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.

Sunday, 6:30 pm  I have two doctor’s appointments tomorrow and I will be leaving on an extended trip starting on March 5  until March 25.  I may have some intermittent moments to jot down my observations, but nothing that I can predict in advance.  I am sorry for the inconvenience.

SPX ended its Friday at the 38.2% Fibonacci retracement of its 7-day decline.  The retracement probe is either ended or may extend to the 50% retracement level near 6000.00.  If so, it may reverse in the first hour on Monday.  A lot of investors took Friday afternoon’s reversal as a signal that the decline is over.  No so.  There is a tremendous amount of resistance at the 6000.0 level, including both the Diagonal trendline and the 50-day Moving Average..  In addition, the Cycles Model infers the decline may continue to the end of March!  The late Friday rally took me by surprise.  You see, the neckline of a Head & Shoulders formation is nearly impermeable.  I took my cue from that experience and used the neckline as the final resistance.  The Head & Shoulder formation crumbled in the last hour on Friday.  Mea culpa!  Looking ahead, the Cycles Model offers periods of trending strength this weekend and the following two weekends as well.  I may be able to offer more commentary around mid-day on Monday and possibly Tuesday morning.

Monday, 7:30 am

The bounce has now extended to 5989.60 thus far.  Goldman warns of a “painful short squeeze” today.  However, most of the pain is already over at the 38.2% retracement. There may be an incremental increase lasting an hour or to mid-day.   The maximum resistance appears at 6010.00 in what may be termed an expanded flat correction.  Long gamma may begin above 6980.00,.  However, dealers may not be comfortable chasing long gamma on such a day as this.  The Cycles Model calls for high volatility and a possible reversal today.

Bitcoin is up 22% this morning after last week’s dismal performance.  It has been pushed back at Intermediate resistance at 95648.00.  However, it is likely to go for the 50-day Moving Average and trendline near 97695.00 yet today.  The uptrend may have been broken and maximum resistance may lie just above.

Monday 1:20 pm

SPX made the turn in the very first hour of the day.  The Cycles inference of possibly a panic down day was correct.  It now appears that the decline may gather momentum through the rest of the week.  It is now headed toward the 1987 trendline near 5400.00.  Another possible support level may be the August 5 low at 5119.26.  Should the 1987 trendline be broken, then the August 5 low may be the the month-end target.  The saying goes, “The market goes up the escalator,  down the elevator.”

The Ag Index is making good headway in its retracement decline.  It is now approaching the 50% retracement level.  The mid-Cycle support is at 370.53 while the 61.8% Fibonacci retracement is at 364.52.  It is approaching a good price range for accumulation. , as the next move up may be explosive.

ZeroHedge comments, “”U.S. Health Secretary Robert F. Kennedy Jr. has ordered the delay of a new rule updating the definition of “healthy” on food product labels.

The new Food and Drug Administration (FDA) final rule will not go into effect until April 28, a delay from the originally announced implementation date of Feb. 25, Kennedy said in an update on Tuesday.”

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.

2:07 pm

There is a struggle in the SPX to see who gains ascendancy.  While another new low was made this afternoon, there may be a struggle by the dealers to keep SPX above the short gamma level at 5850. 00.  Should they succeed, an attempt may be made at 5900.00 again, to frustrate those put buyers.  Whether they succeed today or not, the trend is lower prices in the next month.

10:37 am

SPX has bounced to retest the Head & Shoulders neckline at 5900.00.  We may see the decline resume shortly.  Be warned that the CTA “sell level” at 5887.00 has been triggered.  This means that going forward the decline may accelerate due to higher volume.  Market liquidity is down significantly in the last week.  SPX has seen a 5% loss from the top in what may be termed a retail buyers’ strike thus far.  That may change to a more active selling environment with added (larger) players.   The Head & Shoulders formation suggests a possible greater loss to come.

7:45 am

Good Morning!

SPX futures bounced to 5888.00 before easing lower this morning.  Yesterday the trendline near 6000.00 was retested from beneath, then SPX declined through  the 100-day Moving Average at 5950.00.  Thus far the selling panic has been largely retail and hedge funds, but now larger players are getting mightily concerned.  The CTA trigger at 5887.00 has been passed without so much as a nod and this morning’s bounce was not able to regain the “safe” level.  That may trigger $40 billion in sales during the next week.  This may be slightly offset by pension and 401(k) purchases.   The Cycles Model calls for a “panic weekend” this week and into the next three weekends as well.

Today’s options chain is deep into short gamma beneath 6000.00.  Short gamma has been purchased in volume every 50 points down to 5400.00, suggesting a relentless decline may be possible.

ZeroHedge reports, “US equity futures are higher, rebounding from an overnight rout driven by a plunge in Chinese and Japanese stocks, while the ongoing crash in bitcoin which sent the token briefly below $80K and down 25% from its all time high, is not helping the dismal sentiment. As of 8:00am ET, S&P futures were up 0.2% and well off the lows,signaling a rebound after the underlying index erased the last of its 2025 gains on Thursday and outperforming both Nasdaq and Russell. Mag 7 are higher led by META (+0.5%) and NVDA (+0.5%). Crypto-linked stocks are lower as Trump’s latest trade-tariff threats prompted a rush by some investors to safer assets, deepening the recent rout in Bitcoin. Bond yields are 1-2bp lower and the USD is higher as the yen finally cracks lower. Commodities are mostly lower: WTI -1.1%, copper -0.7%. Overall, we have seen equities trying to rebound modestly from yesterday’s selloff, but macro narrative has been pressured from trade/policies uncertainties (Trump is set to talk with Zelensky today) and stagflation concerns ; today we get the January PCE and income/spending report: core PCE is expected to print 2.6% YoY, vs. 2.8% prior.”

VIX futures are hovering near the top of the trading range this morning, awaiting the market open.  While market savvy investors are hedging, most ignore the VIX as an indicator of market health/distress.  Commentators may take notice once the VIX has surpassed it historic median price near 25.00.  The Cycles Model indicates a series of possible upside panics in the VIX over the next three weeks.

The March 5 options chain shows Max Pain at 19.00.  Short gamma resides between 15.00 and 18.00.  Long gamma may begin above 20.00 and remains strong to 28.00.

TNX may be making a mid-Master Cycle reversal as its futures bounced from the mid-Cycle support at 42.21.  A rally above the trendline at 44.00 may confirm the reversal.  If correct, we may see TNX resuming its rally through the end of March.  The implication is that both stocks and bonds may be in a panic decline.  Nowhere to hide, except cash.

ZeroHedge observes, “After hotter-than-expected CPI and PPI (and various survey-based inflation expectations), today brings the Big Kahuna – The Fed’s preferred inflation indicator, Core PCE – which is expected to show a dovish downturn (from +2.8% YoY to +2.6% YoY). And that is exactly what happened with headline PCE rising 0.3% MoM (as expected) and Core up 0.3% MoM (as expected). That pushed the YoY shifts lower on a sequential basis (Core PCE YoY at its lowest since June 2024)…”

Bitcoin has been plumbing new lows, reaching 78329.80 prior to a bounce.  The Cycles Model calls for a possible bounce back to the mid-Cycle resistance at 83719.34 as early as today prior to a resumption of the decline.  There may be a significant low made during the week of March 10.

Gold futures have declined to 2862.69 thus far this morning.  Currently, gold is on an aggressive sell signal, urging investors to lighten their long positions. It is approaching its first confirmed sell at the intermediate support at 2839.33.  Beneath that, the sell signal becomes more urgent.  The Cycles Model infers that the decline may continue to the end of March.  Diagnal patteerns often retrace back to their source (1618.00).

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.

3:06 pm

SPX has fallen through the neckline of a small Head & Shoulders formation.  People ask, “Why do Head & Shoulders formations have a minimum target?”  The reason is that third Waves can never be the smallest of an impulsive series.  An impulse contains 5 Waves, in which the third normally offers the longest and most powerful impulse of the series, as illustrated in Wave 1.  During the 2008 decline, third Waves were consistently 1.5 time the length of Wave one.  They may have a larger or smaller multiple.  the third Waves leading to the all-time high produced Wave threes were 120% of the Waves ones.

7:45 am

SPX futures bounced at the 100-day Moving average at 5948.00 and are retesting the trendline near 6000.00 this morning as a final effort to gain ascendancy above the 50-day at 6006.00. Few recognize the trendline that has an equal or greater importance as a guideline for the uptrend.  The 50-day is beneath Intermediate support/resistance at 6021.00, a possible alternate target.  Should it linger near 6000.00, the SPX rising above yesterday’s high at 6009.42 is possible.  The Cycles Model calls for a resumption of the decline by the weekend with a possible pivot occurring today.

Today’s options chain shows Max Pain at 5995.00  Long gamma may begin above 6000.00 while short gamma become strong beneath 5950.00.

ZeroHedge reports, “US equity futures are higher post-NVDA, though the stock’s reaction was a bit muted with the stock rising ~2% pre-market, a far cry from the 10% swing that was priced in by straddles ahead of earnings (and why both puts and calls will expire worthless). As of 8:00am ET, S&P futures are up 0.6%, and Nasdaq futures rise 0.8%, with all Mag7 stocks higher, and Semis and Fins also stronger. Bond yields are up 5bps from 2s to 30s with USD poised to have its strongest day in 5 sessions as yen drops sharply after stops are triggered around 149.40. Commodites are weaker ex-Energy although WTI remains below $70/bbl. Today’s macro data focus is on Durable/Cap Goods and Jobless data. Notably, both Asian and European stocks are weaker today, prompting JPM to ask if “this the beginning of a rotation back to US TMT?”

VIX futures declined to 17.67 this morning in a correction with a possible target at the mid-Cycles support at 16.68.  The Cycles Model calls for a reversal back to the uptrend around mid-day.

The March 5 options chain shows Max Pain at 19.00.  Short gamma resides between 15.00 and 18.00.  Long gamma begins at 20.00 and remains strong to 28.00.

Bitcoin has regained the mid-Cycle support at 83613.70 this morning after a strong challenge beneath it yesterday.  The Cycles Model calls for a resumption of the decline by the weekend followed by a steep decline over the next week.  The Master Cycle low may be found in the week of March 10.

TNX made a low near the mid-Cycle support at 42.22 yesterday.  It may make another probe lower in the next day or so.  However, the weekend may bring a mid-Master Cycle reversal back to the rally mode for the rest of the month.  Today we will see $155 billion of short term T-bills at auction as the last offering of the month is made.

USD futures may have made an early Master Cycle low on Monday as the USD has been gaining elevation since then.  The target at mid-Cycle support at 104.84 has not been met, leaving a slight risk of another probe lower.  We remain neutral, as a buy signal above Intermediate support at 107.69 has not been made.

The Yen is retracing some of tis gains with a possible downside target at the mid-Cycle support at 65.78.  The uptrend may strengthen beginning in March with a Master Cycle high due the week of March 17.   Few see  the risk of a rising currency, especially when loans are taken out in that currency, known as the “carry trade.”  The Yen has already appreciated by over 7% since the beginning of the year.  Some of thos who borrowed on the “carry” may be getting uncomfortable.

Gold futures declined to a new low at 2890.00 this morning.  It is on an aggressive sell signal beneath the Cycle Top at 2943.38.  The Cycles Model suggests the decline may continue to the end of March.  A month-long decline may bring gold down to the Cycle Bottom at 2273.10.

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.

12:42 pm

SPX reversed short of the 50-day Moving Average at 6012.80 and has declined beneath the trendline.  This is a new sell signal for those still long.

10:59 am

SPX is extending its retracement for another brief spell with a probable probe to 6013.00 to 6024.00.  The trendline offered a pause in the bounce, causing a small triangle formation to be followed by the last probe of the bounce.

8:20 am

Good Morning!

SPX futures have risen to 5988.90 in the overnight session, on its way to test the trendline near 6000.00 this morning.  The bounce is nearly over.  Yesterday’s momentous decline beneath the trendline  and a new monthly low has fulfilled the trending strength it received, but there may be more to come.  The 100-day offers a modicum of support at 5946.40.  Downside strength may build through the coming weekend with another major downdraft by Monday.  Deutsche Bank notices that Fridays are now the worst day of the week, followed by Mondays, which used to be affected by headline risk.

Today’s options chain shows Max Pain at 6000.00.  Long gamma may begin above 6020.00, while short gamma beneath 6000.00.  Short gamma strengthened every 50 points beneath 6000.00.  It is easy to see why dealers are trying to get the SPX above 6000.00.

ZeroHedge reports, “US equity futures are higher, reversing much of yesterday’s drop, and European bourses are at all time high, as the market braces for NVDA earnings after today’s close. As of 7:30am, S&P futures are up 0.6% while Nasdaq futures jump 0.8% as all Mag7 names are higher premarket ex-AAPL, while NVDA rises 2.6% aiding the bid for Semis and signaling a rebound on Wall Street after Tuesday’s drop, fueled by a weaker-than-expected consumer confidence print that stirred fears of an economic downturn. Bond yields are 1-2bps higher but with little reaction to the House passing the blueprint for the next budget that is likely to materially increase the deficit.  President Trump is set to meet Zelenskiy this week to sign an agreement giving the US control over half of the war-battered country’s natural resources. Elsewhere, China plans to start re-capitalizing several of its biggest banks in the coming months while BP announced it will increase its oil and gas production. The global risk-on tone is not extending to commodities where there is weakness across all 3 complexes. To the day ahead now, and the main highlight will be Nvidia’s earnings after the US close; data releases include US new home sales for January.”

VIX futures backed down to 18.74 this morning, as SPX finishes its bounce.  Once accomplished, a breakout above the Cycle Top at 23.68 is likely.  Most analysts sit up and take notice of the VIX above its historical midpoint at 25.00, so we may expect more commentary on the VIX very soon.

Tomorrow’s Max Pain lies at 19.00 with short gamma immediately beneath it.  Long gamma bursts forth at 20.00 and remains strong to 28.00.

TNX may be consolidating near its daily low at 42.81, but has further to go in its correction.  A likely target may be the mid-Cycle support at 42.23.  Should it reach its goal by the weekend, a mid-Cycle eversal may take place.  Details are sketchy at the moment, but the mid-Cycle area offers a significant opportunity for a bounce.

ZeroHedge reports, “After one of the strongest 2Y auction on record, the streak of strong coupon sales extended for a second day and despite the continued plunge in yields, which dipped well below 4.30% at one point in the day, today’s sale of $70BN in 5Y paper was flawless, and almost as strong as yesterday’s auction.

The auction stopped at a high yield of 4.123%, down 20bps from 4.330% last month and the lowest since Sept 24; it also stopped 1bps through the When Issued, the 4th consecutive stop through and the highest since December 2013.”

Bitcoin continues its descent as it approaches the mid-Cycle support at 83495.28.  There may be a bounce in the making, only to retest the neckline of the Head & Shoulders formation near 91100.00.  Trending strength may reappear over the weekend,  leading up to a possible panic decline next week.

USD futures continue to consolidate as it corrects down to the mid-Cycle support at 104.83.  The Cycles Model suggests another two weeks of decline prior to a very strong reversal.

The Japanese Yen has broken above its previous high at 67.27.  In doing so, it has caused the Yen carry trade to cost approximately 7.7% more since the beginning of the year due to the Yen appreciation.  So much for a cheap loan that was supposed to bear a .1% interest rate.  While there “may” be a pullback to the mid-Cycle support at 65.78, the trend appears to be gathering strength for a blow-out to the Cycle Top at 70.42 in just a few more weeks.  This may spell the death knell for the Yen carry trade.

Gold futures continued to fall to 2903.39 after yesterday’s strong reversal beneath the Cycle Top support at 2938.00.  This action offers an aggressive sell signal.  This suggests on may reduce exposure to gold.  The Cycles Model suggests a probable decline to the end of March, which may be destructive to long positions.  After beating the drums to buy gold last week, analysts are suddenly silent.

Crude oil may have made its Master Cycle low yesterday at 68.68.  If so, there may be a bounce to the mid-Cycle resistance at 73.45 in the next one to two weeks.  However, that is not the end of the decline.  After the bounce, the probability is high that the decline may resume to mid-April.

ZeroHedge observes, “Oil prices in New York steadied this morning after starting the session at its lowest opening price in two months as a souring economic outlook threatened prospects for energy demand and spurred investors to shun riskier assets.”

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.

3:32 pm

SPX has resumed the bounce to the trendline near 6000.00, near Max Pain for options buyers.  There may be a couple more hours of attempted elevation, only to be resisted by the trendline.  A new development has occurred.  The bounce helps form an irregular right shoulder of the Head & Shoulders formation.  A decline back through the neckline may produce dire results.

2:31 pm

SPX fell through the trendline at 5992.00 and the 100-day Moving Average at 5945.00, then bounced at round number support at 5900.00.  It attempted to return to the trendline, but failed on the first try.  SPX is currently being held up at the 100-day.  Should it fail,  SPX may go much lower.  However, there may be a second attempt at the trendline that could bring SPX back up near 6000.00.  This is not the end of the decline.  Rather, it may be a 4.3-day Cycle completing in the next few hours.  Once complete, the next phase of the decline may begin.  This may not be a good time to try catching falling knives.

7:45 am

Good Morning!

SPX futures have declined beneath the 16-month trendline at 5983.00 this morning, reaching a morning low at 5962.60.  It is now struggling to regain a foothold above the trendline, but the die may be cast.  Should it remain beneath the trendline, the next visible support lies at the mid-Cycle at 5741.07.  The market may go down with no visible catalyst. Short gamma dominates all trades beneath 6000.00 caused by the high amount of puts beneath that level.  As dealers must cover those puts at the end of the day, every new level lower forces the dealers to sell/sell short more shares to cover their growing liabilities.  The Cycles Model suggests today may be a trending strength day, which indicates the possibility of panic selling.

Today’s options chain shows Max Pain at 6020.00.  Long gamma may begin above 6050.00.  Short gamma begins beneath 6000.00 and strengthened every 50 points beneath it.  

ZeroHedge reports, “US equity futures, and Asian markets are lower as the recent tech-led selloff on Wall Street accelerated, sparking further risk-off behavior and momentum liquidations, and spilling over into bitcoin which plunged to a 3 month low breaking below its post election support. As of 7:00am, S&P futures are down 0.3% and are outperforming Nasdaq futs which are down 0.5%; sentiment was dented after Trump said that Canada/Mexico tariffs would be implemented on-time. Mag7 names and semis are lower with NVDA down 1.6%; Europe’s ASML and STMicroelectronics also Bloomberg reported that the Trump admin is planning to expand efforts to limit China’s technological advancements, including tougher semiconductor curbs and pressuring allies to escalate restrictions on China’s chip industry. The ongoing stock rout sparked a rally in Treasuries that has pushed US 10-year yields down 6 bps to 4.34%. Traders also added to their Federal Reserve interest-rate cut bets with ~53 bps of easing now priced in by year end; the USD is flat. Commodities are mostly lower with crude/gasoline higher. Today’s macro data focus is on Housing, regional Fed activity indicators, and Consumer Confidence. ”

VIX futures are consolidating beneath yesterday’s high, awaiting the outcome of the struggle for dominance in the SPX.  The Cycles Model indicates a strengthening of the new trend through the weekend.  The next resistance is the Cycle Top at 23.65.  A visible target may be the August 5 high at 65.73.  Another higher target may exist.

Wednesday’s options chain shows ax Pain at 18.00.  Short gamma lies between 15.00 and 17.00.  Long gamma begins at 20.00 and strengthens above 25,00.

Bitcoin broke through the neckline of a Head & Shoulders formation this morning as liquidity dries up.  It is now beneath its three-month trading range with the next visible support at 83381.43, where it may attempt a retest of the neckline.

TNX  plunged beneath the trendline as liquidity flowed from stocks to bonds.   Today appears to be a high volatility down day, the opposite of what I had inferred yesterday.   The Cycles Model implies that the downtrend may continue to the end of March.  The next support lies at the mid-Cycle at 42.25.  However, given the length of time allowed for the current Master Cycle, it may be possible to see TNX decline to the lower trendline near 38.00.

ZeroHedge remarks, “The Trump administration plans to sell two major federal buildings in San Francisco, including the recently renamed Nancy Pelosi Federal Building, according to Fox News.

Formerly the San Francisco Federal Building, the 18-story tower sits in a crime-ridden area plagued by drug dealing and illegal markets.

How apropos for a building named after a woman who helped oversee the decline of San Francisco.”

USD futures are hovering near its low.  While the decline appears complete, the Master Cycle has room to decline through mid-March.  A nearby support is the mid-Cycle at 104.83.  However, unless there is an inversion, the decline may continue lower.  There is a formation developing that suggests a further drop to 100.00.  However, the formation is not complete.

Gold futures have declined to 2936.20 this morning, after making a new high at 2974.00 yesterday.  This may be the end of a stretched Master Cycle.  Should that be so, the Cycles Model infers a decline to the end of March.

Crude oil futures are hovering near yesterday’s low this morning.  Crude is on a confirmed sell signal.  The Cycles Model suggests the decline may continue to mid-April.  There is an active Head & Shoulders formation with a significantly low target.

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.l

10:29 am

SPX has now declined to the trendline at 5978.00.  There is likely to be a bounce to the 50-day Moving Average at 6011.22.

1:55 pm

SPX elected to challenge Intermediate resistance at 6023.00 instead of the 50-day.  It may have been attempting to reach long gamma at 6055.00, but time is running out for the retracement.  SPX may turn down before the end of today’s session.  Tomorrow could be a panic day.

7:45 am

Good Morning!

Good Morning!

SPX futures have bounced to 6051.90 over the weekend, a 41.5% retracement of Friday’s decline.  The bounce may extend to 6061.00-6073.00, but should the bounce be complete, the decline may resume rather quickly.  Once beneath the 50-day Moving Average at 6012.70, an acceleration may occur as it impulses lower, creating market mayhem.  The Cycles Model points out that tomorrow may arrive with a heavy dose of trending strength, resulting in a possible panic down day.  It appears that retail buying paused last week, while hedge funds returned to selling tech stocks.

Today’s options chain shows Max Pain at 6050.  Long gamma may begin at 6055.00 while short gamma strengthens beneath 6010.00.

ZeroHedge reports, “US equity futures are higher, European bourses are mixed and Asian market are red following the worst session of the year for US stocks, as the S&P tumbled 1.7% leaving it about 2% below its ATHs. As of 7:30am, S&P futures are up 0.5% and Nasdaq futures rise 0.4%, with Mag7 names mixed as Nvidia rises in early trading; the Russell outperforms while Fins/Banks are bid this morning pointing to a rebound in Value/Cyclicals. Bond yields are 1-2bps higher with a flat USD. Commodities are mostly lower with WTI still above $70/bbl and precious metals with a slight bid sending gold to a new all time high. Weekend trade news was muted with the German election and the war in Ukraine in focus. Today’s macro data focus is on regional activity indicators.”

VIX futures had a mild setback to 17.46 this morning, a 42% retracement of Friday’s rally.  It is on a buy signal  above the double resistance at 16.59.  While the SPX shows its decline intensifying in the next couple of days, the VIX may not react quite as strongly.  Realized volatility had been declining until Friday’s lift-off.  With that, a higher floor has been established.  Despite volatility pricing moving higher, it is still beneath long-term averages.

Wednesday’s options chain shows Max Pain at 17.00.  Short gamma may reside at 15.00-16.00.  Long gamma begins at 20.00, but does not have much strength above that.  It appears that options investors are not yet aware of VIX’s potential.

TNX bounced from its trendline near 44.00 this morning.  While most bond traders are asleep at the wheel, TNX is taking a very sharp U-turn, leaving many off course.

ZeroHedge remarks, “When Benoit Mandelbrot’s book The (Mis)behavior of Markets was published in 2004, it was a revelation for many of us. I remember sitting in my car in a parking lot, unwilling to tear myself away from reading it.

Here’s the super-short summary: from time to time markets crash for no visible reason. The internal dynamics of market structures are fractal, and one feature of this structure is that markets break down unpredictably. After the fact, we seek an external trigger–a Federal Reserve “policy error,” inflation fears, etc.–but these post-mortem explanations gloss over the cause, which is the inherent instability of market structures.”

Bitcoin has slipped beneath the trendline and may be poised for a potential two-week decline.  The mid-Cycle support at 83270.00 may be the next target, but may not stop there.  The Head & Shoulders formation offers a deeper potential target.

Gold futures reached a morning high at 2973.74 this morning, creating an inversion in the Cycles.  How long it may last is uncertain.

West Texas Crude has made a new low this morning, at 70.02, only 4 market days from the “standard” Master Cycle low shown on the chat.  One of two things may be happening.  First, it may simply be extending the Master Cycle or, second, it may be developing a fast decline in the new Master Cycle.  We may know as early as tomorrow which it is.

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.

1:25 pm

VIX has launched above its resistance area at 16.59 and is now on a buy signal.  Investors have suddenly discovered that the need hedges against the reversal in stocks.

12:58 pm

The decline in SPX has accelerated past the short-term support at 6068.00.  The next possible bounce may be at Intermediate support at 6022.22 or the 50-day Moving Average at 6013.44.  Should that occur today, there may be a panic event on Monday-Tuesday with the trendline near 6000.00 also being taken out.  Normally investors go short beneath the 50-day.  However, today’s situation may not allow it, as the decline appears to be accelerating already and may grow worse over the weekend, leaving no opportunity to take action.  At a minimum, one should not be long beneath the 50-day.  Momentum stocks are being especially hit hard.

9:53 am

BKX bounced from the 50-day Moving Average at 135.30 yesterday, but the correction may not last.  Once beneath the 50-day investors may see an acceleration of the decline as recognition of that support is nearly universal.  The Cycles Model shows a potential increase in volatility and strength of the decline occurring over the weekend.  The distress in commercial real estate loans is increasing and banks are oved over $3 trillion in CRE loans.

ZeroHedge reveals, “At the end of Q4 2024, commercial real estate continued to exhibit severe weakness, with commercial real estate bonds hitting record distress levels, surpassing the previous records reached in Q3 2024. Commercial real estate bonds are just commercial real estate loans packaged into securities and sold to investors. One category of bonds, commercial mortgage-backed securities (“CMBS”), saw their distress rate increase to 10.6 percent, a fourth consecutive monthly record.”

8:00 am

Good Morning!

SPX futures rose to 6124.90 thus far this morning, a 64% retracement of yesterday’s plunge as favored momentum stocks suddenly reversed..  We may continue to see this type of stair-step activity down until the 50-day Moving Average at 6014.21 and trendline near 6000.00 are breached.  Today is a massive monthly options expiration and the dealers will be actively attempting to manage the SPX for the least payout to options investors.  This may lead to increased volatility during trading hours.  The Cycles Model suggests trending strength may appear on Tuesday.

Today’s options chain shows Max Pain at 6120.00.  Long gamma may begin at 6125.00 and strengthens at 6150.00.  Short gamma rules beneath 6100.00.

ZeroHedge reports, “US equity futures are flat, as European and Asian markets rise, as sentiment improves on the last day of the week. As of 8:10am ET, S&P futures were unchanged at 6,138 after Walmart’s forecast and concerns about consumer behavior led to a decline in stocks Thursday; Nasdaq futures gained 0.3% with the Mag 7 names are mostly higher led by META +0.6%. US-listed Chinese stocks rose in premarket trading on Alibaba’s post-earnings euphoria and after Treasury Secretary Scott Bessent said he would hold an introductory phone call with his Chinese counterpart, though he didn’t specify who on the Chinese side he’d speak to. Bond yields are 1-2bps lower and the USD is higher. Commodities are mixed: oil fell -0.8% this morning, while base metals are higher. From the macro perspective, overnight headlines were largely quiet; earnings results since market-close were mixed; BKNG announced 10% dividend increase and additional buybacks. Today, key macro focus will be global PMIs: the Mfg PMI is expected to print 51.4 vs. 51.2 prior; the Services PMI should print 53.0 vs. 52.9 prior.”

VIX futures continued to convalesce beneath overhead resistance at 16.44 to 16.56.  However, it may be coming out of its Trading Cycle (60 day) low this weekend, suggesting resistance may not hold in the following week.

The February 26 options chain shows Max Pain at 15.00.  There is no short gamma.  Long gamma may begin at 17.00 and is strengthening to 27.00.

TNX futures declined to 44.73 this morning, while the cash market bottomed at 44.82.  It may be performing an irregular retracement which allows it to resume its upward course.  The Cycles Model suggests trending strength may reappear early next week.

Bitcoin has risen above its 50-day Moving Average at 99078.00, offering a possible buy signal.  The Cycles Model suggests a probable three weeks left in the Master Cycle.  Should it remain above the 50-day at the close, Bitcoin may see a new all-time high.  The alternate view infers a possible new low, should the 50-day hold.  Bitcoin has already challenged the six month trendline near 97000.00.  A breakdown beneath it would favor the alternate view.

Zerohedge observes, “In the latest reversal of the cantankerous policies of former United States Securities and Exchange Commission Chair Gary Gensler – who officials in the crypto industry complained had sought to regulate the industry to death through enforcement actions – the SEC has agreed to dismiss the lawsuit against centralized exchange firm Coinbase, accusing the company of operating as an unregistered securities broker.”

Gold may be coming off its Master Cycle high yesterday at 2973.40.  Today’s gold futures declined to 2930.31.  The Cycle Top lies at 2923.57, offering a potential aggressive sell signal beneath it.  Gold may be nearing a 25.8 year Cycle from its low of July 1999 at 253.20.  The initial low may occur at the end of March, with a deeper low in May, according to the Cycles Model.

WTI futures have fallen back beneath the 50-day Moving Average at 72.26, reiterating the sell signal.  The Cycles Model suggests a continued decline through the middle of April.   Should it pass beneath the neckline of the Head & Shoulders formation near 65.00, a very serious decline may ensue.

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.

10:57 am

BKX, our liquidity proxy, has crossed beneath the upper trendline, offering investors an aggressive sell signal.  This signal tells us to lighten our exposure to the Banking Index.  Intermediate support lies at 135.30, beneath which is a confirmed sell signal.  Banks are on very thin ice.  While many smaller banks are consolidating and being purchased by larger ones, there may be some regional banks nearing illiquidity.

10:00

SPX is crossing the support line at 6100.00.  This begets an aggressive sell signal.  Most should lighten their longs, while only the brave may attempt to go short.  This is the end of the Master Cycle and further upside may be minimal, if at all.  While short-term support lies at 6061.61, a sell-side confirmation lies at the 50-day Moving Average at 6013.14.

7:45 am

Good Morning!

SPX futures have declined to 6122.80 thus far  A decline beneath 6100.00 may offer an aggressive sell signal.  Another short-term support may lie at 6060.00, whereas long-term support lies at the 50-day Moving Average at 6008.00.  The 16-month trendline may converge with the 50-day near 6000.00, giving a confirmed sell signal.  Quick action may be needed to preserve the small gains eked out in the SPX since the beginning of the year.  Professional money managers claim to be bullish on stocks, short everything else, but are selling at a furious pace again as retail investors have redoubled their efforts to “buy  the dip.”  This is a schizophrenic market.

Today’s options chain shows Max Pain at 6125.00.  Long gamma prevails above 6145.00 while short gamma is strong beneath 6100.00.

ZeroHedge reports, “US equity futures slide from the latest record high as concerns around trade tariffs and a disappointing outlook from Walmart weighed on sentiment. As of 8:00am ET, contracts on the S&P 500 and the Nasdaq 100 slipped about 0.3% as Mag7 names are mixed with Semis lower. Palantir was among the biggest losers in US premarket trading, on track to extend Wednesday’s 10% slide, after Defense Secretary Pete Hegseth outlined plans to cut military spending by 8% over the coming years.  Walmart plunged 8%, the most in a year, after the company’s guidance disappointed Wall Street.  Europe’s Stoxx 50 continues its ascent rising 0.6% led by real estate and auto sector. The potential for a pausing of the Fed’s QT hinted in yesterday’s FOMC minutes helped a late-day rally and Trump says a bigger China trade deal is possible but says there is a shot clock for Ukraine to find a deal. Bond yields are down 2-3bps with the USD weaker as the yen continues its recent surge. Commodities are seeing strength in both Ags and Metals; gold set a fresh all-time high above $2950. The macro data focus is on Jobless Claims and the Leading Indicator Index.”

VIX futures topped out this morning at 15.73, still within the recent trading range.  The 50-day Moving Average is at 16.40 while the mid-Cycle resistance is at 16.54.  Once above those double resistances, the VIX may surprise to the upside.  The reason is that the heavy short presence in the options market has been lifted, creating a vacuum above it.

The February 26 options chain shows Max Pain at 16.00, but virtually no short gamma beneath it.  Long gamma begins at 20.00, but so far has been hesitant to reach higher as a hedge.

Bitcoin is being squeezed between the trendline at 96400.00 and the 50-day Moving Average at 99011.00.  The Cycles Model suggests there may be another three weeks of decline, indicating a possible breakdown may occur imminently.  Should that be the case, the next move may target the mid-Cycle support at 82507.21.  Depending on how quickly that may be reached, there may be a considerable risk  of reaching the next possible support at 70000.00.

Eurostoxx 50 made its Master Cycle high on February 18 at 5550.00 and has reversed since then.  Those who fear missing out on the searing rally may already be too late.  This has been a panic rally into stocks because the governments in Europe are in the state of collapse.

TNX may be challenging the 50-day Moving Average at 45.20 this morning.  The odds are better than even that TNX may resume its move higher.  Confirmation comes above the Intermediate support/resistance line at 45.82.

ZeroHedge reports, “In a day seeing another push higher in yields, moments ago the Treasury concluded the week’s lone coupon auction and it could have been better.

Pricing at a high yield of 4.830%, this was a 7bps drop from last month’s 4.90%, but while January’s auction stopped through the When Issued by 1.1bps, today we saw a 1.0bps tail to the 4.82% When Issued, the 5th tail in the last 6 auctions. ”

Zerohedge further explains, “Since the last FOMC meeting – on Jan 29th – the market has coped admirably well with the utter avalanche of headlines spewing from Washington (and around the world). Gold has been the standout choice while stocks, bonds, oil and the dollar are all about flat…

Source: Bloomberg

The macro data has been a nightmare (for The Fed) with stagflationary impulses clear as growth surprises have been to the downside while inflation surprises have soared to the upside…”

Gold futures ripped to the upside at 2972.91 this morning, then immediately reversed back down.  Should it decline beneath 2933.00, it may have formed a key reversal.  Today is the last day that gold could make an extended high, which caught me by surprise.  However, further examination showed that the fractal lacked its final probe to a new high, which it accomplished today.  Trump confirmed the Fort Knox audit.

ZeroHedge observes, ”   Having started the ‘Audit Fort Knox’ discussion last week…

With our suggestion immediately going viral on X, with Sen. Rand Paul (R-KY) indicating he’s on board – replying to Musk with “Let’s do it.””

The Ag Index peaked yesterday in a burst of strength as it may have completed its Master Cycle high.  The Master Cycle implies that the decline may last until the end of March, as will stocks.  The downside target may be the declining trendline or the mid-Cycle support at 370.71.

ZeroHedge reveals, “Walmart exceeded Bloomberg analysts’ expectations for fourth-quarter US comparable sales and adjusted earnings per share. However, its first-quarter and full-year profit guidance missed, citing ongoing pressure from its product mix and an uncertain economic environment. Shares are down nearly 8% in premarket trading as the one-year non-stop rally hits a wall.

The discount retailer and the nation’s largest grocer—recognized by Goldman as offering the best prices for US consumers—reported a 20% surge in e-commerce sales for the holiday quarter. The results included $180.6 billion in total revenue and $7.9 billion in operating income, exceeding Wall Street expectations.”

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.

3:30 pm

SPX may have completed its last fractal, or very nearly so.  Prepare for an imminent reversal.  An aggressive sell signal may be activated beneath 6100.00.

8:00 am

Good Morning!

SPX futures rose to 6138.40 this morning, then eased back beneath yesterday’s high at 6129.63, a new all-time high.  Note that yesterday was day 271 of the current Master Cycle.  Usually the Master Cycles end within two weeks of day 258.  Should SPX go higher today, it will have extended 14 days.  Yesterday I mentioned that SPX may make a final probe to 6160.00.   However, time is running out.  A sell signal may be made beneath the 50-day Moving Average at 6002.00.

Today’s options chain shows Max Pain at 6115.00.  Long gamma may begin at 6150.00, while short gamma may start at 6050.00.

ZeroHedge reports, “US equity futures are lower ahead of today’s FOMC minutes, with global markets also sinking and bonds extended their slide after President Trump’s latest tariff threats stoked concern about a widening trade war; hawkish UK inflation prints which sent bond yields higher did not help. As of 8:00am S&P futures are -0.3% lower after the index topped its January record on Tuesday, while Nasdaq futures traded steady after Trump raised the specter of 25% tariffs on Autos and Pharma, both coming after April 1. The Trump Admin will also keep Biden-era rules on M&A. A slew of earnings reports also dented sentiment, with Arista Networks, Occidental Petroleum, Celanese and Bumble all dropping in premarket trading after results. Super Micro Computer rallied, however, after issuing an aggressive long-term revenue outlook. Pre-mkt, Mag7 names are mixed with Semis seeing some profit-taking. The yield curve is twisting steeper as the USD appreciates. Commodities are stronger despite the USD move; Brent trades above $76 while gold is at an all time high around $2940. Today’s macro data focus will be on Housing data and the Fed Minutes.”

VIX futures rose to 15.62, within the existing trading range.  The 50-day Moving Average is at 16.36.  A buy signal awaits above that level.  As an alternate, the mid-Cycle resistance at 16.53 may also be used as a buy signal.  The release of the FOMC minutes may be a catalyst for a spike in hedging.  In addition a debt ceiling standoff looms in mid-March.  The perceived “stability” cannot last.

Today is the monthly options expiration for the VIX.  Max Pain lies near 20.00.  Short gamma lies between 15.00 and 19.00.  Long gamma is populated from 20.00 to 85.00.

TNX futures rose to 45.78 this morning, while the cash market lags.  Intermediate resistance lies at 45.95.  Once clear of that, the Cycle Top at 48.15 may be in sight.  Trending strength is at work today and may intensify next week as congress plays chicken with the debt ceiling in March.

Bitcoin may  have broken it trendline with a possible three weeks left in the Cycle.  This may be considered a sell signal, especially since it is beneath the 50-day Moving Average at 98941.00.  Once the trendline is broken, the next support may be the mid-Cycle level at 82300.00.

Gold futures are trading beneath the February 11 high at 2968.50, but is being supported at the Cycle Top at 2912.40.  Once a breakdown occurs, we may see gold plummet to its trendline at 2730.00. or lower.  The uptrend may be complete, but the decline is not yet underway.  Should gold close beneath 2912.00, on may wish to lighten up one’s gold holdings.  The Cycles Model suggests that, once underway, the decline may last through the end of March.  Analysts continue to flog gold as an inflation hedge.   However, there may be a closer link to political instability, instead.  Should the political arena calm down, especially in war zones,  we may see a dramatic drop in the price of gold.

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.

2:57 pm

SPX may be making the final probe to a possible all-time high.  Should it go higher, a possible target appears to be ~6160.00.  However, the probe higher may be constrained by time, which is running out for this rally.  In addition, there appears to be significant selling at each attempt at a new high.

9:45 am

Good Morning!

SPX futures rose to 6138.60, not an all-time high in the futures.  The high in the cash market is 6125.39.  Friday’s high at 6127.47 may be the peak performance for the SPX, leaving the January 24 high at 6128.18 as the all-time high.  The efforts to make a new high have failed thus far, leaving a truncated fractal.  The ability to probe higher may  be stifled by the turn in the Cycle that may have occurred on Friday.  Certainty of the reversal may arrive with the crossing beneath the 50-day Moving Average at 6002.42.  Hedge funds are going short again while retail money still pours into the market.

Today’s options chain shows Max Pain at 6100.00.  Long gamma may start above 6150.00 while short gamma may begin beneath 6050.00.

ZeroHedge reports, “US equity futures and global markets are higher as Russian and US officials met to negotiate an end to the three-year war in Ukraine. As of 8:00am ET, both S&P and Nasdaq futures are 0.4% higher, with Mag7 names all higher ex META (GOOGL +0.5%, AMZN +0.4%, AAPL +0.1%, MSFT +0.3%, META -0.2%, NVDA +1.2% and TSLA +0.8%) and Semis bid up, led by Intel. In Europe, the Stoxx 600 index held near record highs, with defense stocks such as Rheinmetall and Dassault Aviation rallying further on expectations that governments will have to ratchet up military spending. A gauge of emerging-market equities hit a three-month high, while stocks in Asia were mixed, but still closed in the green for a fifth day after President Xi Jinping met with prominent entrepreneurs Monday. Tariff headlines were quiet over the weekend as the market focused on a RU/UKR solution. Bond yields are higher by 1-3 bps and USD looks to break a 5-day losing streak. Commodities are stronger with all 3 complexes bid up and WTI finding support above $70/bbl. Today’s macro releases lack market-moving data as part of a relatively quiet macro week; we have two Fed speakers on deck.”

VIX rose to 16.03 this morningas a reversal from the low on Friday has taken shape.  the 50-day Moving Average is at 16.37, which defines the possible new trend.  The Cycles Model calls for another month of rally in the VIX with massive strength appearing in March.

The February 19 (monthly) options chain shows Max Pain at 17.50.  Short gamma is strong between 15.00 and 17.00.  Long gamma may begin at 19.00 and strengthens up to 60.00.

ZeroHedge observes, “Today, the S&P 500’s cyclically adjusted price-to-earnings ratio (CAPE) is nearing historic highs, signaling market valuations may be in overheated territory.

In December 2024, the S&P 500 CAPE ratio stood at 37.9 – well above its long-term average of 17.6. Notably, it has only exceeded this level during the Dot-Com bubble and in 2021.”

TNX has reversed out of its Friday low this morning, having gapped above the 50-day Moving Average at 45.07.  It is on a buy signal, sell signal for UST.    The Cycles Model calls for trending strength to begin today and stretch through the end of March.  Intermediate resistance lies at 45.84, but more importantly, a breakout may occur at 46.60 and, later, at 48.09, th e neckline for the Head & Shoulders formation.

Zerohedge reports, “The Elon Musk-led Department of Government Efficiency (DOGE) on Monday revealed its finding that $4.7 trillion in disbursements by the US Treasury are “almost impossible” to trace, thanks to a rampant disregard for the basic accounting practice of using of tracking codes when dishing out money.

Mind you, it’s not as if such a federal tracking system wasn’t already in place — it simply went casually unused for all sorts of payouts adding up to an almost unfathomable $4.7 trillion. Without Treasury Access Symbol (TAS) identification codes associated with those payouts, there’s little hope in figuring out where all that money went.”

10:58 am

USD remains on a corrective course that may last up to 3 more weeks.  The upper range may be the 50-day Moving Average at 107.74 and the lower range may be the mid-Cycle support at 104.73.

The Japanese yen has resumed its upward course that may last another month, according to the Cycles Model.  It is now above the mid-Cycle support/resistance at 65.59 and on a buy signal.  Trending strength may resume by the end of the week.  The Yen has regained nearly 5% since the beginning of the year, causing some consternation among those using the the Yen carry trade for financing.

The Ag Index is approaching its Master Cycle high.  The Cycles Model suggests looking for a strong reversal this week.  If so, look for a retracement down to the trendline or mid-Cycle support at 370.56 in the next month, whichever comes first.