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.
3:06 pm
SPX has fallen through the neckline of a small Head & Shoulders formation. People ask, “Why do Head & Shoulders formations have a minimum target?” The reason is that third Waves can never be the smallest of an impulsive series. An impulse contains 5 Waves, in which the third normally offers the longest and most powerful impulse of the series, as illustrated in Wave 1. During the 2008 decline, third Waves were consistently 1.5 time the length of Wave one. They may have a larger or smaller multiple. the third Waves leading to the all-time high produced Wave threes were 120% of the Waves ones.
7:45 am
SPX futures bounced at the 100-day Moving average at 5948.00 and are retesting the trendline near 6000.00 this morning as a final effort to gain ascendancy above the 50-day at 6006.00. Few recognize the trendline that has an equal or greater importance as a guideline for the uptrend. The 50-day is beneath Intermediate support/resistance at 6021.00, a possible alternate target. Should it linger near 6000.00, the SPX rising above yesterday’s high at 6009.42 is possible. The Cycles Model calls for a resumption of the decline by the weekend with a possible pivot occurring today.
Today’s options chain shows Max Pain at 5995.00 Long gamma may begin above 6000.00 while short gamma become strong beneath 5950.00.
ZeroHedge reports, “US equity futures are higher post-NVDA, though the stock’s reaction was a bit muted with the stock rising ~2% pre-market, a far cry from the 10% swing that was priced in by straddles ahead of earnings (and why both puts and calls will expire worthless). As of 8:00am ET, S&P futures are up 0.6%, and Nasdaq futures rise 0.8%, with all Mag7 stocks higher, and Semis and Fins also stronger. Bond yields are up 5bps from 2s to 30s with USD poised to have its strongest day in 5 sessions as yen drops sharply after stops are triggered around 149.40. Commodites are weaker ex-Energy although WTI remains below $70/bbl. Today’s macro data focus is on Durable/Cap Goods and Jobless data. Notably, both Asian and European stocks are weaker today, prompting JPM to ask if “this the beginning of a rotation back to US TMT?”
VIX futures declined to 17.67 this morning in a correction with a possible target at the mid-Cycles support at 16.68. The Cycles Model calls for a reversal back to the uptrend around mid-day.
The March 5 options chain shows Max Pain at 19.00. Short gamma resides between 15.00 and 18.00. Long gamma begins at 20.00 and remains strong to 28.00.
Bitcoin has regained the mid-Cycle support at 83613.70 this morning after a strong challenge beneath it yesterday. The Cycles Model calls for a resumption of the decline by the weekend followed by a steep decline over the next week. The Master Cycle low may be found in the week of March 10.
TNX made a low near the mid-Cycle support at 42.22 yesterday. It may make another probe lower in the next day or so. However, the weekend may bring a mid-Master Cycle reversal back to the rally mode for the rest of the month. Today we will see $155 billion of short term T-bills at auction as the last offering of the month is made.
USD futures may have made an early Master Cycle low on Monday as the USD has been gaining elevation since then. The target at mid-Cycle support at 104.84 has not been met, leaving a slight risk of another probe lower. We remain neutral, as a buy signal above Intermediate support at 107.69 has not been made.
The Yen is retracing some of tis gains with a possible downside target at the mid-Cycle support at 65.78. The uptrend may strengthen beginning in March with a Master Cycle high due the week of March 17. Few see the risk of a rising currency, especially when loans are taken out in that currency, known as the “carry trade.” The Yen has already appreciated by over 7% since the beginning of the year. Some of thos who borrowed on the “carry” may be getting uncomfortable.
Gold futures declined to a new low at 2890.00 this morning. It is on an aggressive sell signal beneath the Cycle Top at 2943.38. The Cycles Model suggests the decline may continue to the end of March. A month-long decline may bring gold down to the Cycle Bottom at 2273.10.