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
SPX has declined to short-term support at 6827.00, but not through it. It has already crossed a short-term trendline, signifying weakness. Beneath 6827.00 lies an aggressive sell signal. Investors should consider lightening up their longs, should SPX decline further.
RealInvestmentAdvice considers, “A recent article by Simon White, via Bloomberg, discussed the rising cost of margin debt for investors. While his analysis below compares the cost of debt to GDP, we will also consider a more critical comparison to disposable personal income (DPI).”
7:45 am
Good Morning!
SPX futures rose to 6885.00 over the weekend, then eased down to test Friday’s low. The next two days contain a pivot, indicating a potential intra-Cycle reversal. The next opportunity for a pivot may be near mid-day. Currently the trendline offering overhead resistance is approaching 6900.00. Should the SPX trend lower, an aggressive sell signal may be offered beneath 6825.00. Intermediate support lies at 6773.98. A decline beneath that support offers confirmation of the sell signal. The Cycles Model remains relatively calm until Thursday, suggesting a downside panic may develop after the FOMC news release. The expectation is that Powell may announce another rate cut, saving the Santa rally.
Today’s options chain shows Max Pain at 6870.00. Long gamma rules above 6885.00 while short gamma becomes strong beneath 6850.00.
ZeroHedge reports, “With just 17 trading sessions left in 2025, stock futures edge higher again and are on pace for 10 gains in the past 11 days. S&P 500 futures were up 0.2% as of 5:32 a.m. in New York, with Nasdaq 100 contracts +0.3%.”
VIX futures rose to a weekend high at 16.39, testing the trendline. While the crushing of the VIX appears to be complete, the magnitude of the decline signals a possible payback in the other direction. A rise above the trendline gives a potential aggressive buy signal for the VIX. Confirmation of the buy signal comes in above the 52-day Moving Average at 18.38. The April high may come into play again.
Teh December 10 options chain shows Max Pain at 17.00. Short gamma has narrowed down to 15.00 – 16.00. Long gamma begins at 18.00 with max longs at 20.00.
The US 10-year Bond yield rose to a weekend high at 41.63, breaking through the trendline resistance near 41.00. The breakout is surely to be recognized by the long UST investors. The Cycles Model suggests a triple panic event occurring over the next two weeks. The pressure on yields may be immense as bond long run for cover. This somehow doesn’t jive with the nearly 100% expectation of a Fed cut on Wednesday. What else is there? With reserve levels no longer abundant, the Fed is expected to resume funding Reserve Management Purchases and Term Repo Operations to the tune of $45 billion per month stating in January. Should the market react strongly, it appears that the announcement may be “too little, too late.”
USD appears to be consolidating just above Thursday’s Master Cycle low. While USD appears to be sleepy, the Cycles Model suggests a very strong wake-up call arriving this week with knock-on effects for the next month.
Bitcoin is striving against the Cycle Bottom resistance at 91042.00 this morning, but is not expected to make a new high against Thursday’s high at 94089.00. The Cycles Model suggests 2-3 weeks of further decline as the Head & Shoulder target looms. Bitcoin may be an international proxy for liquidity and may be warning of an upcoming liquidity event.
Gold futures have remained flat for the past week. However, the Cycles Model suggests a possible panic surge higher in the next two weeks. Gold remains on a buy signal with a potential target near 4500.00.