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.
1:25 pm
VIX has launched above its resistance area at 16.59 and is now on a buy signal. Investors have suddenly discovered that the need hedges against the reversal in stocks.
12:58 pm
The decline in SPX has accelerated past the short-term support at 6068.00. The next possible bounce may be at Intermediate support at 6022.22 or the 50-day Moving Average at 6013.44. Should that occur today, there may be a panic event on Monday-Tuesday with the trendline near 6000.00 also being taken out. Normally investors go short beneath the 50-day. However, today’s situation may not allow it, as the decline appears to be accelerating already and may grow worse over the weekend, leaving no opportunity to take action. At a minimum, one should not be long beneath the 50-day. Momentum stocks are being especially hit hard.
9:53 am
BKX bounced from the 50-day Moving Average at 135.30 yesterday, but the correction may not last. Once beneath the 50-day investors may see an acceleration of the decline as recognition of that support is nearly universal. The Cycles Model shows a potential increase in volatility and strength of the decline occurring over the weekend. The distress in commercial real estate loans is increasing and banks are oved over $3 trillion in CRE loans.
ZeroHedge reveals, “At the end of Q4 2024, commercial real estate continued to exhibit severe weakness, with commercial real estate bonds hitting record distress levels, surpassing the previous records reached in Q3 2024. Commercial real estate bonds are just commercial real estate loans packaged into securities and sold to investors. One category of bonds, commercial mortgage-backed securities (“CMBS”), saw their distress rate increase to 10.6 percent, a fourth consecutive monthly record.”
8:00 am
Good Morning!
SPX futures rose to 6124.90 thus far this morning, a 64% retracement of yesterday’s plunge as favored momentum stocks suddenly reversed.. We may continue to see this type of stair-step activity down until the 50-day Moving Average at 6014.21 and trendline near 6000.00 are breached. Today is a massive monthly options expiration and the dealers will be actively attempting to manage the SPX for the least payout to options investors. This may lead to increased volatility during trading hours. The Cycles Model suggests trending strength may appear on Tuesday.
Today’s options chain shows Max Pain at 6120.00. Long gamma may begin at 6125.00 and strengthens at 6150.00. Short gamma rules beneath 6100.00.
ZeroHedge reports, “US equity futures are flat, as European and Asian markets rise, as sentiment improves on the last day of the week. As of 8:10am ET, S&P futures were unchanged at 6,138 after Walmart’s forecast and concerns about consumer behavior led to a decline in stocks Thursday; Nasdaq futures gained 0.3% with the Mag 7 names are mostly higher led by META +0.6%. US-listed Chinese stocks rose in premarket trading on Alibaba’s post-earnings euphoria and after Treasury Secretary Scott Bessent said he would hold an introductory phone call with his Chinese counterpart, though he didn’t specify who on the Chinese side he’d speak to. Bond yields are 1-2bps lower and the USD is higher. Commodities are mixed: oil fell -0.8% this morning, while base metals are higher. From the macro perspective, overnight headlines were largely quiet; earnings results since market-close were mixed; BKNG announced 10% dividend increase and additional buybacks. Today, key macro focus will be global PMIs: the Mfg PMI is expected to print 51.4 vs. 51.2 prior; the Services PMI should print 53.0 vs. 52.9 prior.”
VIX futures continued to convalesce beneath overhead resistance at 16.44 to 16.56. However, it may be coming out of its Trading Cycle (60 day) low this weekend, suggesting resistance may not hold in the following week.
The February 26 options chain shows Max Pain at 15.00. There is no short gamma. Long gamma may begin at 17.00 and is strengthening to 27.00.
TNX futures declined to 44.73 this morning, while the cash market bottomed at 44.82. It may be performing an irregular retracement which allows it to resume its upward course. The Cycles Model suggests trending strength may reappear early next week.
Bitcoin has risen above its 50-day Moving Average at 99078.00, offering a possible buy signal. The Cycles Model suggests a probable three weeks left in the Master Cycle. Should it remain above the 50-day at the close, Bitcoin may see a new all-time high. The alternate view infers a possible new low, should the 50-day hold. Bitcoin has already challenged the six month trendline near 97000.00. A breakdown beneath it would favor the alternate view.
Zerohedge observes, “In the latest reversal of the cantankerous policies of former United States Securities and Exchange Commission Chair Gary Gensler – who officials in the crypto industry complained had sought to regulate the industry to death through enforcement actions – the SEC has agreed to dismiss the lawsuit against centralized exchange firm Coinbase, accusing the company of operating as an unregistered securities broker.”
Gold may be coming off its Master Cycle high yesterday at 2973.40. Today’s gold futures declined to 2930.31. The Cycle Top lies at 2923.57, offering a potential aggressive sell signal beneath it. Gold may be nearing a 25.8 year Cycle from its low of July 1999 at 253.20. The initial low may occur at the end of March, with a deeper low in May, according to the Cycles Model.
WTI futures have fallen back beneath the 50-day Moving Average at 72.26, reiterating the sell signal. The Cycles Model suggests a continued decline through the middle of April. Should it pass beneath the neckline of the Head & Shoulders formation near 65.00, a very serious decline may ensue.