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.

10:45 am

SPX has bounced above the 50-day Moving Average at 5987.00.  Should it retain its perch above the 50-day , there is a possibility to continue rallying to a new ATH near 6200.00.  Alternatively, a decline back down to the trendline at 5900.00 may limit the rally to near- 6000.00.  Fortunately, the issue may be resolved in just a matter of days.

10:13 am

BKX has fallen beneath the trendline at 136.00, crating a sell signal.  The 50-day Moving Average lies at 133.15, signaling further price erosion   There seems to be no direct connection between Trump’s tariffs and the BKX.  However, we cannot ignore that there is something weakening the banking index.

8:00 am

Good Morning!

NDX futures fell to 20839.80 this morning, beneath the 50-day Moving Average at 21267.68.  There is a bounce that may alleviate the fear of loss as the markets attempt to regain the 50-day.  However, a further plunge to the 100-day Moving Average at 20697.67 may elicit a panic-selling response.  The 15-month trendline is at mid-Cycle support at 20012.92.  We may continue to see wide-ranging choppiness until Wednesday, the next Cyclical Pivot day.  It is hoped that Trump’s trade war will be short-lived.

Today’s options chain shows max Pain at 21400.00.  Long gamma may begin above 21450.00 while short gamma lies beneath 21290.00.

SPX futures tumbled to 5908.40 before a bounce.  It remains beneath the 50-day Moving Average at 5987.02, a cause for concern as it offers a well-recognized sell signal for traders.  Should the decline resume, the 100-day Moving Average and 15-month trendline lie at 5881.06, offering a break in the trend.

Today’s options chain shows Max Pain at 6065.00.  Long gamma may begin above   6075.00 while short gamma lies beneath 6050.00.  Dealers must see SPX rise 100 points above its present position to regain neutral ground.

ZeroHedge reports, “US equity futures tumbled as the market prepares for Trade War 2.0, with both tech and small-caps underperforming as the dollar soared more than 1% pre-mkt, trading near a two year high and the yield curve bear flattens after Trump announced tariffs on Canada, Mexico and China, and warned that European levies are coming. The Canadian dollar fell to its lowest since 2003 and the euro weakened. As of 8:00am ET, S&P futures are down 1.7%, but off session lows having tumbled as much as 2% earlier; Nasdaq futures slide 1.7% with the Mag7 all broadly lower (GOOGL -1.8%, AMZN -2%, AAPL -1.9%, MSFT -1%, META -2%, NVDA -3% and TSLA -3%). Pre-mkt, Mag7/Semis are providing no safety and Cyclicals ex-Energy are under pressure as the market analyzes whether “Trade War 2.0 ushers the end of US Exceptionalism” according to JPM. The 2Y yield is +7bps pre-mkt as the bond market forecasts an inflationary impulse from the tariffs, indicating the market is not selling off on growth but rather on inflationary fears. Trump is said to have calls scheduled with Canadian and Mexican leaders today but warns that tariffs will be implemented on Tuesday if no deal is achieved; sets EU as the next target. Today’s macro data focus will be on ISM-Mfg, Vehicle Sales, and Construction Spending.”

VIX futures ramped up to 20.41 in early trading.  It remains beneath last Monday’s peak, but not by a lot.   The Cycles Model shows VIX receiving a triple boost of trending strength this week, sending it to possible new highs.

The October 5 options chain shows a solitary short gamma holding at 15.00.  Long gamma edges out the shorts at 16.00 and runs strong to 30.00.

TNX has no appearance of being affected by the Trump tariffs.  It is hovering just above the January 30 low at 44.88.  The Cycles Model shows no particular activity this week, although it may change by the weekend.

Bitcoin slipped beneath its double support at 99807.98 on Friday.  This morning it continued its decline, slashing through the 100-day at 63895 and bouncing off the 5-month trendline at 90000.00.  It has since bounced above the 100-day, but remains distant from the super-support at 99813.98.  Should it fail to gain traction, we may see Bitcoin challenge the trendline by the end of the week.

USD futures ramped above the Cycle Top at 109.42.  It may find support there, as today is a day of trending strength.   The Cycles Model suggests that USD may continue to rise until mid-March.  Tariffs may be self-defeating, as the currency of the exporting country may lose value, negating the price hike imposed by tariffs.

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.

3:36 pm

SPX elected the 5-day fractal, confirming the January 24 Master Cycle high at 6128.18.  The decline may extend to the end of March, with the first likely panic day on Monday.  A possible target may be the 15-month Ending Diagonal trendline at 5925.00.  Take note: short selling in January was 10 times long buying.

7:45 am

Good Morning!

NDX futures rose to 21697.60 thus far this morning, above Intermediate support at 21410.75.  NDX may have completed a 5-day fractal this morning from the January 24 Master Cycle high.  A reversal beneath this support may signal the decline may be underway.  The alternate view is that equities may be forming an 8-day fractal with completion near the Cycle Top at 22075.53.

SPX futures rose to a morning high at 6102.60, completing a 5-day fractal from the January 24 high.  There’s a good chance that the retracement bounce may be complete.  SPX may be in the reversal zone this morning, with a better-than-even probability of a reversal today.  The alternate possibility may be that SPX goes higher, possibly to the Cycle Top at 6201.89 and a new all-time high.

Today’s options chain shows Max Pain at 6065.00.  Long gamma may begin above 6075.00, but becomes significant above 6100.00.  Short gama may begin beneath 6050.00.

ZeroHedge reports, “US equity futures are higher this morning on the last day of a volatile week, amid healthy earnings results post market close yesterday. As of 8:00am, S&P futures are up 0.5%, while Nasdaq futures gain 0.8% with AAPL up +3.5% after first sliding after disappointing iPhone sales only to reverse losses on the company’s (rather modest) guidance; Intel gained +1.4% as results were better-than-feared while Mag7 stocks were mostly higher (GOOGL +0.5%, AMZN +0.9%, AAPL +4%, MSFT +1%, META +0.5%, NVDA -1% and TSLA +0.2%). Europe’s Stoxx 600 index headed for its best month in two years as strong earnings reports burnished the appeal of the region’s stocks over pricier Wall Street equities. As we get closer to the Feb 1 deadline, headlines on Trump’s tariffs took the central stage. Trump’s reiteration of the 25% tariffs on Canada/Mexico led to some volatility yesterday, but the markets quickly rebounded and still managed to finish in the green. 10Y treasury yields were flat at 4.52% while the dollar gained ahead of President Donald Trump’s weekend tariff announcement. Today, key macro focus will be December PCE and Energy earnings (XOM and CVX).”

VIX futures reached a morning low at 15.22.  The move may be complete, or nearly so.  The Cycles Model shows volatility erupting early next week  with a potential for multiple panic days.

The February 5 options chain shows Max Pain at 17.00.  There is very little short gamma from 15.00 to 17.00.  Long gamma may begin at 18.00 and above.

TNX has reversed from yesterday’s Master Cycle low at 44.88.  The 50-day Moving Average may have been the focal point for the reversal, rather than the trendline near 44.00.  Contrary to popular opinion, the Cycles Model shows interest rates rising through the end of March.

ZeroHedge observes, “With constant fearmongery about Trump’s tariffs prompting a panic-flation, it is interesting to note that inflation data has been serially disappointing in recent weeks (printing below expectations)…

Source: Bloomberg

And this morning we get The Fed’s (old) favorite inflation indicator (until they changed their minds because it didn’t fit the narrative) – Core PCE – print at +2.8% YoY (flat from the prior month).”

USD futures rose to a morning high at 108.37 this morning.  The 50-day Moving Average at 107.50 and Intermediate resistance at 108.08 have been surpassed, creating a buy signal.  The Cycles Model suggests the USD may continue to rally through mid-March.

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!

NDX futures made an overnight high of 21588.20, challenging the Intermediate support at 21408.77, where a sell signal may be made.  NDX still maintains the long-term trend, but is being subject to increasing volatility and inability to make new highs.  NVDA closed beneath the 200-day Moving Average, hardly a performance worthy of the Mag-7.

SPX futures rose to 6071.70 in the overnight session, then declined to “Max Pain” at 6050.00 at present.  There may be an attempt to close the month of January above the December 31 close at 5881.00.  Keep in mind the 50-day Moving Average is at 5984.28.  Beneath it lies a confirmed sell signal.

Today’s options chain shows Max Pain at 6050.00.  Long gamma lies above 6070.00 while short gamma lurks beneath 6000.00.

ZeroHedge reports, “US equity futures and European markets are broadly higher led by Tech/Small-Caps following a dovish Powell press conference (which reversed the hawkish FOMC statement) and solid, if hardly stellar (see MSFT), earnings. As of 8:00am ET, S&P futures are up 0.25%, off session highs; Nasdaq futures rise 0.3% with Mag 7 names mixed (GOOGL +0.7%, AMZN flat, AAPL -0.4%, MSFT -4%, META +1%, NVDA -0.8% and TSLA +2%). European markets are solid in the green ahead of what is widely expected to be the 5th consecutive ECB rate cut later Thursday to revive the sluggish eurozone economy. Bond yields are lower as the curve flattens and USD weakens on the back of continued strength in the JPY which will continue until Japan’s exports crater. Commodities are mixed with strength in both base and precious metals while oil has reversed earlier losses. Today’s macro data focus is on jobless claims and Q4 GDP data ahead of tomorrow’s Dec PCE print, after the close we get AAPL earnings.”

VIX futures are consolidating above the 50-day Moving Average at 16.08.    The retracement appears complete, or nearly so.  The Cycles Model shows increasing trending strength wit a spike over the weekend.

Bitcoin may have made its retracement high at 105613.70 on a day of trending strength today.  If so, the retracement may be over and a decline may be imminent.  The Cycles Model calls for three more weeks of decline.  A sell signal may be made should BTC decline beneath the 50-day Moving Average at 99249.57.

TNX extended its master Cycle low to 44.88 this morning, just above the 50-day Moving Average at 44.72.  Today is day 259, so the reversal appears timely.  The Cycles Model suggests a resumed rally to the end of March.

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.

3:31 pm

The Powers that be rescued SPX from short gamma beneath 6025.00 and may attempt to keep it near Max pain at 6050.00, where the options payout is the least.  From there we await the earnings deluge after the close.

ZeroHedge points out, “The S&P 500 is down 32bp as AI continues to dominate headlines ahead of Microsoft ($3.3TN), Meta ($1.7TN) and Tesla ($1.3TN) results on Wednesday evening. AI Power is retracing, up 1.4%, whilst AI Software Pioneers are 2.1%, reversing some of the basket’s outperformance from the last two days. AI Semis are lower by 80bp and subdued with Nvidia down 5%. Bullish arguments around the secular theme focus on competition fuelling technological advances which will only increase the proliferation/adoption of AI in the long run. Meanwhile, some are questioning the veracity of DeepSeek’s claim around training costs.”

8:00 am

Good Morning!

NDX futures are hovering above the 50-day Moving Average at 21245.00 this morning, as the FOMC announcement at 2:00 pm is made ready.  The FOMC exerts tight control over the market movements on announcement day.  The expectation is that there may be no immediate cuts as of announcement day, but a possible .25% cuts may come later with good data.  The January meeting  may not offer any surprises or new information.  Watch for a possible decline beneath the 50-day which may announce the resumption of the decline.  The Cycles Model provide little detail of upcoming events until this weekend, where volatility spikes may occur.

ZeroHedge observes, “ASML shares surged as much as 12% in European trading, the biggest intraday gain since 2020, after the chip equipment maker posted quarterly bookings that topped Bloomberg Consensus estimates. Despite concerns over weaker demand from key clients Intel and Samsung, JPMorgan analysts believe that strong orders came from Taiwan Semiconductor Manufacturing Co. and other high-end chip producers.”

SPX futures may have slowly begun to fade yesterday’s close.  As mentioned, we await the crossing of the 50-day Moving Average at 5982.64 to offer a potential sell signal.  The 15-month trendline awaits at 5863.86, where the uptrend is finally broken.

In today’s options chain, Max Pain may appear at 6050.00.  Long gamma begins to strengthen at 6070.00 and becomes very strong above 6100.00.  Short gamma emerges at 6025.00 and below.

ZeroHedge reports, “Futures are flat with Tech/Small-caps big higher as the market looks to recover from Monday’s tech plunge. As of 8:00am S&P futures are unchanged, erasing a modest earlier gain during the European session; Nasdaq futures extend their Tuesday rebound and rise 0.4% after rising 2.0% on Tuesday; Mag7 names are mixed (GOOGL +0.5%, AMZN +0.9%, AAPL -1%, MSFT flat, META +0.5%, NVDA -0.7% and TSLA -0.2%) with semis rallying but this may not mean the end of the Semis-to-Software rotation which is +10% this week. Europe’s Stoxx 600 index rose 0.6% after chip giant ASML soared 11% after order bookings beat estimates, spurring gains for semiconductor stocks. Bond yields are flat to down 2bps to 4.52% ahead of what is expected to be a dovish pause by the Fed today (full preview here). USD strength continues, given the likelihood of new tariffs announced this week or weekend. Commodities are mixed as Ags and Metals are bid. Looking to the day ahead, the main highlight will be the Federal Reserve’s policy decision, along with Chair Powell’s subsequent press conference, while the Bank of Canada will also be making their own policy decision. Data releases include December advance goods trade balance and wholesale inventories (at 8:30am ET). Finally, today’s earnings releases include tech giants Tesla, Microsoft and Meta.”

VIX futures rose to 16.89 this morning, above the 50-day Moving Average at 16.03.  This is an actionable buy signal.  The Cycles Model suggests a continuation of thee rally through the end of March.  Hang on for volatility!  Today is VIX weekly ooptions expiration day.

The February 5 options chain shows Max Pain at 17.00, with a small short gamma at 15.00.  Long gamma may begin at 18.00 and shows positive sentiment to 30.00.

TNX  extended its Master Cycle low to this morning at 45.12 (45.10 in the futures).  Today is day 258, the “ideal” reversal date.  This afternoon’s FOMC announcement may be accompanied by a “sudden” reversal in TNX, as it did in September.

ZeroHedge comments, “Personal consumption represents over two-thirds of economic activity.

Therefore, consumers’ ability to spend, i.e., income, is vital to the economy.

Taking it one more step, RealInvestmentAdvice.com’s team notes that confidence in the security of our jobs and wages drives the marginal consumption behaviors of most citizens.

With that, we share a chart that should worry the Fed.

The chart below shows that the University of Michigan survey of real household income expectations is plummeting.

Moreover, the index is at its lowest since record began…”

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.

2:19 pm

SPX may have completed its initial downside fractal.  The reason for the bounce is because the energy of the decline must be dissipated before the next decline.  Once beneath the 50-day Moving Average, another panic event may occur.  The next target for the decline is likely to be the Cycle Bottom shown in the chart at 5812.43.

8:15 am

Good Morning!

NDX futures challenged the 50-day Moving Average at 21238.36in the overnight session, but could not climb above yesterday’s intraday high.  It has since fallen back beneath the 50-day.  Goldman’s trading desk relates that, “No one was buying.” on the way down yesterday.  The NDX made a 70% retracement of a 2-week rally in a day.  The view on AI may have been fundamentally changed, as players walk off the field , protesting, “It was only a flesh wound.”

The NDX options chain remains deep in short gamma, while the longs were hung out to dry.

ZeroHedge comments, “The entire AI complex sold off violently on Monday after China’s “AI Sputnik” moment, driven by the low-cost DeepSeek chatbot, raised doubts about the market’s future expectations for massive investments in new computing infrastructure and upgraded power grids to support large language models and other AI technologies.

Uh-oh, Mag5… ROI concerns now enter the picture.”

SPX futures rose to 6040.40 in the overnight session, mostly on a technical bounce.  It remains above the 50-day Moving Average at 5982.17, which may bear watching today.  The Cycles Model suggests negative momentum may be building toward the weekend, when we may see another burst of downside energy.

Today’s options chain shows that Max Pain is at the hotly contested 6000.00 strike.  Long gamma may strengthen above 6050.00 while short gamma resides beneath 5975.00.  Sentiment is leaning short.

ZeroHedge reports, “US futures rose slightly after Monday’s rout over valuations in the artificial-intelligence sector, while the dollar advanced after US President Donald Trump said he wants to enact across-the-board tariffs that are “much bigger” than 2.5%. After suffering a record drop on Monday, Nvidia led a rebound in premarket trading one day after Chinese upstart DeepSeek prompted traders to rethink the extent of US tech dominance. As of 8:00am ET, futures on the Nasdaq 100 rose about 0.2% after the tech index suffered its worst one-day drop since mid-December as Nvidia shares climbed as much as 5% in premarket, poised to claw back some of their 17% slump. Contracts tracking the S&P 500 gained 0.2% with semis poised to recoup some of yesterday’s losses. In Europe, stocks climbed on the back of upbeat earnings. Keep an eye on USD and bond yields, which moved higher as Trump looked set to add a blanket tariff on Feb 1 which could start with a 2.5% blanket tariff and ramp from there. The commodity complex is seeing strength in Energy, weakness in Ags, and Metals are mixed. Today’s macro focus is on Durable/Cap Goods, Housing Pricing, Consumer Confidence, and regional activity indicators ahead of tomorrow’s Fed decision. Starbucks, GM and Boeing are among companies to report results today.”

VIX futures edged down to an overnight low at 17.46, but appears ready to spring back into action.  The Cycles Model shows a buildup of trending strength, which may show itself over the weekend again.  (Are the Chinese preparing another surprise?)

TNX  may have made its Master Cycle low yesterday, on day 256.  There is a diminishing possibility of yet another low.  However, time is not favorable for such an event.  This is yet another double reversal event happening during the month of January.  $44 billion in 7-year Treasury Notes will be at auction today.

ZeroHedge reports, “90 minutes after a mediocre 2Y auction hit the tape, the Treasury sold $70BN in 5Y paper in the day’s second auction to start the Fed-abbreviated week, which also sees a 7Y sale tomorrow before the FOMC on Wednesday.

The auction stopped at a high yield of 4.330% which was down from 4.478% in December, and also stopped through the When Issued 4.336% by 0.6bps – this was the third consecutive through auction in a row and followed 4 consecutive tails as sentiment has clearly improved toward the belly of the curve.”

Bitcoin is in consolidation today.  The Cycles Model suggests a possible three weeks of decline ahead.  Volatility is due to increase imminently, which may accentuate the decline.

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.

3:32pm

SPX is being held at the 50-day Moving Average at 5981.00.  Dealers are doing their best not to let short gamma become shorter gamma.  Inevitably, SPX may still decline to the 100-day trendline at 5900.00.This decline may have been just too surprising for everyone.  Today ‘s move is called an island reversal, a classic reversal pattern.

ZeroHedge comments, “‘m not sure that “software will eat the world,” but it could consume the stock market bubble in a single gulp.

Is DeepSeek a Sputnik Moment? Let’s break it down. The Soviet Union’s October 1957 launch of the world’s first artificial satellite, Sputnik 1, stunned the U.S., which reckoned it had a commanding lead in “the Space Race.” (It turns out the U.S. had the capability of launching a satellite before Sputnik, but held off for various reasons.)”

:00 am

NDX was stopped at the trendline and Cycle Top resistance at 22069.86 and did not make a new all time high last week.  This morning NDX futures plummeted 6% to 20632.20, possibly finding support at the 100-day Moving Average at 20575.00 and the January 13 low at 20538.33.  It bounced, gaining back roughly 2% as I write.  But the damage is done.  Investors who bought the top tick in the NDX last week are trying to undo their trade at a loss in a possible limit-down day..  I had warned on Thursday that a Master Cycle high might be imminent last Thursday, but FOMO was too hard to resist for many.  This month we have a double directional change in the Cycles.  The Cycles Model tells us that the new decline may last until the end of March.

ZeroHedge remarks, “There is only one topic on traders’ minds this morning that threatens to upend the multi-year AI bull trend driving chip stocks to record highs: the (extremely) cheaper Chinese DeepSeek response to OpenAI’s ChatGPT, as noted in an overnight piece titled “Goldman Asks If China’s DeepSeek is AI’s Sputnik Moment.”“

SPX futures declined to 5915.20, finding support at the 15-month trendline at 5900.00, a 3.5% loss over the weekend.    The SPX is not limit down but the NDX very nearly is.  It will be up to the authorities on how to handle this, making it an interesting day.

SPX options chain is in short gamma beneath 6075.00.  This will make it very difficult to recover.

VIX futures rose to 22.51 this morning, a 51.5% gain from Friday’s close.  It is on a confirmed buy signal and may continue to be so through the end of March.  Protection is no longer cheap.  In addition, once it climbs above the Cycle Top at 23.62, the pullbacks may be shallow, making it difficult to buy market protection.

Wednesday’s options chain shows only long gamma above 17.00, which strengthens above 20.00.  There is a singular lack of vision, as the top cache of calls has a strike at 30.00.

TNX has resumed its decline to the trendline at 44.00 or possibly mid-Cycle support at 42.23.  The Cycles Model suggests there may only be a few days left in the current Master Cycle, so the trendline has the more favorable outlook.

ZeroHedge observes, “The DOGE $2 trillion budget savings goal is crucial to the very future of constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine.”

Bitcoin sank beneath the 50-day Moving Average at98923.00 this morning before a comeback of sorts taking it back above 100,000.  The Cycles Model suggests another possible three weeks of decline may be left in the current Master Cycle.  The sell signal is triggered when BTC closes beneath the 50-day.

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.

8:00 am

Good Morning!  I have a bad cold and it is slowing me down.

SPX futures pulled back to 6105.00 this morning, not far enough to cause a reversal.  Cycles have Models for both price and time.  After yesterday’s mistaken identity I did some further research to find that the current Cycle may extend to today’s mid-afternoon or Monday’s mid-morning.  Should it end today or Monday, the intended target may be near 6173.00.  These are estimates based on time and the fractal structure.  They are not guarantees.

Today’s option chain shows Max pain at 6095.00.  Long gamma lies above 6120.00 while short gamma lies beneath 6090.00.

ZeroHedge reports, “US equity futures are slightly lower to close out a blowout week for risk assets. As of 8:00am S&P futures are down 0.1% after the index reached its new ATH on Thursday, the first of the year; Nasdaq futures are unchanged with megacap tech flat this morning (TSLA +57bp) while Russell futs are also down 0.1%. European flash PMIs were mixed with mfg beats for UK/France/Germany/EZ while services were mixed: FTSE -35bps, CAC +95bps, DAX +30bps, Nikkei -7bps, Hang Seng +1.86%, Shanghai +70bps. Trump overnight hinted at a softer approach toward tariffs telling Fox News he’d rather not impose them on China which sent the yuan and Chinese stocks higher.  Bond yields are flat around 4.64%, and the USD is modestly lower on the back of EUR strength. Commodities are mixed; precious metals; Ags are mostly lower, while WTI is up 30bps at $74.85; Bitcoin is up 2% to $105,300 after Trump unveiled his much anticipated executive order. Overnight, BOJ hiked 25bp as expected with an on the margin hawkish surprise as no downgrades to economic outlook and inflation outlook was revised higher. However, after initially sliding, the USDJPY has since rebounded and is flat. Today, the key focus will be global PMIs and earnings, with AXP and VZ being the most important ones to provide further color on consumer demand and economic growth. Wall Street estimates PMI-Mfg and PMI-Srvcs to print at 49.8 and 56.5, respectively; we also get the U of Mich (10am), Existing Home Sales (10am), and Kanas City Fed Services (11am).”

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.

12:11 pm

BKX has not been able to exceed its November 25 high which, in turn, is beneath the January 2022 all-time high at 148.96.  The deterioration of liquidity has been barely noticeable by investors.  However, the rising rates by the Bank of Japan may have a knock-on effect on our domestic liquidity, especially the banks, where rising domestic rates are causing issues..

11:15 am

The Japanese Yen has been consolidating above its Master Cycle low of 62.94 on January 10.  The Bank of Japan is planning on raising their core rate from .10% to .25%, a massive move that may send the Yen skyward.  The BOJ has been lending prodigiously, trying to bolster their own economy.  That effort has spilled over into the Yen Carry Trade, where US investors may borrow from the BOJ at .10%.  That is not a misprint.  In addition, investors who borrowed in Yen last August are now ahead due to the decline of the Yen, creating a currency profit to the borrower.  That may be reversed tomorrow, further tightening the liquidity supply in our country.  The Yen is poised to rise above the 50-day Moving Average at 64.64 as early as tomorrow, creating a buy signal for the Yen and a potential disaster for those in the Yen Carry Trade..

11:05 am

The SPX denominated by Japanese Yen has hit trendline resistance short of the December ATH.  The Nikkei Index All-Time-High was on July 11.  It has since not been able to overcome its severe deficit.  Thus, Japanese investors have turned to the US markets where they have been richly rewarded until the December 13 high.  Should the SPX falter here, it may destabilize the US market as the Japanese markets are at the cusp of a serious decline.  The Bank of Japan is scheduled to raise its core rate tomorrow.  You may recall that they did so in early August, causing a serious decline in our own markets as well as theirs.

8:15 am

Good Morning!

SPX futures hit a morning low of 6066.40 before a small bounce.   The 1-week steep Ending Diagonal at 6075.00 is being broken , allowing an aggressive sell signal.  Intermediate support is at 5981.47, with the 50-day just beneath it at 5971.64, where a confirmed sell signal awaits the decline.  Yesterday may have been an early Master Cycle high, giving further credence to a major change in trend.  Many view the January 13 low as a “bump in the road.”  It is more like a pothole that SPX just barely emerged and the NDX could not overcome, leaving the December 13 high as its ATH.

Today’s options chain shows Max Pain at 6080 .00.  Long gamma begins at 6110.00 while short gamma reaches potency at 6060.00.  There seems to be a growing awareness that this rip may only be temporary.

ZeroHedge reports, “US equity futures are slightly lower as markets look to take a  breather after making a new intraday all-time high in the US and Europe on Wednesday. As of 7:30am, S&P futures dipped 0.1% after the index closed on the brink of record peak, propelled by optimism over – what else – artificial intelligence, and a solid batch of earnings from corporate heavyweights. Nasdaq 100 futures fell 0.5% with all Mag7 names lower ex-META and Semis also weaker with NVDA/AVGO lower. Bond yields are higher, with the 10Y rising 2bps to session highs at 4.64% the highest since Jan 16, while the USD also rose. The commodity complex is under pressure with the exception of energy as WTI trades near session highs around $79.4. Today’s macro data focus is on jobless data and regional activity indicators ahead of tomorrow’s Flash PMIs.”

VIX futures are consolidating beneath the 50-day Moving Average at 15.94.  While not reaching its intended target at 14.27, it may have completed its Wave structure at the higher level of 14.59.  SPX implied volatility has come down hard in the past week, leaving little room for further decline.  In addition, the “floor” is rising from the July low at 10.62 to the December low at 12.70.  Better yet, the low may now be at 14.27.  Calling the VIX “mean reverting” doesn’t do justice to its ultimate capabilities in hard times.

TNX futures hit a morning high at 46.48, giving the equities market pause.  Today is day 252 of the current Master Cycle, giving an approximate week to let the dust settle.  A burst of volatility may hit the bond market tomorrow, according to the Cycles Model.  The anticipated path continues to be a decline as far as the mid-Cycle support at 42.23.

Bitcoin may be consolidating above the 50-day Moving Average at 98598.00.  There may be a retest of the high over the next week, but resistance lies at 107700.00 to 108400.00.  Once the probe is complete, the Cycle dynamic takes over with a decline through mid-February.  Global excess liquidity is falling with money growth falling beneath economic growth.  This, in turn affects the markets , especially the speculative ones.

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.

8:00 am

Good Morning!

SPX futures ramped to a morning high at 6080.40 and is hovering nearby.  Whether it makes a new ATH above 6100.00 this morning or not, it is a candidate for the terminus of the current Master Cycle.  This morning it may complete 6 days of unbroken rally in a very steep Ending Diagonal.  Ending Diagonals beg a complete reversal.   The Cycles Model suggests this morning may be the right time.  The rising trendline at the bottom of the red Diagonal has been broken while the December 6 ATH has not, as I write.  A reversal may inevitably decline beneath whatever support may be left  by the red trendline currently at 5850.00.

Today’s options chain shows Max Pain at 6025.00.  Long gamma begins above 6040.00 while short gamma has a massive presence beneath 6020.00.  Dealers are very long at present while non-dealers are short.

ZeroHedge reports, “US equity futures are higher to start the third day of Trump’s presidency – and not too far from a new all time high – led by tech following blowout Netflix earnings and a fresh extension of the AI frenzy, coupled with signs that US tariffs on trade partners could be less harsh than feared. As of 8am ET, S&P futures are up 0.5%, rising for the third day in a row, and lifted by strong corporate results; Nasdaq 100 futures surge 0.9%, spurred by a 15% premarket jump in Netflix to a new all time high above $1,000 after the streamer reported a blowout quarter with record subscriber gains, and Oracle which jumped 9% after the company teamed up with SoftBank and OpenAI to form a $100 billion joint venture that will fund AI infrastructure.”

NDX futures have risen to 21775.60 thus far this morning on he AI push and Netflix earnings.  The Cycle Top resistance is at 22018.99 with the upper trendline just above it.  Note that resistance is beneath the ATH made in December.

Today’s options chain shows Max Pain at 21520.00.  Long gamma may be found above 21525.00 while sort gamma lies beneath 21500.00.

ZeroHedge remarks, “As we wrote in our preview note, it would take a lot to “wow” NFLX bulls according to Goldman while UBS chimed in that the company would have to announce a price hike, and… well, the company heard the two banks, not only reporting Q4 results that blew away expectations but also hiked prices in the US… and also announced a $15 billion buyback to boot!”

VIX futures declined to a new low at 14.64 thus far this morning.  There is a potential for the VIX to reach 14.27 today, but it is also due for a reversal this morning..  VIX Cycles may be strong once the correction is finished.

Today is monthly options expiration for the VIX.  Shorts may harvest some gains today, but short gamma lightens up considerable in next week’s expiration.

Bitcoin is not participating in the aftermath of the inauguration.  It had an extended Master Cycle high on Monday followed by a prompt reversal.  The Cycles Model suggests that Bitcoin may decline into mid-February as market liquidity dries up.

TNX may be due for a short term bounce today after consolidating above yesterday’s low.  Today’s Treasury auction features a small $13 billion 20-year bond.  It may be well subscribed, due to size.  A $20 billion 10-year TIP is offered tomorrow that is not likely to make waves.  The February Treasury auction schedule may be a completely different story.  The Cycles Model suggests yields may decline until mid-February when larger amounts hit the auction block.

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.

1:15 pm

SPX may be repulsed near 6050.00, as that would form a flat correction.  The inauguration gave the markets an excuse to extend the rally.  The probe from the January 13 low appears to be an Ending Diagonal that is nearing its apex.  .

8:00 am

Good Morning!

SPX futures hit an inaugural high at 6034.90 before easing back down.  It is currently beneath the January 6 high at 6021.04.  Should it open above it, the Master Cycle may reach its termination today instead of January 6.  However, I do not count the futures market highs/lows since the markets are thinly traded and easily influenced.  The Cycles Model allows up to 3 more weeks of decline in the current Master Cycle.

Today’s options chain shows Max Pain at 5975.00.  The main focal point is 6000.00, where short gamma hotly contests long gamma for ascendancy.

ZeroHedge reports ,”US equity futures are higher even as president Trump pledged to impose tariffs up to 25% on Canadian and Mexican imports as soon as Feb. 1, but held off imposing an immediate China tariff, which according to JPMorgan points “to a more cautious view from Trump on tariff implementation”, helping push the USD/CNY lower by -0.7%. The possibility of tariffs on Canada and Mexico on Feb. 1 weighed on futures yesterday evening, if not so much Tuesday morning when S&P futures are near session highs, up 0.4% to 6,060 with Nasdaq futures rising by a similar amount as a more serene mood settled over markets after a rollercoaster session on Donald Trump’s first day in office, with investors looking past the threat of tariffs to the potential boost from fiscal stimulus and tax cuts. Trump also threatened Europe with tariffs unless it buys more American oil, and gave TikTok a 75 day reprieve to sell itself. Other moves included declaring national emergencies on migration and energy, withdrawing from the Paris agreement and WHO, rolling back EV policies, and boosting oil and gas drilling. Elsewhere in markets, the is FTSE flat/DAX -10bps/CAC +5bps/Shanghai -5bps/Hang Seng +91bps/Nikkei +32bps. 10Y yields dropped from their Friday close to trade at 4.58%, down 4bps, as the dollar gained. This week, key macro focus will be Q4 earnings (9% of SPX mkt cap reports) and headlines from Washington. Crude oil dropped after Houthi rebels said they would no longer target tankers transiting the Red Sea. Bitcoin slumped on Monday after Trump failed to mention it even once in his various speeches and addresses. Today, we will hear from KEY, DHI, PLD, SCHW, MMM, FITB pre-open while NFLX, STX, UAL, COF, IBKR, HWC report after the bell. ”

NDX futures made a lower high this morning, at 21594.40.  The lower Master Cycle high puts a fly in the ointment of tech investors.  The underperformance of the Mag 7 comes as a sore disappointment for tech investors.  It also is a point of sobriety for the giddy SPX investors who may still be celebrating the new ATH.  Note that excess liquidity has tightened due to anticipation of economic growth outstrips the money supply.  Tech stocks are especially prone to tightening liquidity.  An economic slowdown may  have a pronounced effect on tech.

ZeroHedge observes, “Apple shares traded lower in premarket trading in New York after Jefferies downgraded the world’s most valuable company from “Hold” to “Underperform.” Adding to the pressure, independent research firm Counterpoint revealed disappointing iPhone sales data in China.”

VIX futures are consolidating above its temporary trendline this morning.  The Friday low shows a completed Wave structure and VIX may be poised for a strong reversal.  The Cycles Model shows growing trending strength that may be surprising.  In addition, the current Master Cycle extends to early April.

Tomorrow’s options chain shows Max Pain at 17.00.  Short gamma resides between 14.00 and 16.00.  Long gamma picks up at 18.00 and remains strong to 50.00.

USD futures leaped higher  off the Intermediate support at 107.76 overnight, but have slowed their ascent.  A probable resistance awaits at the Cycle Top at 109.06.  The Cycles Model suggests the USD may turn back down to a lower support in the next week.  Hedge funds are hugely long the USD, which still needs to work off its overbought condition.

TNX continues its descent to the trendline near 44.00.  The Cycles Model gives it about a week to accomplish its task.  Today we may witness the auction of $289 billion of bills and notes.

Bitcoin crested just beneath the Cycle Top resistance at 110492.11 to a new all-time high on inauguration day.  The Cycles Model anticipated this move with a burst of strength over the weekend.  This moves the terminus of the Master Cycle from January 6 to January 20, extending to a 273-day Master Cycle.  The new Master Cycle forsees a decline to mid-February.

ZeroHedge speculates, “With Donald Trump set to be inaugurated as US president on Jan. 20, crypto advocates and industry analysts are weighing the role of crypto – specifically Bitcoin – in the economy, and whether Trump’s stated pro-crypto policies will prop up the US dollar or erode its position as the global reserve currency.”