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
11:30 am
BKX is taking a deep dive from its 52-day Moving Average at 169.00. The Cycles Model suggests a high velocity decline that may break through the trendline at 156.00. The Cycles Model suggests the decline may continue to the week of April 10. The potential target may be the April low at 99.66.
11:00 am
SPX is going into short gamma beneath 6850.00. Should this continue, the dealers who sold SPX puts may have to short the SPX as well in order to fund the matured options at the end of the day. Should this continue, downside momentum may accelerate.
7:45 am
Good Morning!
SPX futures declined to 6855.00 over the weekend, then bounced to 6899.00 this morning before resuming its decline. There were five attempts by options investors on Friday to rise above 6900.00 with the final attempt at the close. This may have been due to monthly options expiring and a very large block of calls at 6900.00. The sell-off in the futures market on Sunday may have been due to dealers matching their underlying assets against the maturing calls. While the SPX has gone nowhere in the past three months, with the high to low range being only 3.3%, less than half of the normal trading range for the SPX. This has given comfort to traders/speculators who have been trading that range, not realizing that the SPX has slipped beneath two major supports, the Ending Diagonal, currently at 6910.00 and the 52-day Moving Average at 6895.00. In addition, virtually no one realizes that a neckline of a Head & Shoulders formation (shown on the two-hour chart) exists at 6775.00, with its bearish implications. There may be an air pocket beneath the neckline down to 6500.00.
Today’s options chain shows Max Pain at 6900.00. Long gamma strengthens above 6950.00, while short gamma rules beneath 6850.00.
ZeroHedge reports, “Stock futures slumped after Trump’s weekend tariff tantrum added uncertainty to American trade policy and was another blow to bullish outlooks for 2026. The Supreme Court’s tariff ruling means a big source of fiscal revenue from 2025 may have to be refunded (although if it is refunded to US consumers, who bore the brunt of tariffs as most liberals analysts concluded, it would represent a huge pre-midterm stimulus).”
The premarket VIX has risen to 20.64 this morning. While SPX remains flat, the VIX continues to rise, suggesting not all is well under the hood. The rise above the trendline tells us that investors are beginning to hedge the SPX. Dealers often take the opposite side of the options they sell. However, when a breakout occurs, they must also short the SPX to monetize the options. In the case of the VIX, a breakout may force dealers to join the speculators who are buying the VIX/selling the SPX.
Wednesday’s options chain shows short gamma has fallen off a cliff with a small remainder still at 15.00 to 18.00. Long gamma begins strongly at 19.00 and stretches to 40.00.
TNX is correcting its initial move off its Master cycle low on February 17. It may probe nominally lower in the next couple of days. However, Thursday may show as a panic-up day as the yields resume their pace higher.
USD was pushed back from the 52-day Moving Average at 97.97. It is likely that the USD may resume its decline to the trendline or beneath it in the next three weeks.
The Japanese Yen has bounced from the 52-day Moving Average at 64.15 this morning, extending its Master Cycle. The Model suggests a possible panic-up day mid-week that may propel the Yen above its previous highs. It suggests a very strong trend upward to mid-April. The Cycle Top is a plausible target, as the yen is heavily shorted. Unwinding those shorts (carry trade) my provide ample fuel for such a rally.
Bitcoin has exceeded its initial target of 65000.00. It may now proceed to the next level, which lies near 63000.00. Here is the risk…should BTC continue its decline beneath the February 6 low at 60069.00, it may assume a deeper decline, perhaps to 48000.00. You see, the 50% retracement of the Bitcoin rally from its January 2015 low to its October 2025 high is at 63222.00. The 61.8% Fibonacci retracement appears at 48339.00. The Cycles Model infers a possible continued decline to April 15, giving Bitcoin plenty of time to incur substantially higher losses.
Silver futures rose to 87.83, then pulled back today. It may challenge the Cycle Top at 91.25 before reversing back down. Silver may be in a complex correction that could last to early April. The downside target may be as low as 30.00. What is incomprehensible to most investors is the magnitude of the moves. Seen in a larger context, they may appear normal. Latecomers to the silver trade may become discouraged as losses pile up.