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
10:51 am
SPX opened lower, but bounced at the 2-hour Cycle Bottom at 6810.00. It then made a 61.8% Fibonacci retracement at 6880.00 on light volume. The retracement may have been the work of dealers who have a lot at stake should the SPX decline lower. The Cycles Model indicates an imminent collapse to the neckline.
8:00 am
Good Morning!
SPX futures rose to 6858.00 this morning as dealers sold shorts to fund yesterday’s options payout. It is noteworthy that the dealers may be taking the same position as the short sellers. Normally they take the opposites side of the options speculators, but there is no demand for calls. As the SPX enters short gamma, dealers have no choice but to short the SPX as well, compounding the effect. Max Pain, where dealers pay the least on maturing options, is now above 6900.00. The Cycles Model infers that today may be an especially hard down day as both the speculators and dealers may be short the options market. A decline beneath the Head & Shoulders neckline at 6775.00 may result in a bounce near 6700.00 to retest the neckline. There is a minor support near 6812.00.
Today’s options chain shows Max Pain near 6865.00. Long gamma dominates above 6900.00 while short gamma is strong beneath 6830.00.
ZeroHedge reports, “A short rebound in stocks fizzled after Monday’s drop, as worries about the disruptive impact of artificial intelligence continued to unsettle markets which digested yesterday’s AI scare, and await today’s Claude / Anthropic presentation, while preparing for tonight’s State of the Union address (“SOTU”).”
The premarket VIX tested the Cycle Top resistance at 21.65 this morning. The Cycles Model suggests that the VIX may go into hyperdrive for the balance of this week. The consensus is that VIX may rise to 35.00. However, there is an equal possibility that the VIX may rise to the April 2025 high near 60.00.
Tomorrow’s options chain shows Max Pain at 19.00 Short gamma between 15.00 and 17.00 is weakening. On the other hand, there are significant call walls at 20.00, 25.00, 30.00 and 40.00 signifying institutional involvement.
TNX rose from its Master Cycle low this morning to resume its uptrend. A busy week of Treasury auctions begins today. The Cycles Model suggests rising rates reaching critical mass by the weekend. The Head & Shoulders formation indicates a possible target near 45.00 in the next two months.
The USD index is testing the 52-day Moving Average at 97.96 this morning. A breakout reinforces the buy signal made in early February. Overhead resistance is heavy, so it may take another week to break out above it. The Cycles Model shows March to be a very active month for the USD.
Japanese Yen futures declined to 64.00 this morning, extending their Master Cycle low. The decline appears complete, allowing the Yen to resume its new uptrend. The Cycles Model shows an increase in activity in March, with a possible ongoing rally through mid-April. Given that time period, it is possible for the Yen to reach its Cycle Top at 70.20 in April.
Bitcoin has reached an intermediate target near 63000.00, as indicated. However, the fractal dimension may not be complete. The next test is the Master Cycle low made on February 6 at 69069.72. Should it go lower, it’s next support level may be near 50000.00. An ultimate target may be between 35000.00 and 40000.00. A b ounce above the February 6 low may bring some relief to Bitcoin investors.