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.
2:07 pm
There is a struggle in the SPX to see who gains ascendancy. While another new low was made this afternoon, there may be a struggle by the dealers to keep SPX above the short gamma level at 5850. 00. Should they succeed, an attempt may be made at 5900.00 again, to frustrate those put buyers. Whether they succeed today or not, the trend is lower prices in the next month.
10:37 am
SPX has bounced to retest the Head & Shoulders neckline at 5900.00. We may see the decline resume shortly. Be warned that the CTA “sell level” at 5887.00 has been triggered. This means that going forward the decline may accelerate due to higher volume. Market liquidity is down significantly in the last week. SPX has seen a 5% loss from the top in what may be termed a retail buyers’ strike thus far. That may change to a more active selling environment with added (larger) players. The Head & Shoulders formation suggests a possible greater loss to come.
7:45 am
Good Morning!
SPX futures bounced to 5888.00 before easing lower this morning. Yesterday the trendline near 6000.00 was retested from beneath, then SPX declined through the 100-day Moving Average at 5950.00. Thus far the selling panic has been largely retail and hedge funds, but now larger players are getting mightily concerned. The CTA trigger at 5887.00 has been passed without so much as a nod and this morning’s bounce was not able to regain the “safe” level. That may trigger $40 billion in sales during the next week. This may be slightly offset by pension and 401(k) purchases. The Cycles Model calls for a “panic weekend” this week and into the next three weekends as well.
Today’s options chain is deep into short gamma beneath 6000.00. Short gamma has been purchased in volume every 50 points down to 5400.00, suggesting a relentless decline may be possible.
ZeroHedge reports, “US equity futures are higher, rebounding from an overnight rout driven by a plunge in Chinese and Japanese stocks, while the ongoing crash in bitcoin which sent the token briefly below $80K and down 25% from its all time high, is not helping the dismal sentiment. As of 8:00am ET, S&P futures were up 0.2% and well off the lows,signaling a rebound after the underlying index erased the last of its 2025 gains on Thursday and outperforming both Nasdaq and Russell. Mag 7 are higher led by META (+0.5%) and NVDA (+0.5%). Crypto-linked stocks are lower as Trump’s latest trade-tariff threats prompted a rush by some investors to safer assets, deepening the recent rout in Bitcoin. Bond yields are 1-2bp lower and the USD is higher as the yen finally cracks lower. Commodities are mostly lower: WTI -1.1%, copper -0.7%. Overall, we have seen equities trying to rebound modestly from yesterday’s selloff, but macro narrative has been pressured from trade/policies uncertainties (Trump is set to talk with Zelensky today) and stagflation concerns ; today we get the January PCE and income/spending report: core PCE is expected to print 2.6% YoY, vs. 2.8% prior.”
VIX futures are hovering near the top of the trading range this morning, awaiting the market open. While market savvy investors are hedging, most ignore the VIX as an indicator of market health/distress. Commentators may take notice once the VIX has surpassed it historic median price near 25.00. The Cycles Model indicates a series of possible upside panics in the VIX over the next three weeks.
The March 5 options chain shows Max Pain at 19.00. Short gamma resides between 15.00 and 18.00. Long gamma may begin above 20.00 and remains strong to 28.00.
TNX may be making a mid-Master Cycle reversal as its futures bounced from the mid-Cycle support at 42.21. A rally above the trendline at 44.00 may confirm the reversal. If correct, we may see TNX resuming its rally through the end of March. The implication is that both stocks and bonds may be in a panic decline. Nowhere to hide, except cash.
ZeroHedge observes, “After hotter-than-expected CPI and PPI (and various survey-based inflation expectations), today brings the Big Kahuna – The Fed’s preferred inflation indicator, Core PCE – which is expected to show a dovish downturn (from +2.8% YoY to +2.6% YoY). And that is exactly what happened with headline PCE rising 0.3% MoM (as expected) and Core up 0.3% MoM (as expected). That pushed the YoY shifts lower on a sequential basis (Core PCE YoY at its lowest since June 2024)…”
Bitcoin has been plumbing new lows, reaching 78329.80 prior to a bounce. The Cycles Model calls for a possible bounce back to the mid-Cycle resistance at 83719.34 as early as today prior to a resumption of the decline. There may be a significant low made during the week of March 10.
Gold futures have declined to 2862.69 thus far this morning. Currently, gold is on an aggressive sell signal, urging investors to lighten their long positions. It is approaching its first confirmed sell at the intermediate support at 2839.33. Beneath that, the sell signal becomes more urgent. The Cycles Model infers that the decline may continue to the end of March. Diagnal patteerns often retrace back to their source (1618.00).