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.
12:42 pm
SPX reversed short of the 50-day Moving Average at 6012.80 and has declined beneath the trendline. This is a new sell signal for those still long.
10:59 am
SPX is extending its retracement for another brief spell with a probable probe to 6013.00 to 6024.00. The trendline offered a pause in the bounce, causing a small triangle formation to be followed by the last probe of the bounce.
8:20 am
Good Morning!
SPX futures have risen to 5988.90 in the overnight session, on its way to test the trendline near 6000.00 this morning. The bounce is nearly over. Yesterday’s momentous decline beneath the trendline and a new monthly low has fulfilled the trending strength it received, but there may be more to come. The 100-day offers a modicum of support at 5946.40. Downside strength may build through the coming weekend with another major downdraft by Monday. Deutsche Bank notices that Fridays are now the worst day of the week, followed by Mondays, which used to be affected by headline risk.
Today’s options chain shows Max Pain at 6000.00. Long gamma may begin above 6020.00, while short gamma beneath 6000.00. Short gamma strengthened every 50 points beneath 6000.00. It is easy to see why dealers are trying to get the SPX above 6000.00.
ZeroHedge reports, “US equity futures are higher, reversing much of yesterday’s drop, and European bourses are at all time high, as the market braces for NVDA earnings after today’s close. As of 7:30am, S&P futures are up 0.6% while Nasdaq futures jump 0.8% as all Mag7 names are higher premarket ex-AAPL, while NVDA rises 2.6% aiding the bid for Semis and signaling a rebound on Wall Street after Tuesday’s drop, fueled by a weaker-than-expected consumer confidence print that stirred fears of an economic downturn. Bond yields are 1-2bps higher but with little reaction to the House passing the blueprint for the next budget that is likely to materially increase the deficit. President Trump is set to meet Zelenskiy this week to sign an agreement giving the US control over half of the war-battered country’s natural resources. Elsewhere, China plans to start re-capitalizing several of its biggest banks in the coming months while BP announced it will increase its oil and gas production. The global risk-on tone is not extending to commodities where there is weakness across all 3 complexes. To the day ahead now, and the main highlight will be Nvidia’s earnings after the US close; data releases include US new home sales for January.”
VIX futures backed down to 18.74 this morning, as SPX finishes its bounce. Once accomplished, a breakout above the Cycle Top at 23.68 is likely. Most analysts sit up and take notice of the VIX above its historical midpoint at 25.00, so we may expect more commentary on the VIX very soon.
Tomorrow’s Max Pain lies at 19.00 with short gamma immediately beneath it. Long gamma bursts forth at 20.00 and remains strong to 28.00.
TNX may be consolidating near its daily low at 42.81, but has further to go in its correction. A likely target may be the mid-Cycle support at 42.23. Should it reach its goal by the weekend, a mid-Cycle eversal may take place. Details are sketchy at the moment, but the mid-Cycle area offers a significant opportunity for a bounce.
ZeroHedge reports, “After one of the strongest 2Y auction on record, the streak of strong coupon sales extended for a second day and despite the continued plunge in yields, which dipped well below 4.30% at one point in the day, today’s sale of $70BN in 5Y paper was flawless, and almost as strong as yesterday’s auction.
The auction stopped at a high yield of 4.123%, down 20bps from 4.330% last month and the lowest since Sept 24; it also stopped 1bps through the When Issued, the 4th consecutive stop through and the highest since December 2013.”
Bitcoin continues its descent as it approaches the mid-Cycle support at 83495.28. There may be a bounce in the making, only to retest the neckline of the Head & Shoulders formation near 91100.00. Trending strength may reappear over the weekend, leading up to a possible panic decline next week.
USD futures continue to consolidate as it corrects down to the mid-Cycle support at 104.83. The Cycles Model suggests another two weeks of decline prior to a very strong reversal.
The Japanese Yen has broken above its previous high at 67.27. In doing so, it has caused the Yen carry trade to cost approximately 7.7% more since the beginning of the year due to the Yen appreciation. So much for a cheap loan that was supposed to bear a .1% interest rate. While there “may” be a pullback to the mid-Cycle support at 65.78, the trend appears to be gathering strength for a blow-out to the Cycle Top at 70.42 in just a few more weeks. This may spell the death knell for the Yen carry trade.
Gold futures continued to fall to 2903.39 after yesterday’s strong reversal beneath the Cycle Top support at 2938.00. This action offers an aggressive sell signal. This suggests on may reduce exposure to gold. The Cycles Model suggests a probable decline to the end of March, which may be destructive to long positions. After beating the drums to buy gold last week, analysts are suddenly silent.
Crude oil may have made its Master Cycle low yesterday at 68.68. If so, there may be a bounce to the mid-Cycle resistance at 73.45 in the next one to two weeks. However, that is not the end of the decline. After the bounce, the probability is high that the decline may resume to mid-April.
ZeroHedge observes, “Oil prices in New York steadied this morning after starting the session at its lowest opening price in two months as a souring economic outlook threatened prospects for energy demand and spurred investors to shun riskier assets.”