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.
3:32 pm
SPX has resumed the bounce to the trendline near 6000.00, near Max Pain for options buyers. There may be a couple more hours of attempted elevation, only to be resisted by the trendline. A new development has occurred. The bounce helps form an irregular right shoulder of the Head & Shoulders formation. A decline back through the neckline may produce dire results.
2:31 pm
SPX fell through the trendline at 5992.00 and the 100-day Moving Average at 5945.00, then bounced at round number support at 5900.00. It attempted to return to the trendline, but failed on the first try. SPX is currently being held up at the 100-day. Should it fail, SPX may go much lower. However, there may be a second attempt at the trendline that could bring SPX back up near 6000.00. This is not the end of the decline. Rather, it may be a 4.3-day Cycle completing in the next few hours. Once complete, the next phase of the decline may begin. This may not be a good time to try catching falling knives.
7:45 am
Good Morning!
SPX futures have declined beneath the 16-month trendline at 5983.00 this morning, reaching a morning low at 5962.60. It is now struggling to regain a foothold above the trendline, but the die may be cast. Should it remain beneath the trendline, the next visible support lies at the mid-Cycle at 5741.07. The market may go down with no visible catalyst. Short gamma dominates all trades beneath 6000.00 caused by the high amount of puts beneath that level. As dealers must cover those puts at the end of the day, every new level lower forces the dealers to sell/sell short more shares to cover their growing liabilities. The Cycles Model suggests today may be a trending strength day, which indicates the possibility of panic selling.
Today’s options chain shows Max Pain at 6020.00. Long gamma may begin above 6050.00. Short gamma begins beneath 6000.00 and strengthened every 50 points beneath it.
ZeroHedge reports, “US equity futures, and Asian markets are lower as the recent tech-led selloff on Wall Street accelerated, sparking further risk-off behavior and momentum liquidations, and spilling over into bitcoin which plunged to a 3 month low breaking below its post election support. As of 7:00am, S&P futures are down 0.3% and are outperforming Nasdaq futs which are down 0.5%; sentiment was dented after Trump said that Canada/Mexico tariffs would be implemented on-time. Mag7 names and semis are lower with NVDA down 1.6%; Europe’s ASML and STMicroelectronics also Bloomberg reported that the Trump admin is planning to expand efforts to limit China’s technological advancements, including tougher semiconductor curbs and pressuring allies to escalate restrictions on China’s chip industry. The ongoing stock rout sparked a rally in Treasuries that has pushed US 10-year yields down 6 bps to 4.34%. Traders also added to their Federal Reserve interest-rate cut bets with ~53 bps of easing now priced in by year end; the USD is flat. Commodities are mostly lower with crude/gasoline higher. Today’s macro data focus is on Housing, regional Fed activity indicators, and Consumer Confidence. ”
VIX futures are consolidating beneath yesterday’s high, awaiting the outcome of the struggle for dominance in the SPX. The Cycles Model indicates a strengthening of the new trend through the weekend. The next resistance is the Cycle Top at 23.65. A visible target may be the August 5 high at 65.73. Another higher target may exist.
Wednesday’s options chain shows ax Pain at 18.00. Short gamma lies between 15.00 and 17.00. Long gamma begins at 20.00 and strengthens above 25,00.
Bitcoin broke through the neckline of a Head & Shoulders formation this morning as liquidity dries up. It is now beneath its three-month trading range with the next visible support at 83381.43, where it may attempt a retest of the neckline.
TNX plunged beneath the trendline as liquidity flowed from stocks to bonds. Today appears to be a high volatility down day, the opposite of what I had inferred yesterday. The Cycles Model implies that the downtrend may continue to the end of March. The next support lies at the mid-Cycle at 42.25. However, given the length of time allowed for the current Master Cycle, it may be possible to see TNX decline to the lower trendline near 38.00.
ZeroHedge remarks, “The Trump administration plans to sell two major federal buildings in San Francisco, including the recently renamed Nancy Pelosi Federal Building, according to Fox News.
Formerly the San Francisco Federal Building, the 18-story tower sits in a crime-ridden area plagued by drug dealing and illegal markets.
How apropos for a building named after a woman who helped oversee the decline of San Francisco.”
USD futures are hovering near its low. While the decline appears complete, the Master Cycle has room to decline through mid-March. A nearby support is the mid-Cycle at 104.83. However, unless there is an inversion, the decline may continue lower. There is a formation developing that suggests a further drop to 100.00. However, the formation is not complete.
Gold futures have declined to 2936.20 this morning, after making a new high at 2974.00 yesterday. This may be the end of a stretched Master Cycle. Should that be so, the Cycles Model infers a decline to the end of March.
Crude oil futures are hovering near yesterday’s low this morning. Crude is on a confirmed sell signal. The Cycles Model suggests the decline may continue to mid-April. There is an active Head & Shoulders formation with a significantly low target.