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.
10:36 am
BKX is coming off its Master Cycle high made on December 24. Christmas is past and the near-parabolic rally appears over. The Cycles Model calls for a probable decline to the end of January. A crossing beneath the upper trendline of the Ending Diagonal formation may have caused an aggressive sell signal, but confirmation lies considerably beneath it, at 157.93. Nonetheless, lightening of long exposure to banks may be a good move.
7:45 am
Good Morning!
SPX futures consolidated near 6900.00 in the overnight session. It may be set to decline further to the Intermediate support at 6800.00 over the next couple of days. The Cycles Model calls for modest declines this week, then potentially accelerating into a panic decline next week. The new Master Cycle may last to the end of January. Looking back, it took the SPX two months to put in a new ATH by only 25 points. Yet Wall Street analysts proclaim a significant acceleration of corporate profits, despite the conundrum of fewer full-time jobs and rising part-time jobs fueling a decline in economic growth. The January earnings season may tell all.
Today’s options chain shows Max Pain at 6915.00. Long gamma may preside above 6925.00 while short gamma rules beneath 6900.00.
Zerohedge reports, “Stock struggled to find direction amid a year-end lack of catalysts and the traditional lull in trading in the final trading days of the year. After suffering one of the biggest one-day drops on record, silver and gold regained their footing after sliding from all-time highs.”
VIX futures are consolidating within yesterday’s trading range. There is a clear reversal above Friday’s Master Cycle low. The Cycles Model portrays a modest rally into the year-end. However, thee is a doubly indicted panic event projected for early nest week. The VIX may awaken from its slumber to welcome 2026. The collapse of the VIX engenders expectations of economic stability that may not exist in real time.
The December 31 options chin shows Max Pain near 17.00. Short gamma resides between 14.00 and 17.00 while long gamma becomes strong above 20.00.
TNX tested the 52-day Moving Average yesterday, December 29, completing its Master Cycle at 41.08. The combination bounce from the 52-day and rally above Intermediate resistance at 41.18 creates a buy signal. Most may wait for the breakout above 42.00 to buy in. That may come as early as next week.
USD futures may be consolidating, ready to complete its final probe to the Cycle Bottom at 96.78. The Cycles Model gives it a week to finish the job. This weekend appears to offer a possible high volatility resolution to the Cycles.
The Japanese Yen also has about a week to complete the decline into the anticipated Master Cycle low projected to be near 60.00. This must be an extreme frustration for the Bank of Japan, which has raised its key interest rate from .5% to .75% this month. Investors much prefer the US treasury bonds over those issued by the Bank of Japan. It has signaled that there is room for more rate hikes and may do so as early as the first week of Japan, where a Cycle turn is indicated.
Bitcoin may be completing its consolidation move today possibly winding up for an explosive move later this week. The Cycles Model allows a significant decline into the first week of February as it resumes its mission to take out the Head & Shoulders target. Bitcoin has been in decline since September as world governments, especially China, have been hostile toward the use of Crypto. European governments are considering a ban on Crypto, especially as the prospects of a war in Europe arises.
Silver has bounced above its trendline at 72.00 this weekend after a wild ride to its peak at 82.61 on Sunday, then a sell-off to 70.69 in the overnight market. The Cycles Model calls for a possible consolidation or correction this week with a possible spike higher into the first two weeks of January. Since silver has some strategic value, a rise to 100.00 per ounce may cause a ban on trading, should the prospects of a war rise.
ZeroHedge remarks, “After an almost vertical move higher, the CME hiked margin requirements on silver futures again, and we got a fast, ugly flush: double-digit intraday drops, headlines about “speculative excess,” and miners getting hit even harder than the metal.(The Economic Times)
That’s the kind of tape that makes late longs puke and tourists swear off commodities for a while. It’s also the kind of tape that tends to create opportunity if the underlying bull case is still intact.”
Gold has crossed beneath its Cycle Top support/resistance at 4425.32 and is now testing resistance from beneath. Should it remain there, a further sell-off may be develop, with the 52-day Moving Average at 4177.14 in sight. The Cycles Model project a possible turn next week, suggesting that gold may go lower until then. Having met its upside target, the likelihood of a major correction is high.