1:00 pm
SPX has fallen through short-term support at 6040.00. The next support lies at 5957.21. The Cycles Model does not anticipate a significant bounce until Fed day (Wednesday).
7:45 am 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.
Good Morning!
SPX futures have bounced this morning to a high at 6074.20 thus far. The Cycles Model suggests the bounce may be over this morning. If so, the stage may be set for a week-long decline. Recall that the all-time high was made a week ago. After Tuesday’s decline, the SPX has done little more than go sideways. Thursday’s day of strength was to the downside, which suggests a possible change in trend. If the Model is correct, the bounce may not make a new high. On the other hand, equity forecasters are positive of new highs.
This morning’s options chain shows Max Pain at 6065.00. Long gamma may begin at 6075.00 while short gamma may start beneath 6030.00. You can see that the SPX moves have been guided between the gamma clusters.
ZeroHedge reports, “US equity futures pointed to a strong end to the week, as a premarket surge in Broadcom powered gains across the entire chip and tech complex, even as European bourses dipped and Asian markets took it on the chin after the latest Chinese stimulus disappointment. As of 8:00am S&P500 futs gained 0.4%, and Nasdaq 100 futures rose 0.7%, with shares in Broadcom surging 15% after it predicted a 65% increase in sales of AI chips in the fiscal first qtr; if gains holds, the stock will hit a record high, inching closer to a $1 trillion market cap. Peers Marvell, Micron, Nvidia and Advanced Micro Devices also rose. US 10Y yields gained 3bps rising to 4.35%, highest since Nov. 25; the dollar reversed earlier gains with the euro bouncing after Macron named centrist Bayou as the new French PM. Crude oil futures rose to a weekly high. On tap today we have US Import/Export prices (8:30am ET), Eurozone + UK Industrial production, Japan Industrial production”
NDX futures made a new all-time high at 21820.70 this morning. Despite the appearances of healthy momentum, the new high was made by a very limited number of stocks. Broadcom’s surge was accompanied by Marvell, Micron, Nvidia and Advanced Micro Devices. What started this summer as the Marvelous Seven is now only five stocks. Those owning these stocks participated in the rally. Others did not. NDX is in s throw-over formation which is due for a reversal.
VIX futures have pulled back to 13.37 this morning, thereby completing its correction of the first probe from the low. The Cycles Model suggests the launch of the next phase higher in strength today. The 50-day Moving Average is at 14.36. Will the VIX move above the 50-day? Watch closely, as that will indicate a new buy signal.
The December 18 options chain shows Max Pain at 17.00. Short gamma resides between 13.00 and 16.00. Long gamma begins at 18.00 and is well populated to 55.00. There is a growing concern about the equities valuations among options investors.
Bitcoin is consolidating beneath yesterday’s secondary high. The Cycles Model suggests more than a week of decline before a bounce. A lot of damage can be done in that short period. While the Cycles Model has given an aggressive sell signal thus far, serious downside risk appears beneath the Cycle Top and Intermediate support at 95513.48.
TNX futures have risen to 43.55 overnight, while the cash market has risen to 43.46 thus far. Yesterday’s day of strength broke TNX above its Intermediate support/resistance at 43.08. The path is clearly higher with a month to go in the current Master Cycle.
Yesterday ZeroHedge observes, “After a solid 3Y auction on Tuesday and a stellar 10Y yesterday, moments ago the Treasury concluded the week’s coupon issuance with a decidedly soggy 30Y auction, one which pushed yields to session highs.”
Gold has slipped beneath the trendline at 2700.00 and the 50-0day Moving Average at 2684.00 to create a sell signal. The Cycles Model offers a two-week decline for gold that may challenge the mid-Cycle support at 2491.38.