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.
1:45 PM
YOU CAN’T SAY I DIDN’T WARN YOU. SPX is back at the neckline… and sinking. SPX may be due for a possible bounce, but don’t count on it going places. Regardless whether it closes above or beneath the neckline, the formation has been triggered. I have been warning for over a week that tomorrow would be a disaster in the making. The Cycles Model infers a double strength down day, suggesting we may see a limit down (7% decline) the first thing in the morning either tomorrow or Monday, or both. The first thing to start blowing up is the leveraged long funds and ETFs, as the neckline measures a 5% decline from the top. Should the SPX go beneath 6228.00, (a 10% decline from the top) margin calls may begin. No one will have the ability to sell, so stop losses may be useless, or worse, since a stop loss has no limit on how low it can be exercised in a panic down day. I am speaking from over 40 years of experience. The impossible becomes possible in a panic day.
10:03
Recent activity in the SPX has revealed an expanded Head & Shoulders formation, shown above. It surpassed the Intermediate resistance at 6746.00, but the right shoulder was halted near the 61.8% retracement value at 6757.36 and the peak of the left shoulder at 6764.58. This is a classic formation and fits very well with the Cycles outlook. Crossing the Intermediate support at 6746.00 may offer an aggressive sell signal, while beneath the 52-day Moving Average at 6716.18 may confirm the sell signal. Stay alert!
11:33 am
BKX is back beneath the 52-day Moving Average at 149.93 and on a confirmed sell signal. The Minimum target appears to be the mid-Cycle support at 136.52, while the intermediate target may be the April 7 bottom at 99.68. The Fed may be too little, too late to curb the negative impact of higher rates and thinning (ice) liquidity.
RealInvestmentAdvice posits, “In our last article, QE Is Coming, we focused on why the capital and financial markets have become so dependent on the Fed for liquidity. The article explains that, in the aftermath of the crisis, a slew of regulations drastically changed the liquidity landscape. As a result, the Fed—not the private market—is now the primary provider of liquidity.’
7:45 am
Good Morning!
SPX futures rose to6736.90 on the news of the Nvidia earnings blowout. It surpassed the 50% retracement level at 6723, then paused. Intermediate resistance lies at 6744.00. The Cycles Model allows another day or so of higher values after a small pullback. The 61.8% retracement lies at 6757.00, should it make it that far. Friday, monthly options expiration, may be extremely volatile in equities. Sentiment is higher overnight, but the (late) October payrolls and upcoming November payrolls look weak, while future performance may be constrained, unable to live up to today’s numbers.
Today’s options chain shows Max Pain at 6690.00. Long gamma may begin above 6700.00 while short gamma resides beneath 6689.00. Tomorrow’s am expiry shows Max Pain at 6700.00.
VIX futures pulled back to 20.33, still above mid-Cycle support at 19.72, where it may find support. Further support may be found at the 52-day Moving Average at 17.77. The Cycles Model shows an explosive move in the VIX starting on Friday and extending over the weekend. Velocity may expand in December.
The November 26 options chain shows long gamma coming in strong at 20.00 and above, while the sentiment for short gamma weakens.
The US 10-year Note edged slightly above its sideways consolidation, then pulled back. It may test the 52-day Moving Average at 40.83 for support, then forcefully launch higher over the weekend. The uptrend may extend for another month.
ZeroHedge reports, “In this week’s lone coupon auction, which just happens to print an hour before the release of the October FOMC minutes, moments ago the US sold $16BN in 20Y bonds at a high yield of 4.706%, up 20bps from 4.507% last month and the highest since August. The auction also tailed the When Issued 4.704% by 0.2bps, the first tail since June.”
USD futures may be consolidating above its 200-day Moving Average at 99.88 after yesterday’s breakout. Short sellers are caught with a deer-in-the-headlights look as the breakout signals a terrific short squeeze ahead. The Cycles Model implies short covering may begin tomorrow with vigor, lasting into the first week of December.
Bitcoin is hovering above its November 18 low at 88529.00, contemplating another probe lower over the weekend. The Cycles Model suggests that Bitcoin may extend its Master Cycle as far as mid-week, with up to two high velocity probes lower. Bitcoin is a pure liquidity play, as it may be used to launder money and move assets across borders. Governments are limiting/prohibiting the use of Bitcoin and other CBDCs as a means of keeping capital from fleeing. The loss of capital inflows has only indirectly affected US liquidity thus far.