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.
11:15 am
While stocks and bonds go into decline, foodstuffs may be on the rise. The GSCI Ag Index is about to hit its Master Cycle low this week. The Cycles Model suggests that food costs may rally to the end of March! This is one sector to be long as a hedge against rising food costs.
USAToday comments, “Jesi Aviles knows exactly what her weekly grocery bill will be before she walks into Walmart.
“I know when I go in the grocery store, I’m not leaving without spending $400.”
The 32-year-old stay-at-home mom of five in Mount Airy, North Carolina, has watched that number climb steadily over the past few years. Just about two years ago, she could feed her family of seven for $200 a week easily. Now the cost has doubled. The family spends about $1,600 on groceries a month, more than their $850 rent.”
10:43 am
BKX has pulled back from its Cycle Top resistance and reversed beneath its upper trendline, giving an aggressive sell signal. BKX has lasted beyond the mainstream stock highs due to investor rotation out of AI and retail stocks. This creates a false sense that all is well in this category. One cannot be further from the truth, as rising rates and rising Yen have taken away the free pass to profits in the financial. While TNX is testing the 42.00 level, the Bank of Japan may come out with its revised Statement of Monetary Policy on Friday.
8:10 am
Good Morning!
SPX futures fell to 6770.50 overnight, coming near the 52-day Moving Average, but managed to crawl back up to the flat line this morning. An appearance of normalcy on the surface hides the churning beneath. Rotation out of AI and retail stocks has been finding a home among small-cap and mid-cap stocks, a risky bet. November’s delayed employment report is due at 8:30 am. The consensus is for a negative surprise. The Short-term outlook is for a brief bounce this morning back to yesterday’s high at 6861.59. The minimum decline after the bounce may be to the 52-day Moving Average at 6762.00. However, a negative surprise may decline through that level. The Head & Shoulders neckline is at 6522.00.
Today’s options chain shows Max Pain at 6820.00. Long gamma begins above 6850.00 while short gamma rules beneath 6780.0.
ZeroHedge reports, “Stock futures are lower, but well off session lows, as traders await delayed jobs data that will shape the Fed’s next move. As of 7:15am, S&P 500 futures are 0.2% lower while Nasdaq 100 contracts are -0.3% with all Mag 7 names lower premarket; European equities are little changed.”
9:40 am
ZeroHedge observes, “Ahead of today’s jobs report, Goldman Delta One Head Rich Privorotsky wrote that with the October print backward looking and mostly govt related and irrelevant, “anywhere near consensus for November (+/-25k of 50k) feels like the sweet spot…that said, hard to see the FOMC feeling compelled to halt accommodation or even talk about hiking if labor momentum is still sub-100k on trend.”
VIX futures retested this week’s high but remained inside the trading range. The Cycles Model infers the next two days may offer a strong (breakout) day, waking up the “somnolent” VIX. The following week may offer higher than usual volatility as the VIX plays catch-up.
Tomorrow’s VIX options chain shows Max Pain at 19.50. Short gamma rules beneath 19.00 while long gamma may be gaining strength above 20.00. A nudge above 20.00 may send the VIX into orbit.
The Shanghai Composite has declined to the neckline of the Head & Shoulders formation at 3916.58 today, triggering that formation, with knock-on consequences. The November 14 high was not its all-time high, which occurred in 2008. Because it has made a later high, it has attracted many US investors chasing outsize gains. Those gains may soon be losses.
TNX ramped up to the Head & Shoulders neckline at 42.04 this morning, testing that resistance. It may have made a double directional signal last week, signifying the potential Master Cycle low. A breakout may be imminent, signaling a possible rally for yet another month. A move in either direction may do so in strength.
USD may have made its extended Master Cycle low at 97.90 this morning. A reversal may signal a very strong uptick in the USD through the end of the year.
The Japanese Yen broke above Intermediate resistance at 65.45, confirming its buy signal. The Cycles Model suggests the uptrend may continue to early January in increasing strength. The 52-day Moving Average is at 64.98 above which the trend is commonly recognized. The rising strength of the rally may be supported by short covering. In essence, the Yen carry trade is a big short on the Yen.
Bitcoin is continuing its descent towards the Head & Shoulders target. The Cycles Model shows at least another week of decline. There is an option of declining to the year-end. We may monitor bitcoin to see where & when the end finally comes.
West Texas crude declined to 54.97 this morning, beneath the Head & Shoulders neckline at 56.30 and the Cycle Bottom at 55.59. The final decline may be underway and may be over in the next two weeks. This is rare positioning for such a formation, so it may bear monitoring.
ZeroHedge observes, “West Texas Intermediate oil fell below $55 a barrel for the first time since February 2021, the latest sign that crude supplies are outpacing demand as the market braces for a large surplus, and further helped rising hopes for a potential peace deal in the Russia-Ukraine conflict.’