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 declined to a morning low at 6801.70 thus far. It may decline to the Head & Shoulders neckline at 6775.00 before a bounce. There is a furious turnover as hedge funds shift from shorting the Mag 7 to shorting software, while small companies shine. The NYSE Hi-Lo Index showed a net increase of 337 more new highs VS new lows on February 11 with the SPX showing only a 9-point gain for the day. The rotation to smallcap stocks cannot add back the volume that is lost from the Mega-stocks being punished. No matter where the SPX lands, a bounce may form today to relieve the oversold condition. The Cycles Model suggests the recovery may only be short-lived.
Today’s options chain shows Max pain at 6925.00. Long gamma may begin above 6940.00 while short gamma rules beneath 6900.00. To achieve the minimum dealer payout, SPX must rise bac above 6900.00 by the end of the day. The bounce may be a barn burner.
The premarket VIX has risen above its Cycle Top at 21.56 this morning, offering a buy signal. Hedges may be bought on a pullback, as the overhead resistance has been pierced. The Cycles Model suggests the rally may gain serious momentum early next week.
The February 18 options chain shows a concentration of short gamma from 15.00 to 19.900. Long gamma may begin above 20.00. A wall of calls (374,719 contracts) resides at 25.00.
TNX futures declined to 40.67 while the cash market shows a low at 40.71. There is a short term support at 40.90 which, when exceeded, may signal a reversal. This decline represents a 62% Fibonacci retracement of the rally from the October low. A rally above the 52-day Moving Average at 41.76 may signal the onset of a 2-month rally to 45.00, or higher. Despite the decline, bond volatility is rising.
Yesterday, ZeroHedge observed, “After a mediocre 3Y, and a dismal 10Y auction yesterday, moments ago the Treasury concluded the sale of the week’s final refunding auction, when it unloaded $25BN in 30Y paper to seemingly endless demand.”
Bitcoin may be attempting a bounce this morning.