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
3;25 PM
There are two basic elements to Cycles; time and price. Those of you who have been following this blog know that time has been important in determining the length of a Cycle. This one has gone into overtime, which has led to several missed calls. The most commonly used Cycle is the 60-day Cycle, which may be recognized about 70% of the time. But most Cycles analysts go silent when the Cycle doesn’t fit the 60-day pattern, and wait for it to reappear. The December 26 high at 6945.77 occurred in 58 days from the October 29 high, close enough for a 60-day Cycle, but the Cycle wasn’t finished until today, day 75. This isn’t the first time that I have concluded that time alone is too one-dimensional. This illustration is not used to explain the Cycles Model, but to show the variability within the Cycles.
The Second dimension is price. For the past two weeks I had consistently called for the top to come in near 6975.00, using trendline analysis, but last week when it should have met the trendline, it fell short. It was the trading band at 6984.00 that was set to Cycle dimensions that gave us the top today with a very clear signal that the reversal would happen. There are other dimensions to the Cycles that are based on human behavior in large groups.
12:25 pm
BKX declined solidly beneath its Cycle Top and trendline at 171.65 today. This action gives an aggressive sell signal that may be confirmed in a decline beneath Intermediate support at 162.72 with further support and signals given beneath the 52-day Moving Average at 158.14. This reversal is not to be ignored, as the BKX may be a proxy for market liquidity. The critical larger banks are expected to post lower revenue growth from trading gains this past quarter, but investment-banking fees are expected to remain robust. The key may be which significant banks got caught in the silver meltdown at the end of the year.
7:45 am
Good Morning!
SPX futures tested round number support and the short-term trendline at 6900.00, making a low of 6911.00. Beneath that level one may find an aggressive sell signal, which may be confirmed beneath Intermediate support at 6850.20 and the 52-day Moving Average at 6821.60. Some major players have exited the market over the weekend and we are now in a testing phase, to see if the various support levels hold. The Cycles Model indicates that the Master Cycle may be complete as of Friday, with a high probability of a change in trend.
Today’s options chain shows Max Pain at 6970.00 Long gamma may increase above 6990.00-7000.0 while short gamma becomes strong beneath 6925.00.
ZeroHedge reports, “Sell America” is back: US equity futures and other US assets – including the dollar – are lower (even as Europe and Asia rise) while precious metals surge to new record highs after the DOJ subpoenaed the Fed and launched a criminal probe into Jerome Powell; ongoing protests in Iran are also denting sentiment.”
The pre-market VIX rose to a morning high at 16.68 thus far. It is now above the trendline, offering an aggressive buy signal. Confirmation tof the buy signal rests above the 52-day Moving Average at 17.18 while the mid-Cycle resistance lies at 17.95. The Cycles Model ha s put a potential panic label on the VIX this week. A significant breakout is possible.
The January 14 options chain shows short gamma nestled in the range of 14.00-15.00. Long gamma begins at 16.00 and tapers off at 30.00. Today’s move has caught many investors unawares.
The US 10-year bond yield appears to be consolidating under the Head & Shoulders neckline at 42.05 after breaking through on Friday. The Cycles Model suggests that, while the current Master Cycle may be ending this week, it may do so in strength, despite efforts to curb interest rates.
USD futures may have made its Master Cycle high on Friday. Today it has pulled back from the 52-day Moving Average at 99.04 to Intermediate support at 98.64. This suggests either a decline or short-term consolidation over the next week.
The Japanese Yen may have bounced this morning, but the Cycles Model suggests a further decline to go before a significant reversal. The next support may be the Cycle Bottom at 62.95. The final probe and reversal may occur this week. The next policy meeting for the Bank of Japan will be held on January 22-23. Speculation that the BOJ may hike key interest rates further may strengthen the Yen.
Bitcoin bounced from round number support at 90000.00 this morning. It made its Master Cycle high at 94804.00 last Monday and is due to decline to the first week of February. The Head & Shoulders formation is still active, suggesting a significant new low may be made.
Silver hit a new all-time high at 82.81 this morning. This breakout may last up to two more weeks, with a potential target near 90.00 to 100.00. The action in silver is getting interesting, as the source of supply has diminished at the same time that demand is growing.