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.l
10:29 am
SPX has now declined to the trendline at 5978.00. There is likely to be a bounce to the 50-day Moving Average at 6011.22.
1:55 pm
SPX elected to challenge Intermediate resistance at 6023.00 instead of the 50-day. It may have been attempting to reach long gamma at 6055.00, but time is running out for the retracement. SPX may turn down before the end of today’s session. Tomorrow could be a panic day.
7:45 am
Good Morning!
Good Morning!
SPX futures have bounced to 6051.90 over the weekend, a 41.5% retracement of Friday’s decline. The bounce may extend to 6061.00-6073.00, but should the bounce be complete, the decline may resume rather quickly. Once beneath the 50-day Moving Average at 6012.70, an acceleration may occur as it impulses lower, creating market mayhem. The Cycles Model points out that tomorrow may arrive with a heavy dose of trending strength, resulting in a possible panic down day. It appears that retail buying paused last week, while hedge funds returned to selling tech stocks.
Today’s options chain shows Max Pain at 6050. Long gamma may begin at 6055.00 while short gamma strengthens beneath 6010.00.
ZeroHedge reports, “US equity futures are higher, European bourses are mixed and Asian market are red following the worst session of the year for US stocks, as the S&P tumbled 1.7% leaving it about 2% below its ATHs. As of 7:30am, S&P futures are up 0.5% and Nasdaq futures rise 0.4%, with Mag7 names mixed as Nvidia rises in early trading; the Russell outperforms while Fins/Banks are bid this morning pointing to a rebound in Value/Cyclicals. Bond yields are 1-2bps higher with a flat USD. Commodities are mostly lower with WTI still above $70/bbl and precious metals with a slight bid sending gold to a new all time high. Weekend trade news was muted with the German election and the war in Ukraine in focus. Today’s macro data focus is on regional activity indicators.”
VIX futures had a mild setback to 17.46 this morning, a 42% retracement of Friday’s rally. It is on a buy signal above the double resistance at 16.59. While the SPX shows its decline intensifying in the next couple of days, the VIX may not react quite as strongly. Realized volatility had been declining until Friday’s lift-off. With that, a higher floor has been established. Despite volatility pricing moving higher, it is still beneath long-term averages.
Wednesday’s options chain shows Max Pain at 17.00. Short gamma may reside at 15.00-16.00. Long gamma begins at 20.00, but does not have much strength above that. It appears that options investors are not yet aware of VIX’s potential.
TNX bounced from its trendline near 44.00 this morning. While most bond traders are asleep at the wheel, TNX is taking a very sharp U-turn, leaving many off course.
ZeroHedge remarks, “When Benoit Mandelbrot’s book The (Mis)behavior of Markets was published in 2004, it was a revelation for many of us. I remember sitting in my car in a parking lot, unwilling to tear myself away from reading it.
Here’s the super-short summary: from time to time markets crash for no visible reason. The internal dynamics of market structures are fractal, and one feature of this structure is that markets break down unpredictably. After the fact, we seek an external trigger–a Federal Reserve “policy error,” inflation fears, etc.–but these post-mortem explanations gloss over the cause, which is the inherent instability of market structures.”
Bitcoin has slipped beneath the trendline and may be poised for a potential two-week decline. The mid-Cycle support at 83270.00 may be the next target, but may not stop there. The Head & Shoulders formation offers a deeper potential target.
Gold futures reached a morning high at 2973.74 this morning, creating an inversion in the Cycles. How long it may last is uncertain.
West Texas Crude has made a new low this morning, at 70.02, only 4 market days from the “standard” Master Cycle low shown on the chat. One of two things may be happening. First, it may simply be extending the Master Cycle or, second, it may be developing a fast decline in the new Master Cycle. We may know as early as tomorrow which it is.