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.

2:00 pm

SPX may have met its Cyclical target in time and price this afternoon.  Those with cajones may wish to sell/sell short at 6000.00.  While it may feel like SPX is at its ATH, it has simply retraced to its descending trendline, completing its hourly Wave [ii].  Intermediate support lies at 5982.60 where a sell signal may be triggered.  The 50-day Moving Average lies at 5947.17.  A trap has been laid for the bulls.  Something may snap over the inaugural weekend that may trap many in the wrong position.  Washington is on high alert.

ZeroHedge suggests, “This one is a “must read” if you ask me. One of my favorite investors that I love reading and following, Harris Kupperman, has offered up his thoughts on the Fed and markets for 2025.”

8:15 am

Good Morning!

SPX futures rose to 5977.60 thus far this morning.  I had assumed that the 50-day Moving Average at 5953.00 would be an appropriate target for this retracement.  However, Ms. Market has a different opinion.  The next retracement level may be the Intermediate resistance at 5979.00, followed by round number resistance at 6000.00 without violating any of the retracement rules.  SPX should not exceed the January 6 peak at 6021.04.

Today’s options chain shows Max Pain at 5935.00-5940.00.  Long gamma edges out the shorts at 5950.00 but doesn’t become strong until above 6000.00.  Short gamma gains precedence at 5925.00 and strengthens beneath 5900.00.

ZeroHedge reports, “US equity futures are higher modestly, rebounding from yesterday’s just as modest loss. As of 8:00am, S&P futures rise 0.4%, with the underlying index poised for its biggest weekly gain since November’s election, while Nasdaq 100 futures advanced 0.5% thanks to Mag 7 stocks mostly higher (NVDA +1.3%, TSLA +0.9% and GOOG/L +0.6%) as the latest data and comments from Fed officials suggest the central bank will have room to cut interest rates this year. 10Y Treasury yields edged lower, slipping more than 15 basis points below recent multi-month highs, while the USD is higher. Base metals are mostly higher amid upside surprise on China Q4 and December macro data: Q4 GDP prints 5.4% vs. 5.0% survey vs. 4.6% prior; Retail Sales and IP both surprised to the upside. However, reactions from local Asian markets remain muted. Today, macro focus will be on housing data (Housing Starts and Building Permits).”

VIX futures are consolidating above yesterday’s low at 15.64.  However, the Wave Structure may allow a final probe to 14.27 before reversing higher.

The January 22 options chain shows Max Pain at 17.50.  Short gamma rules from 13.50 to 17.00.  Long gamma rules above 18.00 and is well populated to 50.00.

TNX futures declined to 45.61, while the cash market recorded a low of 45.68.  TNX is in the midst of a strong retracement with the initial target at the 50-day Moving Average at 44.36.  The decline may show special strength today, suggesting the 50-day may be within reach by the weekend or early next week.

Bitcoin reached a probable Master Cycle high today at 102978.59 on a final day of strength.  Fear of missing out (FOMO)may be the driver of this particularly strong retracement.  While there is a possibility of a marginal new high in the next 24 hours, the Master Cycle has been stretched nearly to its limit.

USD futures advanced to 109.40, riding the Cycle Top support, showing resilience after challenging support  on January 15.  However, the Cycles Model hints at an imminent reversal to test the lower boundaries of this correction.

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.

1:50 pm

BKX may be coming down from yesterday’s Master Cycle high at 135.28.  It appears to be breaking down beneath its trendline near 133.50.  The next support is the 50-day Moving Average at 131.36. Should the decline progress beneath that, the Cycles Model suggests a decline lasting to mid-April.   The Broadening Top formation offers a minimum target near 90.00.

ZeroHedge cautions, “”Commercial real estate is the next domino to fall,” warns Nomi Prins in her 2025 outlook. With rising vacancies, store closures, and mounting debt, banks are playing a dangerous game of “extend and pretend.” Prins reveals how massaged numbers and risky loan practices are masking the true state of financial instability.

“More problems are coming in—it’s only a matter of time,” Prins cautions.”

1:40 pm

SPX has declined beneath the double resistance at 5950.70.  A breakdown occurs beneath 5934.00.  Short gamma may play a powerful role in renewing the decline beneath 5900.00.  The Cycles Model suggest the strength of the decline may pick up tomorrow and be in full force by Monday.

7:30 am

Good Morning!

SPX futures rose to 5977.50 in the overnight session, an unusually strong  82.2% retracement of the January 6 decline.  Cycles are measured in price and time.  Today’s retracement stretched both, but did not exceed short-term resistance at 5985.00 nor did it exceed the Master Cycle high at 60231.84.  In time, the hourly Cycle may have extended 4.3 hours beyond the average hourly Cycle.  With monthly options expiration due on Friday, it appears that the dealers may have had some influence on this outcome.  In any event, the SPX may open the cash market beneath the 50-day Moving Average, reinforcing/reinstating the sell signal.  The may be a “sell the bounce” event.

Today’s options chain shows Max Pain at 5925.00.  Long gamma may begin above 5950.00 while short gamma resides beneath 5900.00.

ZeroHedge reports, “US equity futures are higher led by Tech one day after a powerful burst higher in stocks following a weaker than expected CPI. As of 7:00am. S&P futures are up 0.2% extending on Wednesday’s 1.8% rally, the best day since the November election; Nasdaq futures rise 0.5%, led by NVDA (+1.5%) and AAPL (+0.6%) after stellar earnings by TSMC and a boost to the company’s 2025 CapEx spending budget. Europe’s Stoxx 600 climbed for a third day, with luxury goods maker Richemont soaring 18% after it reported a jump in jewelry sales. Its results lifted an index of European luxury stocks by the most since March 2022. Bond yields are 1-2bp higher after yesterday’s rally; USD is higher. On Commodities, base metals rallied ahead of major China data release tonight. Today, key macro catalysts are Retail Sales (analysts expect a 0.6% MoM print , down from 0.7% prior while the Control Group is expected to print unchanged at 0.4%) and banks earnings (MS and BAC).”

VIX futures rose above critical support at 16.27-16.30 where two support structures lie.  The retracement decline may be complete and Cyclically on time.  Note that VIX may have established an uptrend, denoted by a new trendline.  Investors have not decided to seek shelter/hedging yet.  MOst of the trading in VIX is very short term, which does not show up in theVIX, which measures positions of 30 days or more.

The January 22 (monthly expiration) options chain Shows Max Pain at a contested 18.00.  Short gamma is packed between 14.00 and 17.00.  Long gamma begins at 20.00 with concentrations at 30.00 and 40.00.

TNX is consolidating in the lower half of yesterday’s trading range.  The Cycles Model suggests that the decline may become supercharged at tomorrow’s options expiration.  The initial target for this pullback may be the declining trendline at 44.40.  However, the correction may take up to two more weeks, making the mid-Cycle support a probable target.  Yesterday saw the second biggest day for TLT calls in its history.

Bitcoin may have reached its retracement high in the last 24 hours.  This morning it peaked at 100867.35 and may have reversed down.  The January 6 high remains intact.  The Cycles Model suggests the decline in bitcoin may take another month.  It has yet to break beneath the 100-day Moving Average at 97298.40 which demarks the 5-month uptrend.  Beneath that is a lot of open space.

USD is consolidating above its Cycle Top support at 108.94.  However, that may not last.  The Cycles Model suggests that the USD may decline to the mid-Cycle support at 104.40 by the end of the month.  From there, a powerful rally may emerge until mid-March.

Gold futures have reached a morning high at 2747.39, possibly completing a very long and steep retracement of the December 12 decline.  If so, a very sharp decline may follow lasting 2-3 weeks.  Should this happen, do not underestimate the strength of 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.

11:10 am

SPX surged to the 50-day Moving Average at 5950.00 by mid-morning in a face-ripping short squeeze that retraced 71.7% of the January 6 decline.  A possible objective of this short covering is to reduce the very large equity short base beneath the 50-day Moving Average, or at least make it very painful for those who shorted beneath the 50-day.  With that (short) fuel gone, the retracement may be over.  However, long gamma disappears beneath 5900.00, taking away the upside fuel (long gamma) as well.  The current hourly Cycle may have run its course, leaving the SPX faltering beneath critical resistance.

7:00 am

Good Morning!  I have an early doctor’s appointment, so I am pre-filling this report.

SPX futures may continue to consolidate until this morning.  Based on the (triangle) Wave structure, it may attempt another bounce toward the 50% retracement value near 5900.00.  A strong push may elevate the SPX as far as the 61.8% Fibonacci retracement value at 5926.18.  However, the bounce may be over by mid-day.  SPX may resume its decline thereafter.

8:50 am

Consumer prices soared in December, soaring by 21% and wiping out any thought of a rate cut.  However, SPX futures rose to 5939.00, just shy of the 50-day Moving Average at 5948.00.  That exceeds the normal 61.8% Fibonacci retracement in futures, but it may open at or beneath the 61.8% retracement value at 5926.18.

Today’s options chain shows Max Pain at 5855.00.  Long gamma may begin at 5900.00 while short gamma resides beneath 5800.00.  There’s some option maneuvering going on this morning.

ZeroHedge reports, “US equity futures are higher, led by small-caps with the rally strengthening after the cooler than expected UK CPI print. As of 8:20am, S&P and Nasdaq futures are up 0.4%, with banking shares advancing in premarket trading after markets inched out a positive close on Tues following firm underlying PPI components & yields continuing to march higher. BlackRock, Bank of New York Mellon, JPMorgan and Goldman Sachs all beat estimates for the fourth quarter, with trading revenues performing strongly. All Mag7 names are also higher. Otherwise, it’s fairly quiet from a headline perspective overnight into CPI, although US reportedly will unveil more regulations to prevent advanced chips from being sold to China, with the planned rules, targeting producers TSMC, Samsung, and Intel. Bond yields are down 1-2bps as the USD is being offered, largely a function of yen strength following comment from BoJ Governor Ueda who said the BoJ will raise rates and adjust the degree of monetary support if improvement in the economy and price conditions continues, while he added that he wants to discuss and decide whether to raise rates at next week’s policy meeting. In commodities, Energy and Metals are leading the complex higher.  Today’s focus is on CPI/Bank Earnings but keep an eye on the Beige Book release.”

VIX futures may be on the last leg down, due to be complete by mid-day as well.  The possible target may be between 17.50 and 18.00.  Equities monthly options expiration occurs on Friday.  Thereafter, the VIX may experience particular strength following that day.

9:12 am

VIX futures plummeted to 17.02 this morning, deeper than the normal retracement values.  That may be attributed to tomorrow’s unusually high number of puts in today’s op-ex.  Once they have matured or expired, the VIX may move more freely.

USD made a Cycle inversion after making its Master Cycle high on December 31.  This is in the form of an expanded correction.  Usually corrections do not exceed the Master Cycle high.  An expanded correction is the exception to the rule.  In this situation, USD may now decline through the Cycle Top at 108.89, completing the correction at the 50-day Moving Average currently at 106.91.

TNX is tanking this morning after the December CPI release.  Yesterday’s Master Cycle high paves the way for an approximate 2-week correction in the 10-year yield.  A normal correction may take the TNX down to the mid-Cycle support at 42.25.

9:15 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

11:40 am

SPX has declined beneath the 15-month trendline at 5829.00 again, maintaining its sell signal.  There are three weeks left in the current Master Cycle which may do a lot of damage to the bullish case.  The next support is the mid-Cycle support at 5613.02.  There is still the possibility of a retest of the trendline after a brief decline.  However, the  decline may become forceful after monthly options expiration this Friday.

10:28 am

BKX has achieved the 50% retracement value at 128.54 this morning and may extend to the 61.8% Fibonacci retracement at 129.42 yet this morning.  The higher TNX yields are not good for banks and there is a considerable amount of money moving out of banks to money market funds.

Good Morning!

SPX futures rallied to 5879.00 overnight, between the 38.2% Fibonacci level at 5867.20 and the 50% retracement level at 5896.74 based on the January 6 decline.  The futures have eased back, but may attempt a higher level yet this morning.  The bounce from the 100-day Moving Average has cleared up the Cycle structure and may offer a pivot later this morning.  An alternate view is that SPX may rally back toward the 50-day Moving Average at 5947.00, spending the rest of the day in rally mode.

Today’s options chain shows Max Pain at 5835.00.  Long gamma may begin at 5840.00, but is not strongly populated until 5880.00.  Short gamma strengthens beneath 5800.00.

ZeroHedge reports, “Global stocks and US futures jumped and the dollar slumped after a Bloomberg report that Trump’s incoming economic team is considering a gradual ramp-up in trade tariffs in a strategy that could avert a crippling spike in inflation and which JPM called “more scalpel than broad sword approach which the market seems to like.” With bond yields flat and USD weaker, as of 7:30am S&P futures are 0.3% higher and Nasdaq 100 futures gained 0.6%, and on track to snap a two-day run of losses, as all Mag7 names advanced in premarket trading, with Nvidia and Tesla up more than 2%. European bourses were green across the board, and Asian markets also bounced while emerging markets emerged from their worst start to a year since 2016. In short, until and unless Trump denies the Bloomberg report, it appears to be a broad-based rally today, into PPI and tomorrow’s CPI.  Commodities are seeing some profit-taking today with Ags/Energy lower, but Metals still bid up. Today’s macro data focus includes NFIB Small Biz Optimism, PPI, Federal Budget Balance, and 2x Fedspeakers.”

VIX futures declined to 18.52 this morning.  There is support at 17.31.  The Cycles Model suggests VIX may spend another day in decline.

The January 15 options chain shows Max Pain at 20.00.  Short gamma inhabits the space from 15.00 to 18.00.  Long gamma begins weakly at 21.00 and may extend to 30.00.  Next week’s monthly options chain may bring a marked increase in volatility as huge positions of both puts and calls have been taken.

TNX is consolidating beneath the Cycle Top at 48.08 this morning while the futures have risen to 48.23 overnight.  This has been an extreme move that has the equities market jittery.  The Master Cycle high may have been put in yesterday, but the CPI numbers due tomorrow may jolt the TNX higher.   Once accomplished, there may be a two-week reversal in the batters’ box.  The probable retracement may decline to the trendline near 44.40, although a decline to the mid-Cycle support at 42.24 would not be unheard of.

Bitcoin has bounced back to the 50-day Moving Average at 97418.00 as a retest of resistance.  The retest may be complete today, clearing the way for a 5-week decline.  Most bitcoin owners are not aware of the deteriorating technical condition of bitcoin.   Last week Bitcoin ETFs experienced their second largest outflow since their inception, suggesting a change in investor sentiment. The 100-day Moving Average at 86546.88 is near the 5-month trendline.  That is where the uptrend may be broken.

8:30 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

12:00 pm

SPX bounced at 5773.31, just above a massive put wall at 5770.00.  Should it break through, it has the capability of attaining the mid-Cycle support at 5604.27 (shown below).  An attempt to save SPX from the put wall may send it to retest the trendline resistance at 5825.00.  The retest may be accomplished by mid-afternoon.

Good Morning!

SPX futures declined to 5769.50 over the weekend, then bounced to retest the 100-day Moving Average and 15-month trendline near 5820.00.  This was touted as the “must hold” level last week, now broken.  The mid-Cycle support at 5604.27 and near the 200-day Moving Average may be tested next.  Analysts are still watching the “January Barometer” with the hope of a positive turn in equities while hedge funds are selling.    However, today’s move may skew the outcome of that indicator.   While the January Barometer is subject to error, the Cycles Model may have offered a more realistic view of what is about to happen.  The Cycles Model suggests that the SPX may hover between the 100-day and the 200-day Moving Averages the next few days, followed by a resumption of the decline.

Today’s options chain shows Max Pain at 5830.00, where the smallest payout may be made by the dealers.  Long gamma may begin at 5840.00, strengthening at 5880.00.  Short gamma may begin at 5800.00 while a huge put wall lurks at 5770.00.

ZeroHedge reports, “US equity futures tumbled to the lowest level since November as the global risk-off tone resumed amid a surge in oil prices pushing yields higher, with this Wednesday’s CPI print the next global catalyst. Bond yields jumped (again) as the curve bear flattens and the USD resumes its move higher in what has now become a boring daily trade where the world is once again convinced the “exception” US can decouple form a world where Japan, China and Europe are all contracting and where the US can somehow keep growing (spoiler: it can’t). As of 7:30am, S&P futures are down 0.8% to 5820, on pace for their 7th decline in the past 10 days, and approaching a level last seen in late-September; Nasdaq futures slump even more, down 1.1% with Mag7 names under pressure premarket with NVDA/TSLA the biggest losers. European shares dropped 0.9%, with technology names leading the declines. Credit ETFs are outperforming pre-mkt and may be an area of safety into CPI. Commodities are also stronger, led by Energy on news Biden hopes to blow up Trump’s presidency by sending oil prices soaring thanks to additional US sanctions on Russian oil which may impact 1mm bpd. Today’s macro data focus is the NY Fed’s 1-yr inflation expectations.”

VIX futures rose to a new January high at 22.04, soon to test the Cycle Top resistance at 23.63.  VIX has been slow to react to the decline in equities because it measures investors’ outlook 30 days and beyond.  Thus far, investors have chose the short-term path with zero-day options being the favored choice of investors/speculators.  That may soon change.

The January 15 options chain shows Max Pain at 20.00.  Short gamma lies from 15.00 to 16.00.  Long gamma is practically non-existent with the exception of a cluster of brave souls anchored long at 30.00.

The NYSE Hi-Lo Index has resumed its losses on Friday, breaking beneath the Cycle Bottom at -162.00.  The Hi-Lo measures new 52-week highs vs new 52-week lows.  It is an early indicator, as we can see its demise below 0.00 on December 16.  You can see this indicator is not oversold, suggesting further declines ahead in the SPX.

TNX futures reached 48.01 over the weekend, then began consolidating beneath it.  The Cycles Model records Friday as the Master Cycle Top at 47.90 on day 260.    The Cycles Model suggests continued consolidation under the Cycle Top with increased volatility later this week.  The downside target for the ensuing correction may be the declining trendline with the 50-day support just beneath it, followed by the mid-Cycle support at 42.23.  The correction may last 2-3 weeks.

Bitcoin has declined to a new low over the weekend, violating nearby supports.  The next support level may be the 100-day Moving Average at 90181.78.  The 4-month trendline is beneath it at 90000.00.  Those appear to be must-hold levels to preserve the uptrend.  The Cycles Model suggests a possible continued decline until mid-February.  The Wave structure suggests a minimum target may be near 85000.00, with the mid-Cycle support at 74808.06.

The Shanghai Composite Index fell to 3140.98 today.  It appears to be breaking a possible lip of an inverted Cup with Handle formation.  A possible target for this formation lies near 2800.00, but may be deeper.  The Cycles Model suggests the decline may run to the end of January, lending credence to the possible target.

8:15 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

3:30 pm

SPX is challenging the 100-day Moving Average and 15-month trendline at 5820.00.  Should it break through, the next visible support on the daily chart is the mid-Cycle support at 5604.00 followed by the 1987 trendline near 5350.00.  However, once the Ending Diagonal trendline is broken, the ultimate target may be the very start of this rally on October 27, 2023 at 4103. 78, a possible 33% decline…and it may just happen in the next 4 weeks.

Good Morning!

SPX futures plunged to 5880.20 in the overnight session, then bounced.  It is currently consolidating near 5900.00 as it awaits the December payrolls.  Here is a link to the report.  All signs point to a miss. The Cycles Model does not exhibit strength in the decline yet, but the SPX is clearly beneath the 50-day Moving Average at  5946.82, showing a technical sell signal.  The 100-day Moving Average lies at 5818.50 with the 1-year trendline near 5800.00.Most analysts view the latter as the “must hold” level.  The Cycles Model suggests the the decline may last through the first week of February with the 1987 trendline at 5350.00 being the initial target.

Today’s options chain shows Max pain at 5915.00.  Long gamma may begin at 5950.00 while short gamma may strengthen beneath 5900.00.

ZeroHedge reports, “US equity futures are lower as traders took a cautious stance ahead of US jobs data that will offer fresh insight on the state of the economy. As of 8:00am, S&P 500 and Nasdaq 100 futures fell 0.2%, while in China stocks pushed toward a fresh bear market. Europe’s Stoxx 600 was little changed. Bond yields are largely unchanged, with the 10Y trading at 4.69%; while the week’s broad pullback in European government bonds persisted, pushing the yield on 10-year gilts remaining stuck near the highest level since 2008. Commodities are higher led by 2.3% gain in oil and 1.6% gain in aluminum. All eyes on NFP release today as equities continue to weigh on bond markets reaction. Consensus expects 165k jobs being added, with the unemployment rate unchanged at 4.2% (average hourly earnings are expected to rise +0.3% MoM and +4.0% YoY). In addition, Q4 earnings will begin today with DAL, STZ and WBA all reporting today. We will also receive the decision on TikTok’s SCOTUS hearing. Power utility Edison International and major US insurers slid in premarket trading as estimates of wildfire-related damages in Los Angeles soared.”

VIX futures are hovering just beneath the high at 19.50.  A breakout may propel the VIX above the December high at 28.32.

The January 15 options chain shows Short gamma residing between 15.00 and 16.00.  Long gamma is sparse thus far, with a solitary cluster of calls at 30.00.

TNX leaped to 46.93 this morning on the payroll news, testing the Cycle Top resistance at 47.99.  This may complete the current Master Cycle, as previously discussed.  The Cycles Model calls for a possible 3-week decline to relieve the overbought condition.  A likely target may be the mid-Cycle support at 42.22.

ZeroHedge observes, “Look out above… for yields

The headlines look very strong.

• Big beat (256k vs 165k expectations) on the Establishment data. The beat was all in private payrolls (very good). Downward revisions, but only 8k (not bad).
• Unemployment rate drops to 4.1% (the Household survey added 478k – which catches up on some recent weak prints relative to the Establishment Survey).
• Annual earnings ticked down marginally, but hours worked remained the same – call it a “wash”?

I continue to believe that seasonal adjustment factors overstate data this time of the year (our main reason for thinking we would get a strong report), but in any case markets will have to react to this data.”

Bitcoin is bouncing toward its 50-day Moving Average at 97563.00, near the 50% retracement level at 97603.00.  The bounce may last through the weekend, but the decline appears to resume by mid-week.

ZeroHedge remarks, “There’s a growing belief that regulatory clarity in the US will lead to a lot more tokenization, including for bank deposits. I agree with the first half of that thesis. Tokens are a superior form factor for a digital economy. But just because you can tokenize something doesn’t mean that you should. For too long, people have treated tokenization like it’s a supply side problem. If you tokenize it, they will come. What actually matters is demand, and that’s where tokenized bank deposits will fall short.”

The Shanghai Composite Index has resumed its decline to 3168.52 today.  The October low at 3152.82 is a “must hold” level, with the mid-Cycle support just beneath it at 3100.73.  The Cycles Model suggests the decline may persist to the end of the month.   Once the above support levels are broken, the likely target for this decline may be the Cycle Bottom at 2685.98.

7:45 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

10:20 am

GKX, the Agricultural Index, has declined beneath its trendline after breaking out of it.  The Cycles Model suggests a decline lasting about a week to correct its new uptrend.  A suggested target may be in the  range of 353.00-360.00.  A shallow decline may leave room for yet another probe at the Fibonacci levels.  It may drop beneath the 50-day Moving Average, temporarily neutralizing the existing buy signal while in a correction.  One may view ag stocks as a “buy on the dip” at this time.

ZeroHedge reports, “The worsening global cocoa squeeze has taken a new turn, with US chocolate giant Hershey Co. reportedly seeking approval from the Commodity Futures Trading Commission (CFTC) to purchase a massive amount of cocoa through the New York exchange. The move highlights that cocoa cost inflation will get even more extreme in 2025.”

ZeroHedge further observes, “Wholesale egg prices, as tracked by the Urner Barry Egg Index, have reached record highs at the start of the new year. This surge is mostly driven by the ongoing devastating impact of Highly Pathogenic Avian Influenza (HPAI), which has crushed commercial flocks and dented the nation’s egg-laying capacity. ”

Good Morning!

SPX futures are consolidating in a tight range between 5887.00 and 5914.00.  The markets are closed today in observance of the death of former president Jimmy Carter.  A quiet day is expected on the domestic scene, but markets are still open overseas.  To recap, the Master Cycle was completed on January 6 at 6021.04 and is due for a possible 1-month decline.  The all-time high was made on December 6, followed by a shallow decline and shallower bounce.  While the SPX has declined beneath the 4.5-month trendline and the 50-day Moving Average, causing a technical sell signal, most investors see the market as “flat.”  Stress levels are rising.  The 100-day Moving Average is at 5817.50 with the 14-month trendline near 5800.00, as well.  Once beneath that level, the floodgates may open to a panic decline.  The subsequent supports are the mid-Cycle at 5600.00 and the 1987 trendline near 5350.00.

VIX futures are consolidating between 17.95 and 18.52.  A move above 19.50 may spark a rally of surprising proportions.  Especially high trending strength may affect the rally by the first week of February.  In the meantime, the most popular holdings among the VIX options are the 15.00-16.00 puts.

The NYSE Hi-Lo Index issued a strong sell signal yesterday, declining to -107.00.  Monday’s influx of foreign investors kept the Hi–Lo in positive territory until early this week.  However, the reversal on Monday also drove subsequent foreign investors away.  The buyback blackout is still in effect until the end of the month.  Meanwhile, hedge funds and retail investors are net sellers.  The current Master Cycle in the Hi-Lo may persist until the end of the month.

Bitcoin is consolidating after yesterday’s 10% plunge (Key Reversal) off the January 7 high.    The Cycles Model suggests that conditions for a further decline may persist until mid-February.  The 100-dayMoving Average lies at 94881.37 and the 4-month trendline may be at 94800.00.

TNX futures are consolidating on a closed market.  Yesterday may have seen the Master Cycle high at 47.16.  We may leave our options open for another day due to the circumstances.

ZeroHedge reports, “After two dismal coupon auctions to start the week, and the year, the final sale of Treasury paper in the funeral-shortened week took place shortly after 1pm when the Treasury sold $22BN in a 29 Year, 10 Month reopening, in what was the strongest auction so far in 2025.

Stopping at a high yield of 4.913%, not only was this sharply above last month’s 4.535%, but it was also the highest yield since August 2007. The silver lining: the auction stopped through the When issued 4.920% by 0.7bps, following last month’s tail.”

8:30 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

1:00 pm

The Fed may attempt to boost equities with their announcement.  Resistance to a bounce lies at the 50-day Moving Average at 5044.65.  Bounces may be sold/sold short.

ZeroHedge observes, “The December Fed meeting saw the Fed cut by 25bps as expected and signal a slowdown of easing ahead through changing the language in the statement and by lifting the 2025 dot plot to suggest just two rate cuts this year. ”

Good Morning!

SPX futures briefly retraced to 5930.00 this morning before resuming its decline to a new low at 5882.50.  There may be another bounce to retest the 50-day Moving Average at 5944 .50 before declining further.  Note the lack of overseas (Japanese and European) investors after yesterday’s pullback.

Today’s options chain shows short gamma beneath 5940.00 while long gamma is very strong at 5945.00-5950.00.  This provides a juicy target for the dealers who are long.

ZeroHedge reports, “US equity futures were already rolling over following yesterday’s momentum-driven rout, when a the latest report out of CNN (a polar opposite to the just as fake news from WaPo earlier this week, but fake nonetheless) claiming that Trump was “considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries” sent the dollar surging, all other G-20 currencies plunging, and sparked a broad selloff across risk assets. As of 8:00am ET, S&P futures were down 0.2%, bouncing from session lows of -0.4%, and reversing a gain of 0.4% earlier in the session; Nasdaq futures were hurting more, sliding 0.6% as many of the recent best performers were sold off hard, and none more so than quantum computers which were down about 20% as a group in premarket trading; the Mag7 was also largely red )Apple -0.5%, Nvidia +0.1%, Microsoft -0.09%, Alphabet -1%, Amazon -0.07%, Meta Platforms -0.9% and Tesla -1%). Europe’s Stoxx 600 Index lost 0.4% and Asian stocks slumped, with China tumbling as usual. Meanwhile, bonds extended their ongoing selloff, with the 10Y rising to 4.72% and triggering Goldman’s VaR shock threshold of a 60bps increase in 1 month. In the UK, 10-year bond yields rose to their highest since 2008 and the 30-year inflation-linked note is now yielding more than 2%, the most since the Truss crisis of 2022 as fears spread that Keir’s spending plans will spark a fiscal disaster.”

USD futures surged higher this morning on the (fake) news from WaPo and CNN.   The Cycles Model does not support a higher USD at this time but emotions are high, which have led to a probable fake-out.  The Cycles Model suggests the USD may go lower through the end of the month, discouraging overseas investors in equities.

ZeroHedge relates, “It has not even been two days since the Washington Post published its attempt to manipulate the dollar lower by claiming, falsely, that Trump intends to water down his sanctions, when moments ago the dollar soared on what is most likely another piece of fake news – and also just as likely another attempt by hedge fund “sources” to manipulate the FX market – when CNN reported that Trump “is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries.” And unlike the WaPo’s “three” so-called sources, in the quest for anonymous BS supremacy CNN went to cite a whopping “four sources familiar with the matter.””

VIX futures have risen to 19.50 this morning, threatening a breakout above the January 2 high.  The Cycles Model suggests a rally through the end of April.

The April 15 options chain shows a cluster of puts at 15.00-16.00.  Calls are sparse yet, showing a complacency in equities.

TNX futures rose to 47.33, approaching the Cycle Top resistance at 47.97.  Today is day 258 of the current Master Cycle, suggesting the rally may be over, or very nearly so.  The question remains whether TNX reverses now, or makes one more surge to breakout above the April 25 high at 47.37.  Note that the 10-year rate has moved opposite the FOMC rate cuts, causing higher volatility and investor consternation.  The Cycles Model suggests a correction of the rates rally may last through the end of the month with a possible target near the mid-Cycle support at 42.22.

RealInvestmentAdvice comments, “Outflows from bond ETFs, such as TLT, have been tremendous over the last two months. ETFs, unlike mutual funds, allow dealers to redeem shares for the underlying securities and vice versa. The exchanges most often occur when the demand to buy or sell the ETF is high, thus creating a small arbitrage for the dealer. Investors frequently associate strong inflows with higher ETF prices and outflows with weaker performance. While at times that is certainly true, other times, it’s a false indicator. For instance, as the graph of TLT below shows, fund inflows were at record-high levels in 2022 as TLT sold off precipitously.”

Bitcoin continues its decline, having made a confirmed sell signal beneath the 50-day Moving Average at 97685.27.  The Cycles Model calls for the decline to endure through mid-February.

8:30 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

10:24 am

BKX has declined through its 50-day Moving Average at 130.66 this morning, offering a confirmed sell signal for those interested.  It is currently retesting its resistance at the 50-day.  Yesterday’s new high qualifies as an extended Master Cycle high on day 265.00.  The Cycles Model calls for a decline to the end of January, followed by a brief  bounce and a probable decline to mid-April.  Today’s ISM report has taken the air out of the hopes for more rate cuts.

ZeroHedge observes, “With ‘soft’ survey data trending lower (and PMIs mixed), analysts expected this morning’s ISM Services data to print higher (catching up to S&P Global’s PMI surge in December) and they were right.

ISM Services surged to 54.1 (from 52.1 prior and better than the 53.5 expected)

Source: Bloomberg

However, below the surface things are not so awesome as Prices Paid exploded from 58.2 to 64.4 and employment slipped to 51.4…”

Good Morning!

SPX was rejected at the Ending Diagonal trendline yesterday and crossed beneath Intermediate support/resistance at 5987.41 to give a confirmed sell signal.  Overnight the SPX futures rose back up to 5987.40 thus far to retest the resistance offered there.  Looming on Wednesday is the FOMC report that investors will dissect to find future direction for the markets.  Goldman Sachs reported a very high demand for equity financing, especially among institutions in November and early December.  However, equity funding spreads imploded on December 18 when Powell took away the punchbowl. Since then, hedge funds have been active sellers of equities.  The Cycles Model indicates that yesterday may have been the long-awaited Master Cycle high.  Indications are for a steep decline through early February.

ZeroHedge reports, “US equity futures are up small this morning as yields continue to rise (SPX +17bps; NDX +5bps; US 10 year yield higher at 4.64%). As a reminder equities typically struggle when rates rise by 2 standard deviations in a given month, which in today’s terms is ~60bps. Stocks remain wobbly after yesterday’s performance which saw big tech \the standout, vs the Dow and S&P equal weight down on the day. Nvidia rose 1.9% in premarket trading to a new record high after CEO Jensen Huang announced a raft of new chips, software and services. Uber also gained on news about a collaboration with Nvidia for autonomous driving technology. Overnight, Europe is broadly higher with Eurozone inflation coming in line with forecasts, though ECB survey shows consumer inflation expectations picked up. Asia closed mixed (Shanghai +71bps/Hang Seng -1.22%/Nikkei +1.97%) with Japan leading the way driven by tech strength (Tokyo Electron +11%). The yen weakened to a 6-month low in the morning before verbal intervention from Finance Minister Kato. The macro focus for today will be Richmond Fed President Barkin (voter) speaks (8am est), JOLTS (10am est, GS 7,750k, consensus 7,745k, last 7,744k), ISM Services Index (10am, GS 53.5, consensus 53.5, last 52.1), & Treasury selling $39B of 10-year notes.

VIX futures hovered above yesterday’s low at 15.71, consolidating between the mid-/cycle support at 16.28 and the 50-day Moving Average at 16.56.  This may be considered the calm before the storm.  Long gamma has dropped off considerably, allowing the VIX more room to move.  The Cycles Model suggests that VIX may receive a surge of trending strength today and that the ensuing uptrend may last through the end of March.

Bitcoin made an overnight high at 102747.54, leaving a potential Master Cycle high on day 260.  Master Cycle take an average 258 days, so this high may have hit the mark.  The Cycles Model suggests the ensuing decline may endure through mid-February, leaving plenty of time to do extensive damage.  Once beneath the 50-day Moving Average at 97702.85, the next visible support may be the mid-Cycle value at 73640.06. Many recent investors may be underwater by that point.

TNX futures made a new high at 46.47 in the overnight session.  The Cash high was 46.42 thus far.  It is nearing its Master Cycle time limit, which may be reached by the end of the week.  However, don’t dismiss TNX yet.  There appears to be a burtst of trending strength about to come into play.

2:30 pm

The SPX denominated in Yen tells the story.  For Japanese investors, the SPX gapped higher at the open by.9% and rose to an intra-day gain of 1.5%, while the SPX in USD gapped .7% higher while topping out with an intraday gain of 1.33%.  This tells us the Japanese investors led the market at the open, but may end up flat by the end of the day.  Sayonara!

1:00 pm

SPX has been repelled at the Ending Diagonal trendline at 6021.04 and has declined beneath Intermediate support/resistance at 6007.40 to offer a confirmed sell signal.  The setup is being made for a Key Reversal or an Island Reversal

7:45 am

The Lord’s Prayer

Our Father, who art in heaven, hallowed be thy name.  Thy Kingdom come, Thy Will be done, on earth as it is in heaven.  Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us.  And lead us not into temptation, but deliver us from evil.  Amen.

Good Morning!  The Christmas season ends today for many Christians…..The feast of the Epiphany – Three Kings Day.

SPX futures are challenging the Intermediate resistance at 5986.64 as I write, and may possibly test round number resistance at 6000.00 and the 4-month Ending Diagonal trendline nearby, bringing the retracement to a possible end this morning.    Last week I discussed the impact that overseas investors have on  our domestic equities.  Both Europe and Japan have had weakened currencies, making the US market more attractive than their own.  That, coupled with the rising US Dollar have contributed to our seemingly “stable” equities market.  That is about to change.

The USD index has fallen beneath its Cycle Top over the weekend, as suggested last week, putting it on an aggressive sell signal.  The Cycles Model suggests the USD may decline through the end of January, making US equities and bonds unattractive to foreign investors and blunting the overnight rallies often seen in the past several months.  Commentators are discussing the huge momentum move it made last week, but don’t see the possibility of a reversal.

ZeroHedge reports, “US stock futures gained, led by tech as news reports of Microsoft’s spending plans underscored the sustained demand for AI infrastructure (even though the same and more has been said about Facebook and yet the company’s massive capex spending plans have yet to materialize). S&P 500 futures were up 0.6%, set to rise for a second day after ending the longest losing streak since April on Friday; Nasdaq 100 futures advanced 1%, with chip giants Nvidia and AMD rising more than 2% in premarket trading. In Europe, the Stoxx 600 also edged higher, fueled by ASML’s biggest daily gain since October. The dollar, which recently traded at a more than two year high tumbled on a Wapo report that Trump aides are looking at targeting import taxes at certain industries, rather than across the board resulting in a less strict tariff regime (spoiler alert: not only is this fake news, if anything Trump will double down on tariffs and make them even stricter). The news sent both the dollar and treasuries higher, with the former slipping earlier ahead of a sale of three-year debt as well as auctions of 10- and 30-year notes later this week, with the 30-year yield climbing overnight to the highest since November 2023 before retracing the move. On today’s calendar we get the S&P service PMI, as well as factory/durable orders report.”

VIX futures are consolidating near the mid-Cycle support at 16.27 this morning.  While VIX remains beneath the 50-day Moving Average at 16.62, it may probe deeper to complete its correction.  However, that is due to end this morning and a resumption of the uptrend may follow a bounce above the 50-day.

TNX appears to be consolidating, but is due for a surge in trending strength today.  It appears to be decoupling from the USD (or vice-versa) as the USD weakens.  The Cycles Model suggests a continued rise in the 10-year yield possibly until the end of the week.  The most likely target for this uptrend may be the Cycle Top resistance at 47.91.  Reaching that target may end the uptrend temporarily.

Yen futures rose to 64.04 this morning, ending a possible Cycle inversion.  The Cycles Model infers a rally in the Yen that may last through mid-March, upending the Yen carry trade.

BKX may be about to make a key reversal today, extending its Master Cycle (to today) as well.  The Cycles Model suggests trending strength today, which may complete the Cycle at the 50-day Moving Average at 130.44.  A sharp reversal into a panic decline may follow.  The reason is a cluster of trending strength days starting on Tuesday and lasting the next two weeks.

ZeroHedge remarks, “Money market assets surged again in the last week of 2024 to a new record high of $6.848 trillion and at the same time money flowed into bank deposits for the fifth straight week, recovering all the outflows from the SVB crisis…”

Bitcoin may also be about to make a key reversal today, day 259 of the Master Cycle.  It may rise as high as the Cycle Top at 105689.31 during the day, as today is a double strength day.   It also denotes the high probability of a reversal today.