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.
10:00 am
Good Morning!
SPX is challenging a minor trendline near 6850.00 this morning as it attempts a retracement bounce. Once complete, it may decline to new lows beneath 6827.00, where an aggressive sell signal resides. Aggressive sell signals often appear where the likelihood of a further decline may be 50% or more. The next support is the Intermediate level at 6784.14, where the probabilities may exceed 70%. The most commonly recognized support area is the 50-day (52-day) where the probability of a further decline may be 90% or more. While the November 7 low briefly went beneath the 52-day, it is considered a bounce off the 52-day. Trendlines are important. Friday’s high tested the 7-month trendline, while today’s retracement is testing a much smaller trendline, an extension of the Triangle formation. Once beneath it, the decline is likely to resume. Yesterday’s decline was highly unusual, considering this is a FOMC week. The powers-that-be usually attempt to signal that “all is well” prior to a Fed announcement with a flat or rising market. The break of the trendline, however small, may set the tone the the market reaction after the FOMC announcement. The Cycles Model infers that there may be a panic reaction to the Fed on Thursday.
Today’s options chain shows Max Pain (minimal payout to options holders) at 6850.00. Long gamma strengthens above 6870.00 while short gamma becomes dominant beneath 6840.00. The downside fuse is short.
Zerohedge reports, “US futures are unchanged, with traders looking forward to two market-moving events on Wednesday: the Fed meeting (where 22bps of easing is priced in) and Oracle results. ”
VIX rose to a morning high at 17.20 and has settled back to its own trendline near 16.60 – 16.70. It is on an aggressive buy signal with further resistance at the 52-day Moving Average at 18.39. Smart money are taking their positions while the average investor waits for a rise above 25.00 or a breakout. The Cycles Model allows two more weeks to rally with some panic days involved.
The December 10 options chain shows Max Pain at 17..00. Short gamma dwells between 15.00 – 16.00. Long gamma arises above 18.00, but concentrates under 25.00. No one is expecting a blow-out move.
TNX may be regaining its upward momentum as the bond market may be about to remind the Fed that it cannot be toyed with. It broke out above its trendline yesterday and may be approaching the mid-Cycle resistance at 42.45 (very near the 200-day Moving Average). The Cycles Model suggests possibly three panic days (rallies) in the 10-year note over the next two weeks. In the past, the Fed has consistently followed the direction that the bond market has given them. Any attempt to do otherwise may lead to a disruption of major magnitude.
Bitcoin is attempting to exceed last Thursday’s high at 94089.00. However, it is meeting resistance at the Intermediate demarcation. Should it fail to go higher, the decline may resume to the Head & Shoulders target in the next several weeks.
Crude oil futures hit a new low at 58.03 this morning, beneath Intermediate support/resistance at 59.64 and the 52-day Moving Average at 60.04. It is on a confirmed sell signal. The Cycles Model suggests a further decline to the end of the month with a possible Fibonacci target near 52.00. It may go lower, possibly as low as 44.00.