5-day fractal this morning from the January 24 Master Cycle high. A reversal beneath this support may signal the decline may be underway. The alternate view is that equities may be forming an 8-day fractal with completion near the Cycle Top at 22075.53.
SPX futures rose to a morning high at 6102.60, completing a 5-day fractal from the January 24 high. There’s a good chance that the retracement bounce may be complete. SPX may be in the reversal zone this morning, with a better-than-even probability of a reversal today. The alternate possibility may be that SPX goes higher, possibly to the Cycle Top at 6201.89 and a new all-time high.
Today’s options chain shows Max Pain at 6065.00. Long gamma may begin above 6075.00, but becomes significant above 6100.00. Short gama may begin beneath 6050.00.
ZeroHedge reports, “US equity futures are higher this morning on the last day of a volatile week, amid healthy earnings results post market close yesterday. As of 8:00am, S&P futures are up 0.5%, while Nasdaq futures gain 0.8% with AAPL up +3.5% after first sliding after disappointing iPhone sales only to reverse losses on the company’s (rather modest) guidance; Intel gained +1.4% as results were better-than-feared while Mag7 stocks were mostly higher (GOOGL +0.5%, AMZN +0.9%, AAPL +4%, MSFT +1%, META +0.5%, NVDA -1% and TSLA +0.2%). Europe’s Stoxx 600 index headed for its best month in two years as strong earnings reports burnished the appeal of the region’s stocks over pricier Wall Street equities. As we get closer to the Feb 1 deadline, headlines on Trump’s tariffs took the central stage. Trump’s reiteration of the 25% tariffs on Canada/Mexico led to some volatility yesterday, but the markets quickly rebounded and still managed to finish in the green. 10Y treasury yields were flat at 4.52% while the dollar gained ahead of President Donald Trump’s weekend tariff announcement. Today, key macro focus will be December PCE and Energy earnings (XOM and CVX).”
VIX futures reached a morning low at 15.22. The move may be complete, or nearly so. The Cycles Model shows volatility erupting early next week with a potential for multiple panic days.
The February 5 options chain shows Max Pain at 17.00. There is very little short gamma from 15.00 to 17.00. Long gamma may begin at 18.00 and above.
TNX has reversed from yesterday’s Master Cycle low at 44.88. The 50-day Moving Average may have been the focal point for the reversal, rather than the trendline near 44.00. Contrary to popular opinion, the Cycles Model shows interest rates rising through the end of March.
ZeroHedge observes, “With constant fearmongery about Trump’s tariffs prompting a panic-flation, it is interesting to note that inflation data has been serially disappointing in recent weeks (printing below expectations)…
Source: Bloomberg
And this morning we get The Fed’s (old) favorite inflation indicator (until they changed their minds because it didn’t fit the narrative) – Core PCE – print at +2.8% YoY (flat from the prior month).”
USD futures rose to a morning high at 108.37 this morning. The 50-day Moving Average at 107.50 and Intermediate resistance at 108.08 have been surpassed, creating a buy signal. The Cycles Model suggests the USD may continue to rally through mid-March.