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 have edged modestly higher in a retracement , possibly to 6935.00-6940.00. The reversal from the all-time high at 6965.69 may be in its early stages where efforts are being made to claw back losses. It is ascertainable that each successive surge higher has been shorter, as it was met with growing resistance. The formation being considered is called a rising wedge or Ending Diagonal. See yesterday’s end-of-day commentary. The bottom trendline of the Ending Diagonal lies near 6875.00, offering an aggressive sell signal. Intermediate support is at 6830.00 while the 52-day Moving Average lies at 6817.00, confirming the sell signal.
Today’s options chain shows Max Pain at 6920.00. Long gamma may begin above 6950.00 while short gamma rules beneath 6900.00.
ZeroHedge reports, “Stock futures are muted, with traders awaiting two major catalysts: A possible Supreme Court ruling on whether Trump’s tariffs are legal and December payrolls — a key datapoint for the trajectory of interest rates.”
VIX pre-market is consolidating near yesterday’s high and above the trendline at 15.40. It may be due for a surge as trending strength comes into play this weekend. A panic Cycle may develop over the next week as investors become alarmed and rush to hedge their portfolios. What may cause the alarm? Earnings may disappoint. Global tensions may increase. A couple of significant banks will have to reveal their losses in the silver trade. CREs and consumer loans may be problematic. Potentially rising interest rates may dim future prospects. And Wall Street remains bullish.
The January 14 options chain turns bullish above 16.00. Significant put holdings at 15.00-16.00 indicate growing dealer positioning, since they must take the opposite side of the trade. The pot is starting to boil.
Speaking of the pot starting to boil…TNX has punctured the neckline of the Head & Shoulders formation at 42.05. US 10-Year Bond futures reached a high of 42.15 thus far this morning. While the Cycles Model only anticipates another week of rally, the Head & Shoulders target may be in view, despite Trump’s attempt at another QE.
ZeroHedge reports, “Shares of LoanDepot, Rocket Companies, and Opendoor Technologies surged in premarket trading after President Trump signaled plans to push Freddie Mac and Fannie Mae to purchase $200 billion in mortgage-backed securities, a move aimed at driving down mortgage rates and improving affordability ahead of the midterm election cycle.”
USD futures have briefly risen above the 52-day Moving Average at 99.04, signaling a possible breakout. It is unusual to see a breakout this late in a Master Cycle (day 263). This proposes a couple of possibilities. The first (and highest) view is that USD may extend its Master Cycle another week, elevating it to the Cycle Top at 100.57. An alternative view projects a possible phase-shift, where the USD may simply merge into the new Master Cycle without correcting, A third possibility shows a possible early Master Cycle low on December 25 at 97.75. All of these possibilities indicate a rising USD, not debasement. We may get clarity in the next week or so. In the meantime, the long-suffering dollar shorts are still in the majority.
Bitcoin remains above its 52-day Moving Average at 89269.00 this morning. There may be some residual strength in the retracement, allowing it to go as high as 92000.00 before resuming its decline. The Cycles Model suggests the decline may continue to the first week of February.
Silver found support at the trendline at 75.00 in the overnight session. The bounce may end quickly, as the Cycles Model suggests a short, but sharp decline to the 52-day Moving Average at 59.04 over the next week or so.