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.
10:42 am
SPX has declined beneath the short-term trendline at 6827, which held it up until late last week. The aggressive sell signal is on, but closing in on additional confirmation beneath Intermediate support at 6789.31. The 52-day Moving average is near 6766.00, where most investors may recognize the sell signal.
7:50 am
God Morning!
SPX futures rose to 6864.10, a near perfect Fibonacci 61.8% retracement after a 102 point decline from Thursday’s high at 6903.46. Contrary to some reports, the SPX did not make a new all-time high, as the October 29 high at 6920.34 remains the record high, based on the futures, cash market and SPY, whose high on that date was 689.70. Perhaps there is a bit of wishful thinking about the Santa Rally, while not a bust, came awfully close to making that ATH. What caused the failure may have been a loss of confidence in AI and consumer discretionary stocks. The rotation to small and mid-caps was not enough to push the major indices higher. The Cycles Model indicates that Thursday may have been the Master Cycle high for the SPX. This allows the potential of a decline to the end of January. Should that be accurate, the next step may be a decline to test the Head & Shoulders neckline at 6520.00.
Today’s options chain shows Max Pain at 6850.00. Long gamma may begin above 6890.00 while short gamma resides beneath 6825.00.
ZeroHedge reports, “Stocks are set to recoup some of Friday’s tech-driven losses, with a big week of data releases ahead, as the last full week of 2025 comes witgh a bang. Still, sentiment seems a little shaky, with rising signs of skepticism over AI and debate about the extent of rate cuts next year.”
VIX futures rose to 16.52 above the trendline at 16.30. This may indicate an aggressive buy signal. Confirmation may come above the 52-day Moving Average at 18.37. While ;the average investor ignores the VIX until a breakout at 28.27, professionals are loading up on the VIX as a hedge against an increasingly uncertain market. The Cycles Model suggests a potentially explosive move out of Friday’s (proposed) Master Cycle low.
The December 17 options chain shows Max Pain at 19.50. Short gamma rules b etween 14.00 and 19.00. Long gamma begins in strength at 20.00 and reveals institutional presence with large clusters of calls every 5 points to 110.00.
TNX retreated this morning after retesting the 42.00 level on Friday. The top view shows the Cycles Model suggesting that the 10-year yield may be flat or lower this week, possibly targeting the 52-day Moving Average at 40.02, followed by a potentially explosive move higher. Once the retracement is complete, a breakout to a mid-January high near the Cycle Top may be anticipated.
USD futures may be slowly rising out of their Master Cycle low on Thursday. The Cycles Model shows noticeable activity in the USD starting later this week, with a possible breakout this weekend followed by a sharp rally to the first week of January.
The Japanese Yen rose above its Intermediate support at 64.48, amplifying its buy signal. The rise in the 10-0year Japanese bond rate in late October signaled the end of rising AI stock prices which are dependent on longer-term financing (charts not available) for their data centers. A breakout above the 52-day Moving Average at 65.05 may signal the end of the Yen carry trade. The Bank of Japan will issue a new statement on monetary policy on December 19. The Cycles MOdel suggests this may cause a great amount of volatility in the Yen.
Bitcoin appears to be sliding down the Cycle Bottom at 89087.00. Bitcoin may “fall off the luge” later this week as the decline accelerates. While the normal Cycle bottom may be scheduled to occur within the next two weeks, the decline may continue with strength to the end of the year.
Gold futures may have made a secondary high on Friday at 4384.15. The problem is, the all-time futures high was 4398.00 on October 20. Note that TNX made its low on October 22 and has been trending higher since. The USD made its low on September 17. These events have kept gold in a corrective formation with a possible lower low in January before trending higher. Commentators are confident that the bull market in gold may last another year.
Silver futures may have made a new all-time high on Thursday while completing a probable Master Cycle high. However, there may be room for yet another new high this week. The decline on Friday after making its high has been retraced to 64.18 this weekend. Retracements of this nature may be strong enough to make investors to believe that it will go higher, but may turn into a false flag. The real parabola may not have arrived, yet.
Crude oil futures have declined over the weekend to 56.67, threatening the neckline of the Head & Shoulders formation near 56.50. Crude has about two weeks to decline beneath the neckline, followed by a snap back to retest the neckline resistance. The head & Shoulders formation may take two months to complete.