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.
3:40 pm
SPX may have completed its final probe higher prior to hitting the trendline, having consumed the time left in this fractal. It may go modestly higher, but all the requirements for this formation have been met. A sell signal may be found beneath 6810.00 with confirmation beneath the 52-day Moving Average at 6736.82.
ZeroHedge opines, “The conclusion to yesterday’s Global Daily was that we are still in a systemic metacrisis. True, many market metrics don’t show it – but how many deckchairs told the Titanic’s passengers they were heading for the iceberg? Markets have a vital role, as do chairs, but expecting them to reflect the potential enormity of what’s going on could end up with you being in very cold water.”
7:45 am
Good Morning!
SPX futures ran up to 6850.00 thus far this morning breaking out of a possible triangle formation. The 2-hour “trading chart” is highlighted this morning to bring the triangle in sharper focus. Should this be correct, the SPX may have the ability to rise to test the 7-month trendline at 6875.00 – 6880.00. Triangles usually proceed a final move in a series ending in a major reversal.
Today’s options chain shows Max Pain at 6830.00. Long gamma prevails above 6880.00 while short gamma weighs heavily beneath 6800.00.
ZeroHedge reports, “US equity futures are higher again, led by small cap stocks. As of 8:20am ET, S&P futures are up 0.2% (they dropped following a very ugly ADP print at 8:15am), the same as Nasdaq 100 futs…”
VIX futures continue to consolidate between Friday’s low and the 52-day Moving Average at 18.40, showing very little stress. A buy signal is found above the 52-day. VIX has stopped its decline over the weekend when the Bank of Japan announced its consideration of higher rates after months of somnolence. Rising rates in Japanese Government Bonds may have possible knock-on effects on multiple fronts, including the VIX. Recall the BOJ’s announcement of higher rates in August 2024? Something similar may be about to happen again, as the BOJ seeks to “normalize” its rates.
Today is options expiration in the VIX. The December 10 options chain shows Max Pain at 18.00. Short gamma is shrinking to 15.00 – 17.00. Long gamma is rising above 19.00, but there is not a lot of long conviction yet.
The 10-Year Treasury yield has challenged Intermediate support at 40.60, but it may not last as it may be gathering strength to break out above the trendline near 41.40. The Cycles Model shows an imminent return of trending strength that may force deleveraging of multiple markets. Blame it on the Bank of Japan. The gap between the JGB 10-year yield and the US 10-year yield is very wide and pressure to close the gap may bring trending strength back to TNX.
USD futures declined to 98.89, probing beneath the 52-day Moving Average at 99.07. This may be a false signal to traders, since the current Master Cycle may have ended with this show of downside strength. While dollar shorts may be relaxing at this probe lower, its may be gathering strength for a fiery rally, as the Cycles Model shows trending upside strength during the next three weeks.
Bitcoin just extended its Master Cycle high this morning and subsequently declined beneath its Cycle Bottom support/resistance at 92401.00. This action gives a sell signal as the decline is moving very fast. The Cycles Model shows the decline resuming to the end of the year.
Gold futures are rising back above the Cycle Top resistance at 4231.00 this morning. The Cycles Model shows a possible two more weeks left in the current Master Cycle, with the trendline near 4500.00. A surge to the upper trendline is possible due to heightening international pressures.
The Japanese Yen has risen above its Cycle Bottom at 64.20, giving a buy signal. The Cycles Model indicates a rally through the end of the year, allowing the Yen the ability to rise to its Cycle Top at 70.94. This move may wipe out the Yen carry trade, as borrowers were anticipating ultra-low interest payments (.0025%) and a declining Yen. Hedge funds using the Yen carry to ultra-leverage (50-1oox) their investment may already be feeling the pain. Mutual funds and ETFs using leverage should be evaluated for their exposure to the Yen carry trade.