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
11:42 am
NDX is also at an inflection point. It may bounce to the 52-day Moving Average at 25409.71…or fail imminently. The NDX may have a “hair trigger” that has the potential to reverse the bounce at any time. The sell-to-buy ratio is asymmetric, with very few buyers. Short gamma may be creating its own market. Bounces may only create more short gamma by 0DTE speculators.
11:23 am
SPX has made its bounce at 6775.50. The 50% retracement level is at 6884.00 while the 52-day Moving Average lies at 6895.00, near Max Pain at 6900.00. This market is being driven by the options. Dealers are attempting to escape gammadegon. Will they succeed…or get sucked further down by short gamma?
7:45 am
Good Morning!
SPX futures declined to 6793.90 over the extended weekend, testing Friday’s low at 6794.65. Remember that the Ending Diagonal trendline and 52-day Moving Average are at 6892.00, confirming a sell signal last week. The final support lies at 6775.00, which is the neckline of a Head & Shoulders formation (not shown on the daily chart). Hedge funds went on a massive buying spree last week as Friday’s low appeared to be a match of two prior lows since mid-January. However, the bounce remained under the 52-day and trendline at 6892.00. Should the SPX decline to new lows today, the last money to come in will be the first to go, adding momentum to the decline.
Today’s options chain shows Max Pain at a highly contested 6900.00. SPX may open deeply into short gamma with a put wall at 6800.00 and another at 6770.00. Add in the 0DTE speculators and an option-driven panic may ensue.
ZeroHedge reports, “US equity futures woke up after President’s Day and chose to resume their selloff (after a modest bounce on Monday’s holiday failed to hold) dragged by Tech, as the risk-off moves on AI disruption fears continue. As of 8:15am ET, S&P 500 futures were down 0.5% with Nasdaq 100 contracts falling 1.0%.”
The premarket VIX rose to 22.71 thus far, clearly above the trendline and Cycle Top at 21.60. The Cycles Model suggest today may be a panic-up day. In fact, the Model suggests higher velocity in the VIX through the rest of the month. Under-the-hood stress is building. VIX has a long way to catch up with the VVIX (Velocity). The next two weeks may capture higher stress levels in the VIX.
Tomorrow’s options chain shows Max Pain at 19.50. Short gamma rests heavily between 15.00 and 19.00. Long gamma is well populated between 20.00 and 30.00. However, there is a very large institutional presence at every 5 points to 100.00.
The 10-year US Treasury futures declined to 40.12 over the extended weekend while today’s market opened at a low of 40.25 in an extended Master Cycle. While TNX could go lower, it may have made a Trading Cycle low as well. A reversal may be imminent. Bond volatility is picking up and may show up in a couple of panic sessions before the end of the month. l
USD futures are coming off their corrective low at the Cycle Bottom. Today may show high trending strength as it rises to challenge overhead resistance between 97.34 and 98.35. A break through may result in a bloodbath for the dollar shorts. The Cycles Model suggests the USD may continue to rise through mid-March.
The Japanese Yen has made two Master cycle highs within two weeks of each other. This is highly unusual and may indicate another surge may be on its way instead of a reversal. If so, another move higher may upset the heretofore smooth sailing of the Yen carry trade. Some very large institutions are involved in the carry trade, including banks and insurance companies.
Bitcoin has been repelled at the Cycle Bottom resistance currently at 69510.00. The next level of possible support lies near 65000.00, then 63000.00. Should it go lower, it may exceed the prior low at 60069.72. The Cycles Model suggests that, should there be no recovery soon, bitcoin may continue its decline to the end of April to much deeper lows. This could be the signal for easily liquidity for the markets.
Silver futures have resumed their decline to a morning low of 72.29. The Cycles Model offers the view that silver may continue its decline for at least another month. Should it do so, the next level of support lies near 63.00-68.00, then near 37.00. Those who purchased recently may be trapped. In addition, those who bought leveraged silver ETFs may see their account plummet dramatically.
Gold futures have sunk to 4758.74, beneath the Cycle Top support at 5001.17 and Intermediate support at 4768.00. The 52-dy support lies at 4603.00 and beneath that lies the mid-cycle support at 3902.00. Gold may decline to the mid-Cycle support and still be on a long-term uptrend. However, a move of that magnitude may wash out a lot of speculators (weak hands).
Crude oil declined beneath its mid-Cycle support at 62.44 this morning. The decline has resumed with the potential of several high velocity moves in the next few weeks. The minimum decline may go to the neckline. However, should it go beneath it, the full impact of the head & shoulders formation may be felt.