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.
7:45 am
Good Morning!
SPX futures declined overnight to 6811.30, then bounced to 6869.00, making an exact 61.8% Fibonacci retracement. Should SPX reverse down, it will have given us an aggressive sell signal. Aggressive sell signals are fraught with blow-backs and rising volatility. However, once the decline is underway, the next potential support level may be the 52-day Moving Average at 6752.70. There is a strong likelihood that the decline may completely retrace the rally from November 21 before a significant bounce occurs. The Cycles Model suggests today may be a high volatility day, with the potential for a panic decline.
Today’s options chain shows Max Pain at 6880.00. Long gamma resides above 6900.00 while short gamma prevails beneath 6850.00. Should the SPX repeat the overnight futures session, short gamma may affect trading today.
ZeroHedge reports, “US equity futures are lower, as lousy earnings and an ugly capex forecast by Oracle reversed the market euphoria following the “more dovish than expected” Fed rate cut.”
VIX futures rose to 16.88 and declined back beneath the trendline near 16.40. The Cycles Model suggests a breakout to new highs in the VIX may be imminent. VIX can go from very sleepy lows to dynamic highs in very short periods of time, as seen in April. A repeat performance may be in the making.
The December 17 (monthly expiration) options chain shows Max Pain at 19.50. Short gamma runs strong between 14.00 and 19.00. Long gamma Starts at 20.00 and runs to 100.00, thanks to institutional participation. This could be an interesting op-ex.
US 10-year bond yields plummeted to 41.23 during the overnight session, finding possible support at the trendline near 41.25. It opened at 41.31, suggesting a bounce/reversal may have begun. The Cycles Model infers a super-abundant strength over the next several days, implying a breakout that may end at the Cycle Top at 45.50 in the near future. The ensuing rally may prove once and for all that the Fed does not control rates.
ZeroHedge observes, “Tl;dr: The FOMC cut rates by 25bps to 3.50-3.75% as expected, with a 9-3 vote split; Miran sought a 50bps cut, while Goolsbee and Schmid preferred no change.”
ZeroHedge opines, “Rate Cuts Are Priced In—Forward Guidance Is the Catalyst
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Recent hiring data points to a weakening labor market.
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The Fed will start reinvesting more in Treasurys.
- The 2026 voting makeup will likely favor more easing.
The Federal Reserve’s monetary policy path should remain dovish…”
USD is in the process of making a Master Cycle low today near the current low of 98.37. A reversal above the 52-day MovingAverage at 98.99 offers a buy signal for USD> The Cycles Model implies that USD may have a very strong breakout above all the support/resistance lines as early as tomorrow. The new Master Cycle may last to the first week of January.
Bitcoin has declined beneath the Cycle Bottom support at 90245.00, making a morning low at 89429.88. The Current Master Cycle has about two more weeks of decline ahead. Note the Head & Shoulders target appears to be deeper than the April 7 low. This poses serious consequences for international liquidity.
Silver futures rose to 63.25 during the overnight session, continuing its course toward the upper trendline near 65.00. The Cycles Model shows today as a particularly strong trading day. It may “throw-over” as the momentum carries it higher over the next week. The current Master Cycle may end abruptly, so caution is urged.
Gold futures remain within their two week trading range. However, a breakout may be imminent as the Master Cycle winds up in the next week or so near 4500.00.
Crude oil futures made a morning low at 57.0, very near the Head & Shoulders neckline. Should it cross beneath it, the formation may be triggered with serious knock-on consequences. The Cycles Model allows about two more weeks of potential decline, giving it plenty of time to make its target.