The Practical Investor

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.

1:35 pm

SPX is being resisted by the 52-day Moving Average at 6716.00.  A 50% retracement of the 18.5-day fractal decline may occur at 6721.00.  Should the decline resume, this may mark the halfway point of the decline in time.  However, the decline may speed up exponentially, as it must decline 600 points to its Head & Shoulders target listed on the chart.  To help the decline, short gamma beneath 6660.00 may add to the impetus.

7:560 am

Good Morning!

SPX futures ran up to 6653.10 before easing back.  A 55% retracement was completed on Friday after Thursday’s gap higher, then reversal of 249 points to a new low.  Each bounce (reversal) has been successively smaller.  The first bounce retraced 82%.  The second bounce 66% and the third (Friday’s)bounce 55%.  The buy-the-dip urge has become successively weaker as liquidity has become thinner.  The Head & Shoulders neckline has been crossed, suggesting a panic may ensue at its second crossing.  Instead of buying the dip, the chase has turned to downside protection.   The Cycles Model suggests the aftermath of Friday’s mega-volatility is not over.  The next couple of days could be telling.

Today’s options chain shows Max Pain at 6660.00.  In other words, SPX is opening deeply in short gamma which may feed on itself as more investors seek downside protection.

ZeroHedge reports, “US equity futures are higher, but off their overnight highs, as the market looks to rebound from its worst week since early Oct; sentiment was lifted after shares of Alibaba jumped 4.7% in Hong Kong after a strong debut for its AI app; also boosting futs was a spike in December rate cut hopes and bullish comments from Morgan Stanley’s Michael Wilson.”

VIX futures declined to 22.43 this morning, a 65% retracement of Thursday’s rally.  A breakout may seek the April 7 high as a potential target.  The Cycles Model suggests that the Volatility that started last week may not be over.

The November 26 options chain shows that long gamma is firmly in place at 20.00 and above.  Short gamma beneath 20.00 is dwindling.

The 10-year US Treasury Note has slipped beneath the 52-day Moving Average at 40.84.  The Cycles Model suggests today may show a strong decline as trending strength prevails.  Normally the decline may stop at the Cycle Bottom at 39.60.  However, it anticipates the decline to take another 4 weeks…

USD futures are consolidating above the 200-day Moving Average at 99.82.  It may have another week or so to rally with strength, suggesting the Cycle Top at 103.06 may be its intended target.

Bitcoin may yet decline to its Head & Shoulders target as international liquidity collapses.  Europe and Japan are both in dire straits.  Governments are closing the doors to money attempting to flee to the US which may have knock-on effects domestically.

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.

1:05 pm

This morning’s 10:40 commentary mentioned the neckline at6575.00 as a limit to the bounce in error.  I had overlooked the massive wall of puts at 6600.00.  The bounce crossed above the put wall in order to shake out the contracts or to allow the options sellers to short that level.  Most investors think of put options as “insurance” against a loss.  They are not.  Dealers must daily front-run the options chain to maintain their ability to pay off an in-the-money put at the end of the day.  In other words, the risk of a loss does not disappear.  It is merely transferred to the seller of the option.  The SPX may resume its decline as the options sellers have to “double down” with their own short sale.

10:40 am

SPX has ended its bounce sooner than expected and has declined beneath yesterday’s close.  The Head & Shoulders neckline resisted the bounce and, should the bounce repeat, may cap the effort again.  This is not a dip to be bought.  The Head & Shoulders target may be realized in a matter of days.

7:45 am

Good Morning!

SPX futures made a 5:00 am low at 6507.90, then began ramping higher to meet the AM $1.3 trillion options expiration in the SPX.  This may be the largest November options expiration, ever.  Various reasons were given for yesterday’s disaster.  However, one important reason was missing…short gamma.  Thursday’s gap open may have been a play by the dealers to rise out of short gamma beneath 6700.000.  Having hit the right shoulder resistance of the Head & Shoulders formation at 6770.35, selling began again in earnest, declining 232 points at the close.  Unless dealers can rise to Max Pain (least option payout) at 6650.00 at today’s open, dealer options pain (payout) may be enormous.  Dealers have had a cushy ride during the bull market, since 30-40% of all options expire worthless, while 50-60% are closed out prior to expiration, leaving a very small payout by the dealers.  This may be changing.  The Cycles Model calls for a possible bounce, followed by a resumption of the decline by mid-morning, with strength,  through the weekend.

Today’s options chain shows Max Pain (least payout) at 6650.00.  Long gamma  begins above 6700.00, while short gamma strengthens beneath 6640.00 with a put wall at 6600.00.

ZeroHedge advises, “10 Things You Shouldn’t Miss This AM…”  (A must read.)

VIX futures consolidated beneath yesterday’s high, preparing for the largest momentum spike since April.  A possible target for this move may be the April 7 high.

The November 26 options chain shows short gamma beneath 19.00 while long gamma is now firmly ensconced above 20.00 with significant long holdings as high as 50.00.

TNX is pulling back beneath the 53-day Moving Average at 40.83 this morning in a minor Trading Cycle low.  The pullback may be due to a rotation out of stocks into bonds as equities may be shaken again today.  It is not anticipated to last, as trending strength may surge by early next week, sending yields higher.

Bitcoin investors panicked again last night as speculators have lost their confidence that a bottom has been made, making a new low at 80562.00.  The Head & Shoulders target is in view as the Cycles Model suggests the Master Cycle may be complete by mid-week. Be aware that bitcoin may be an international proxy for liquidity, the effects of which may spill over into the US markets.

USD futures rose to 100.40 this morning as foreign investors come to the USD as a safe haven.  The Cycles Model calls for a surge in trending strength starting today and lasting to early December as the Yen and Euro weaken.    It is possible to see the USD rise to its Cycle Top resistance in the next two weeks.

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.

1:45 PM

YOU CAN’T SAY I DIDN’T WARN YOU.  SPX is back at the neckline… and sinking.  SPX may be due for a possible bounce, but don’t count on it going places.  Regardless whether it closes above or beneath the neckline, the formation has been triggered.  I have been warning for over a week that tomorrow would be a disaster in the making.  The Cycles Model infers a double strength down day, suggesting we may see a limit down (7% decline) the first thing in the morning either tomorrow or Monday, or both.  The first thing to start blowing up is the leveraged long funds and ETFs, as the neckline measures a 5% decline from the top.  Should the SPX go beneath 6228.00, (a 10% decline from the top) margin calls may begin.  No one will have the ability to sell, so stop losses may be useless, or worse, since a stop loss has no limit on how low it can be exercised in a panic down day. I am speaking from over 40 years of experience.  The impossible becomes possible in a panic day.

10:03

Recent activity in the SPX has revealed an expanded Head & Shoulders formation, shown above.  It surpassed the Intermediate resistance at 6746.00, but the right shoulder was halted near the 61.8% retracement value at 6757.36 and the peak of the left shoulder at 6764.58.  This is a classic formation and fits very well with the Cycles outlook.  Crossing the Intermediate support at 6746.00 may offer an aggressive sell signal, while beneath the 52-day Moving Average at 6716.18 may confirm the sell signal.  Stay alert!

11:33 am

BKX is back beneath the 52-day Moving Average at 149.93 and on a confirmed sell signal.  The Minimum target appears to be the mid-Cycle support at 136.52, while the intermediate target may be the April 7 bottom at 99.68.  The Fed may be too little, too late to curb the negative impact of higher rates and thinning (ice) liquidity.

RealInvestmentAdvice posits, “In our last article, QE Is Coming, we focused on why the capital and financial markets have become so dependent on the Fed for liquidity.  The article explains that, in the aftermath of the crisis, a slew of regulations drastically changed the liquidity landscape. As a result, the Fed—not the private market—is now the primary provider of liquidity.’

7:45 am

Good Morning!

SPX futures rose to6736.90 on the news of the Nvidia earnings blowout.  It surpassed the 50% retracement level at 6723, then paused.  Intermediate resistance lies at 6744.00.  The Cycles Model allows another day or so of higher values after a small pullback. The 61.8% retracement lies at 6757.00, should it make it that far.  Friday, monthly options expiration, may be extremely volatile in equities.  Sentiment is higher overnight, but the (late) October payrolls and upcoming November payrolls look weak, while future performance may be constrained, unable to live up to today’s numbers.

Today’s options chain shows Max Pain at 6690.00.  Long gamma may begin above 6700.00 while short gamma resides beneath 6689.00.  Tomorrow’s am expiry shows Max Pain at 6700.00.

VIX futures pulled back to 20.33, still above mid-Cycle support at 19.72, where it may find support.  Further support may be found at the 52-day Moving Average at 17.77.  The Cycles Model shows an explosive move in the VIX starting on Friday and extending over the weekend.  Velocity may expand in December.

The November 26 options chain shows long gamma coming in strong at 20.00 and above, while the sentiment for short gamma weakens.

The US 10-year Note edged slightly above its sideways consolidation, then pulled back.  It may test the 52-day Moving Average at 40.83 for support, then forcefully launch higher over the weekend.  The uptrend may extend for another month.

ZeroHedge reports, “In this week’s lone coupon auction, which just happens to print an hour before the release of the October FOMC minutes, moments ago the US sold $16BN in 20Y bonds at a high yield of 4.706%, up 20bps from 4.507% last month and the highest since August. The auction also tailed the When Issued 4.704% by 0.2bps, the first tail since June.”

USD futures may be consolidating above its 200-day Moving Average at 99.88 after yesterday’s breakout.  Short sellers are caught with a deer-in-the-headlights look as the breakout signals a terrific short squeeze ahead.  The Cycles Model implies short covering may begin tomorrow with vigor, lasting into the first week of December.

Bitcoin is hovering above its November 18 low at 88529.00, contemplating another probe lower over the weekend.  The Cycles Model suggests that Bitcoin may extend its Master Cycle as far as mid-week, with up to two high velocity probes lower.  Bitcoin is a pure liquidity play, as it may be used to launder money and move assets across borders.  Governments are limiting/prohibiting the use of Bitcoin and other CBDCs as a means of keeping capital from fleeing.  The loss of capital inflows has only indirectly affected US liquidity thus far.

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.

11:10 am

SPX made an attempt to rise above the neckline at 6650.00, but the resistance was overwhelming, causing it to falter at the Fibonacci 38.2% retracement.  The decline may gather strength as it plummets toward (or below) its intended target this weekend.  Reality may finally be setting in.

ZeroHedge remarks, “Rearranging the Chairs

Tuesday was another down day for most markets as the US weekly ADP jobs report suggested the labor backdrop is weakening and housing starts sagged. As the FT puts it, ‘Oracle’s astonishing $300bn OpenAI deal is now valued at minus $60bn.’”

7:50 am

Good Morning!

SPX futures are back-testing the Head & Shoulders neckline near 6650.00 as I write this morning.  SPX broke through the neckline (thin ice) yesterday and the immediate reaction is to attempt to regain “higher ground.”  But the deed was done.  The Cycles Model calls for deteriorating conditions for the SPX up to monthly options expiration on Friday, resulting in a possible panic decline.  While smart money has been hedging, retail, commercials and hedge funds still find themselves uncomfortably long.  Even with the Head & Shoulders formation, most analysts still see the decline as a “minor” correction, due to the strength and persistence of the previous rally

Today’s options chain shows Max Pain at 6655.00.  Long gamma may prevail above 6680.00 while short gamma strengthens beneath 6635.00.  Beneath 6600 lies a “gamma trap” for speculators.

ZeroHedge reports, “After 4 days of steep declines, futures are finally higher ahead of Nvidia earnings, with AI bulls hoping for strong numbers to provide respite from the market selloff.”

VIX futures have “:stepped back” from yesterday’s high as it digests its gains.  VIX rose above 25.00 yesterday, attracting the attention of analysts and prognosticators, parsing out the meaning of this move.  The Cycles Model indicates a buildup of momentum going into and beyond equities options expiration.  Today’s VIX options expiration shows a “call wall” at 25.00, indicating increased volatility above that level.

TNX is consolidating after testing the 52-day Moving Average at 40.81 yesterday.  It may be ready to break out above the sideways formation as strength in the new trend builds this week.  The next resistance is the mid-Cycle level at 42.58, which could conceivably be reached by the weekend.

USD futures are testing the 200-0day Moving Average at 99.92 this morning, making life difficult for dollar shorts.  The Cycles Model indicates the massive short holdings may burst through resistance as shorts run for cover this weekend.

Bitcoin may have made an early Master Cycle low yesterday.   The normal routine would be to rise up to test the Head & Shoulders neckline at 98932.00, clearing out the weaker hands (shorts) before its final thrust to the implied target.  However, the declining fractal may not be complete.  There is a possibility of a new low near 86000.00 possible this week.

BKX is on a bounce that may take it back to the 52-day Moving Average at 149.91.  It appears that attempts are being made to keep BKX from selling off this week.  The Cycles Model infers that the powers-that-be may succeed temporarily, but the Cycle is getting very top heavy, while Wall Street denies any emergency.  While it is difficult to short the banks, indications are that a disaster may strike by mid-December.

ZeroHedge observes, “The alarms are getting even louder each week.  It has become exceedingly clear that the U.S. economy has entered a crisis that is similar to what we experienced in 2008 and 2009, and a lot of people are really starting to freak out.  For those that cannot see the stunning parallels between the Great Recession and what we are going through now, I don’t know what to say to them. ”

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.

11:19 am

SPX has crashed through the neckline of the Head & Shoulders formation at 6650.00 with attendant consequences.  Round number support at 6600.00 may temporarily send SPX back to the neckline to relieve the oversold condition.  The next level of support may be the September 2 low at 6350.00.  While there may be a bounce near there, the final target may be the April 7 low at 4835.00.

7:45 am

Good Morning!

SPX futures reached a morning low at 6616.30, well beneath the 52-day Moving Average at 6699.30 and on a confirmed sell signal.  It has also crossed the neckline of the Head & Shoulders formation at 6650.00, possibly triggering that formation.  The next possible bounce level is round number support at 6600.00, which may not last.  The reason?  Trending strength is growing and may turn the decline into a panic as monthly options expiration approaches on Friday.  Liquidity is still at a premium and the repo market may be stressed as a decline may put added demands on private lending institutions (banks).

Lance Roberts of RealInvestmentAdvice offers, “Last week, we discussed the importance of “math” as it relates to valuations and noted the importance of understanding “full market cycles.” To wit:

“The math on forward return expectations, given current valuation levels, does not hold up.  The assumption that valuations can fall without the price of the markets being negatively impacted is also grossly flawed. Historical data, as illustrated in the following chart, suggest that valuations do not decline without a significant impact on investment returns. Additionally, it is worth noting that “full market cycles,” which encompass both secular bull and bear periods, recur throughout history.””

Today’s options chain shows Max Pain at 6700.00.  Long gamma may begin at 6735.00 while sort gamma rules beneath 6670.00.

ZeroHedge reports, “US equity futures are sharply lower again – but off session lows – after the S&P 500 and Nasdaq closed below their 50-day moving averages for the first time since April; both tech and small caps are lagging as the market tries to find a level as the bond market continues to reduce the probability of a further Fed easing.”

VIX futures reached a new high at 23.91 this morning on a buy signal as trending strength builds toward options expiration.  There is little commentary on the VIX as it appears to be in a two month consolidation.  However, common recognition of a VIX bull market may arise above 25.00.

The November 19 monthly options expiration shows Max Pain at 21.00 in the VIX.  There are massive holdings of short gamma between 15.00 and 20.00 while long gamma may begin at 22.00.  Institutional positions are  noted at every 5 points starting at 25.00 with a presence to 100.00.

TNX is finishing its correction in a decline, possibly to Intermediate support at 40.70 this week as equities investors may be rotating out of stocks and into treasuries.  It may not prove to be a safe haven as the rally may resume with vigor early next week.

The USD Index is hovering near mid-Cycle support/resistance at 97.48 this morning.  It is also building trending strength this week with a possible target near the Cycle Top at 103.38 by the end of November.  The current Master Cycle may extend to the first week of December.

Bitcoin plunged briefly beneath 90000.00 this morning as the decline may be nearing a temporary respite.  It may be due for a bounce with a possible week-long snap-back to test the Cycle Bottom and the Head & Shoulders neckline at 98932.00.

Gold futures may be consolidating near the 4000.00 level.  Should it remain above its October 28 low at 3886.69, it may resume its rally until mid-December, as war tensions may rise.  A failure to rally may induce another stage of the decline to a minimum target at 3750.00.

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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.

7:30 am

Good Morning!

SPX futures rose to the trendline at 6780.00 over the weekend, then gave it all back this morning.  It is currently consolidating near Friday’s close.  The reason for Friday’s wild swing may have been negative gamma, which becomes a factor beneath 6730.00 today.  Keep in mind that the 52-day Moving Average lies at 6694.00, beneath which sentiment turns very bearish.  The Cycles Model suggests a rise in volatility toward monthly options expiration on Friday.  Puts and calls are running neck-and-neck in what may be an explosive trading day.

Today’s options chain shows Max Pain at 6760.00.  Long gamma dominates above 6800.00 while short gamma becomes strong beneath 6730.00.

ZeroHedge reports, “US equity futures are slightly higher led by Tech, but well off overnight highs, while stocks around global markets slide. As of 8:00am ET, S&P and Nasdaq futures are up 0.1%, having previously been as much as 0.6% higher, after both gauges closed above their 50-day moving averages on Friday, a key support level.”

VIX futures are consolidating above the mid-Cycle support at 19.70 this morning.  VIX is on a confirmed buy signal.  The Cycles Model shows increasing volatility up to equities options expiration on Friday and lingering into next week.

The November 19 options chain shows Max Pain at 21.00.  Short gamma is very heavy between 15.00 and 20.00.  Long gamma begins at 22.00 and reveals institutional presence up to 100.00.

TNX is behaving correctively and may may revisit critical support in a Trading Cycle low near 40.70 in the next day or two.  Subsequently, trending strength may build as the month of November winds up.  Bond volatility may erupt in early December as the current Master Cyclewinds up by mid-month.

USD futures have risen above the mid-Cycle support/resistance at 99.44 with the 200-day Moving Average just above it.  USD is coming out of a possible Trading Cycle low with increasing strength of conviction.  A breakout above the 200-day may follow with the Cycle Top acting as possible resistance by the month end.

Bitcoin may be bouncing from Sunday’s low at 93006.00.  Should that be the case, a probe to the neckline at 98932.00 may follow.  The Cycle Bottom lies just above the neckline as a secondary resistance, which may terminate the current Master Cycle in about a week’s time.  A further month of decline may follow.

BKX remains under the 52-day Moving Average and on a sell signal.  This proxy for liquidity has been supported, but may not last as liquidity needs will grow into the year-end.  Approximately 5 weeks of decline are built into the Cycles Model.

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.

10:15 am

SPX has gapped down at the open and bounced at a potential Head & Shoulders neckline,  testing the 52-day Moving Average at 6705.00.  Should resistance hold, SPX may then resume its decline beneath the neckline with knock-on consequences.  A secondary resistance may be the trendline at 6775.00.

10:30 am

NDX is also bouncing from a potential Head & Shoulders formation.  Stay alert for a decline beneath the trendline at 24535.00.  The down-sloped neckline may be more bearish.

7:45 am

Good Morning!

SPX futures have gapped down beneath the 52-day Moving Average at 6690.50, plummeting to 6664.00 thus far.  SPX is on a confirmed sell signal since crossing the 7-month trendline yesterday.  Thus far, the decline has been orderly.  However, a decline beneath the November 7 low at 6631.44 opens the volatility spigots.  Wall Street must defend that level.  Should the breakdown occur, the minimum target may be near 6350.00.  Retail investors are heavily long while street gamma is negative.  A dangerous combination.  The Cycles Model warns that trending strength may grow into Friday’s monthly options expiration.

Today’s options chain shows Max Pain at 6775.00.  Long gamma strengthens above 6800.00.  Short gamma dominates beneath 6750.00, with heavy reinforcements every 25 points lower.

ZeroHedge reports, “It’s ugly out there. Futs are sharply lower on doubts about whether the Fed will cut interest rates again in December, as fear deepens about stretched AI valuations and the debt used to fund them.”

VIX futures vaulted to 22.63, short of a breakout above the November 7 high.  Upside momentum appears to strengthen this week as panic may set in.  The Cycles Model implies a continued rise in volatility to late December.

The November 19 options chain shows Max Pain at 20.00.  Short gamma is heavily laden from 15.00 to 19.50.  Long gamma begins at 22..00 and strengthens at 25.00 with institutional presence every 25 points above.

TNX has declined beneath the 52-day Moving Average at 40.79, on its way to a Trading Cycle low early next week.  It remains relatively calm until monthly options expiration on Friday.  From that point on, volatility may erupt into the first half of December.

ZeroHedge reports, “After yesterday’s mediocre, tailing 10Y auction, and with yields pushing higher today, prospects for the week’s final coupon auction, today’s $25BN in 30Y bonds, were not too exciting. Which is a good thing because the just concluded final refunding auction was quite disappointing.”

USD is testing Intermediate support at 98.98 as it descends into a Trading Cycle low early next week.  The 52-day Moving Average at 98.52 is a likely target, but may go lower.  Subsequently, a new surge higher, with growing strength, may emerge and continue to the first week of December.

Bitcoin has broken down beneath the Head & Shoulders neckline at 98932.00 with considerable force.  The formation has been activated.  However, a bounce may arise, testing the neckline before trending lower.  Bitcoin may be another proxy for market liquidity as there is nothing backing it but the sentiment of investors with extra cash or people wishing to seamlessly cross national boundaries.  China may have outlawed the use of bitcoin and many European countries are considering banning it, which may be cutting off cross-boundary liquidity.

BKX has broken through the 52-day Moving Average at 150.07 this morning, placing it on a sell signal.  The banking index has been heavily defended until November 12, stretching out the Master Cycle in double overtime.  That support may give out at the end of November with a quadropoly indicated panic Cycle developing in December.

Gold futures declined to 4033.09, challenging the Cycle Top at 4133.00 and Intermediate support at 4045.88, making a Trading Cycle low that may be complete this weekend.  Keep in mind that the retracement may go to the 52-day Moving Average at 3914.67 before reversing higher.  These washouts may test the gumption of gold investors as they may be unable to withstand the shakeout.

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.

12:30 am

SPX has ;reached the trendline and Intermediate support at 6754.30 and may be ready to bounce.  A partial retracement may develop throughout the afternoon, although selling pressure remains.  The next bounce may be the 52-day Moving Average at 6699.00.  SPX may be on an aggressive sell signal which may be confirmed beneath 6700.00.  The tumble in equity markets is being led by the Nasdaq, specifically the Mega-Caps.

7:50 am

Good Morning!

Note:  We are facing a planned power outage this morning.  The morning report may be abbreviated.

SPX futures declined to 6828.60 after reaching its potential retracement limit.  The Retracement shows a 9-point fractal, which suggests completion.  Nearest support lies at 6744.51, where a sell signal may be acted upon.  The government shutdown took 43 days and is likely to be repeated in January with more damaging results.

ZeroHedge reports, “Futures are slightly lower as the market sells the news that the US government has finally reopened, and as traders now seek to identify a near-term catalyst before NVDA’s Nov 19 earnings release while the data vacuum is likely to persist for at least several days.”

VIX futures rose above the 52-day and trendline to 18.06 this morning.  The uptrend is not broken, allowing trending strength to grow over the next week.  A strong panic Cycle may develop around monthly options expiration next week.

ZeroHedge remarks, “We’ll begin with the famous quote from economist John Maynard Keynes: “The market can stay irrational longer than you can stay solvent.”

It’s a reminder that even the smartest traders in the room, the ones who’ve built entire careers calling bubbles and shorting tops, can be steamrolled when markets detach from reality.”

USD futures continue to decline as it retraces to support at the Intermediate level at 98.95.  The 52-day Moving Average is at 98.50 as an alternate target.  The retracement may be finished by the weekend.

TNX is consolidating beneath the 52-day Moving Average at 40.95.  It is making a Trading Cycle (minor) low before moving higher by next week.  Money may be moving out of stocks to treasuries as a traditional safe haven.  However it may not last, as the Cycles Model sugests higher 10-year rates to mid-December.

Bitcoin has resumed its decline toward the Head & Shoulders neckline.  Its anticipated low may occur in the last week of November.  Should it bounce at the neckline, we may see another bounce.  However, once beneath the neckline, any bounce may be a test of the neckline.

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.

7:40 am

Good Morning!

SPX futures rose to 6876.80 this morning, nearing a natural limit on retracements.  Comparison of past declines and recoveries may not be helpful for multiple reasons.  First is the rule of alternation.  All of the prior declines that were compared to resulted in a full recovery.  There is an alternative.  Second, the market may rhyme, but it does not repeat.  Third, five and a half years of dips, then recoveries have produced a Pavlovian reaction in investors.  The market doesn’t always recover, which may leave the majority on the wrong side.  This is a time to be skeptical, since retracements may rise up to (but not above) the prior high, trapping the buy-the-dip crowd should an unexpected reversal prior to a full recovery occur.  The Cycles Model leaves us with a potential double reversal that may go higher, but the fractal thus far leaves room for a reversal.

Today’s options chain shows Max Pain at 6830.00.  Long gamma may prevail above 6850.00 while short gamma rules beneath 6800.00.

ZeroHedge reports, “US futures are higher as the US takes another step to reopen with a House vote (expected to pass early evening on Wednesday, with Trump’s approval. As of 8:15am, S&P futures are 0.4% higher with the mood buoyed by expectations of an imminent end to the government shutdown and a Fed rate cut next month.”

VIX futures declined to a morning low at 17.10 before a bounce, testing the 52-day Moving Average.    VIX may have established its uptrend, albeit sluggishly.  Today’s action may be a Trading Cycle low, with trending strength on a rebound next week.  Today is weekly options expiration with Max Pain near 20.00.

The November 19 options chain shows Max Pain at 20.00.  Short gamma shows puts are heavily laden between 15.00 and 18.00.  Calls are coming alive at 22.00 and show heavy institutional involvement from 25.00 to 100.00.

TNX has dipped beneath its 52-day Moving Average at 40.85.  The Cycles Model shows a potential trading Cycle low this weekend, with recovery as the month progresses.  This may indicate a preference for Treasuries over equities, as the traditional search for a safe haven may develop.  The Cycles Model suggests a decline to the Cycle Bottom at 39.72 over the next week or so.

USD futures are consolidating at the mid-Cycle support at 99.61.  USD is in a correction that may revisit the 52-day Moving Average at 98.49 in the next week.  The Cycles Model indicates the rally may resume to the end of November.

Bitcoin may be consolidating after a steep decline.  The cycles Model indicates a potential resumption of the decline by early next week.  The current Master Cycle ends in two weeks.  The question is, will the decline venture beneath the Head & Shoulders neckline or stay above with another bounce?

Gold futures are consolidating above the Cycle Top support at 4109.13 this morning.  Trending strength may return next week with the rally resuming to mid-December.

The Ag index may be due for a short-term correction down to the 52-day Moving Average at 357.68.  Should it bounce at that level, the Cycles Model infers a resumption of the rally with strength next week.  The current Master Cycle may last to late December.

TheEpochTimes comments, “President Trump is boldly facing the problem of high meat prices but also dealing with the financial strains on farmers themselves. The issue is reconciling the two. Lower prices are great for consumers but also add to the financial problems of small farmers. Gradually, Trump has come to the conclusion that the real bottleneck is with meatpackers themselves, which is one of the oldest corporate monopolies in U.S. history.”

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.

7:50 am

Good Morning!

After having overshot its 61.8% Fibonacci retracement level at 6810.41 SPX futures may now be testing that level.  Yesterday’s rally appeared to be mostly short-covering, which may now be exhausted.  Intermediate support and the trendline lie at 6731.13 while the 52-day Moving Average lies at 6670.00.  The top view is that the decline may resume today, followed by the violation of the aforementioned supports.  Should that happen, the next phase of the decline may last a month or more.  Meanwhile, Wall Street labels the past two weeks as a “wobble” that can be ignored, calling for a Santa Rally to the end of the year.  Whether a wobble or something more bearish, watch the trendline for support or failure.

Today’s options chain shows Max Pain at 6810.00.  Long gamma may rise above 6830.00 while short gamma resides beneath 6780.00.

ZeroHedge reports, “US futures are weaker following the best day for the S&P500 in almost a month and the Nasdaq’s best day since late May. The market frontran the catalyst: late on Monday the Senate passed its funding bill, and the House is expected to vote on Weds, as it always eventually does, especially since it has Trump’s full support.”

VIX futures rose to 18.01 thus far this morning.  VIX is due for a bounce.  However, it may be hampered by overhead resistance at the mid-Cycle  at 19.64.  Clearing that resistance allows the VIX to resume its rally.

YNX has bounced above the 52-day Moving Average at 40.88 this morning.  While acting positively, it may still decline beneath the 52-day over the next two weeks.  Bond volatility is on its first uptick since May, making equities investors uneasy.  Easing beneath the 52-day may ease investors’ trepidations.  However, it may not last.

USD futures may be testing the Intermediate support at 98.90 this morning.  The Cycles Model indicates the rally may resume in the next week.  A breakout above the mid-cycle resistance at 100.17 may propel the USD to its Cycle Top at 104.24 by the end of the month.

Bitcoin may have started its next leg down.  A possible Head & Shoulders formation awaits beneath the low at 98930.00.  The Cycles Model suggests the current decline may continue to the end of November.  Should the neckline be broken, the decline may resume about three weeks later.

Gold futures rose to 4152.00 this morning, lifting it solidly above its Cycle Top at 4098.00.  The Cycles Model offers a rally to mid-December.  The intended target is a little more obscure, with 4500.00 being the base case.  A lot may depend on geopolitical events.