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.
2:57 pm
SPX may be making the final probe to a possible all-time high. Should it go higher, a possible target appears to be ~6160.00. However, the probe higher may be constrained by time, which is running out for this rally. In addition, there appears to be significant selling at each attempt at a new high.
9:45 am
Good Morning!
SPX futures rose to 6138.60, not an all-time high in the futures. The high in the cash market is 6125.39. Friday’s high at 6127.47 may be the peak performance for the SPX, leaving the January 24 high at 6128.18 as the all-time high. The efforts to make a new high have failed thus far, leaving a truncated fractal. The ability to probe higher may be stifled by the turn in the Cycle that may have occurred on Friday. Certainty of the reversal may arrive with the crossing beneath the 50-day Moving Average at 6002.42. Hedge funds are going short again while retail money still pours into the market.
Today’s options chain shows Max Pain at 6100.00. Long gamma may start above 6150.00 while short gamma may begin beneath 6050.00.
ZeroHedge reports, “US equity futures and global markets are higher as Russian and US officials met to negotiate an end to the three-year war in Ukraine. As of 8:00am ET, both S&P and Nasdaq futures are 0.4% higher, with Mag7 names all higher ex META (GOOGL +0.5%, AMZN +0.4%, AAPL +0.1%, MSFT +0.3%, META -0.2%, NVDA +1.2% and TSLA +0.8%) and Semis bid up, led by Intel. In Europe, the Stoxx 600 index held near record highs, with defense stocks such as Rheinmetall and Dassault Aviation rallying further on expectations that governments will have to ratchet up military spending. A gauge of emerging-market equities hit a three-month high, while stocks in Asia were mixed, but still closed in the green for a fifth day after President Xi Jinping met with prominent entrepreneurs Monday. Tariff headlines were quiet over the weekend as the market focused on a RU/UKR solution. Bond yields are higher by 1-3 bps and USD looks to break a 5-day losing streak. Commodities are stronger with all 3 complexes bid up and WTI finding support above $70/bbl. Today’s macro releases lack market-moving data as part of a relatively quiet macro week; we have two Fed speakers on deck.”
VIX rose to 16.03 this morningas a reversal from the low on Friday has taken shape. the 50-day Moving Average is at 16.37, which defines the possible new trend. The Cycles Model calls for another month of rally in the VIX with massive strength appearing in March.
The February 19 (monthly) options chain shows Max Pain at 17.50. Short gamma is strong between 15.00 and 17.00. Long gamma may begin at 19.00 and strengthens up to 60.00.
ZeroHedge observes, “Today, the S&P 500’s cyclically adjusted price-to-earnings ratio (CAPE) is nearing historic highs, signaling market valuations may be in overheated territory.
In December 2024, the S&P 500 CAPE ratio stood at 37.9 – well above its long-term average of 17.6. Notably, it has only exceeded this level during the Dot-Com bubble and in 2021.”
TNX has reversed out of its Friday low this morning, having gapped above the 50-day Moving Average at 45.07. It is on a buy signal, sell signal for UST. The Cycles Model calls for trending strength to begin today and stretch through the end of March. Intermediate resistance lies at 45.84, but more importantly, a breakout may occur at 46.60 and, later, at 48.09, th e neckline for the Head & Shoulders formation.
Zerohedge reports, “The Elon Musk-led Department of Government Efficiency (DOGE) on Monday revealed its finding that $4.7 trillion in disbursements by the US Treasury are “almost impossible” to trace, thanks to a rampant disregard for the basic accounting practice of using of tracking codes when dishing out money.
Mind you, it’s not as if such a federal tracking system wasn’t already in place — it simply went casually unused for all sorts of payouts adding up to an almost unfathomable $4.7 trillion. Without Treasury Access Symbol (TAS) identification codes associated with those payouts, there’s little hope in figuring out where all that money went.”
10:58 am
USD remains on a corrective course that may last up to 3 more weeks. The upper range may be the 50-day Moving Average at 107.74 and the lower range may be the mid-Cycle support at 104.73.
The Japanese yen has resumed its upward course that may last another month, according to the Cycles Model. It is now above the mid-Cycle support/resistance at 65.59 and on a buy signal. Trending strength may resume by the end of the week. The Yen has regained nearly 5% since the beginning of the year, causing some consternation among those using the the Yen carry trade for financing.
The Ag Index is approaching its Master Cycle high. The Cycles Model suggests looking for a strong reversal this week. If so, look for a retracement down to the trendline or mid-Cycle support at 370.56 in the next month, whichever comes first.