The Practical Investor

8:00 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!

SPX futures rose to 5895.60 in the overnight session a near-perfect 61.8% Fibonacci retracement of yesterday’s decline.  However, there is a good probability that SPX may rally back to the 50-day Moving Average at 5939.55 and the 50% retracement of the week-long decline nearby.  Why the stronger rally?  Blame it on the strong US Dollar.

ZeroHedge reports, “US equity futures posted modest gains suggesting stocks may finally halt a five-day losing streak, the longest since April, although we have seen early strength quickly turn to selling so it is unclear if today’s modest bounce will last. As of 8:00am, S&P 500 contracts rose a modest 0.2%, fading stronger gains earlier, while the Nasdaq 100 rose 0.3%. European stocks dropped while Asian equities rebounded to erase Thursday’s losses, boosted by gains in the region’s technology companies even as Mainland China shares sank again as Chinese yields plunged to a new record low. And speaking of yields, the 10Y TSY yield ticked lower, dipping 2 bps to 4.54% while the dollar slipped from the two-year high it set Thursday. The US economic data calendar includes December ISM manufacturing at 10am. Fed speakers scheduled for the session include Barkin (11am).”

USD futures declined to 108.76 this morning, continuing its reversal from the Master Cycle high made on December 31.  Thus, US equities have the wind at their backs for the time being.  Most traders are not aware of the termination of the rising Cycle and reversal into the declining Cycle.  That may come over the weekend, where the Cycles Model suggests the strength of the decline may be established.

Investing.com reports, “(Reuters) -The dollar dipped but stayed close to a two-year high against a group of peers on Friday on investor bets the gap between growth in the U.S. and elsewhere will widen, while Chinese blue chips suffered their biggest weekly fall since 2022.

The dollar index, which tracks the currency against a basket of six other currencies, hit its highest since November 2022 on Thursday, as the euro fell to $1.02248 also its lowest since 2022. The pound and Japanese yen were at multi-month lows too.

While other currencies did manage to rebound a touch on Friday – the euro was last up 0.3% at $1.0297 – the dollar’s continued strength dominated the market mood. [FRX/]

The SPX denominated in Euros remains in its uptrend, despite the stumble made on December 18, when the SPX made a more substantial decline.  The USD cushioned the fall by rising from 106.52 to 108.00 on the 18th, stopping the decline at the 50-day Moving Average.  Since the 50-day Moving Average is considered the “third rail” of traders/investors, they subsequently resumed their flow into US stocks.  However, the USD did not make new all-time highs for European investors since then and now remains vulnerable to declines in the USD and the SPX.

The SPX denominated in Yen did not make its all-time high until December 27, making it the strongest international contributor to US equities.  The reason?  The Yen had weakened to its lowest point on December 26 in a Cycle Inversion.  After the 25% crash in the Nikkei on August 5, Japanese investors turned to US equities based on the relative strength of the SPX, making it impossible for the SPX to crash in 2024.

In summary, the SPX and Yen have made reversals on December 26.  The US Dollar has made its reversal on December 27.  The Nikkei made its final high on July 14 and the EuroStoxx made its final high on September 27.  All major stock indexes have made their maximum high and are treading on thin ice.  A weaker USD may now make a panic decline in SPX possible.

VIX futures declined to 17.30 this morning and may decline to its mid-Cycle support at 16.27.  There is an outside probability it may have the potential to decline to its previous low at 14.27 in the next day or two, extending the Master Cycle low.

9:00 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 extends to January 6 for many Christians.

SPX futures rose to a holiday high at 5945.40, but has since eased lower, completing a 42.3% retracement of its post-Christmas decline thus far.   It is probable that the bounce was repelled by the 50-day Moving Average at  5939.03.  Should it go higher, the next resistance is the Intermediate resistance at 5991.30.  However, should it open beneath the 50-day Moving Average at 5939.02, the way forward is declining.  The Cycles Model shows strengthening of the (declining) trend through the weekend.

Today’s options Chain shows Max Pain at 5925.00.  Long gamma may set in above 5950.00 while short gamma may begin beneath 5915.00 but strengthens beneath 5900.00.

ZeroHedge reports, “US equity futures rebounded strongly on the first trading day of 2025 after 4 straight days of losses, ending 2024 on a soggy note, thanks to – what else – a bounce in tech stocks, even as China suffered its worst start to a new year since 2016. Nasdaq 100 and S&P 500 contracts rallied by at least 1%, although gains eased modestly by 8:00am ET. All the Mag7 names traded higher (Nvidia (NVDA) +1.7%, Microsoft (MSFT) +1%, Alphabet (GOOGL) +1%, Amazon (AMZN) +1.4%, Meta Platforms (META) +1% and Tesla (TSLA) +1%). European energy shares outperformed after a sharp increase in natural gas prices. The euro fell to the weakest against the dollar in over two years. Treasuries and European government bonds gained. Bitcoin extended its rally to a third day. Macro data today includes initial and continuing jobless claims, as well as the Mfg PMI and construction spending.”

VIX futures declined to 17.03 this morning, bouncing above the 50-day Moving Average at 16.67.  The Cycles Model allows for a further pullback by the weekend.  Trending Strength may return by mid-week.

The January 8 options chain shows short gamma clustered at 15.00 while long gamma may begin at 16.00.   However, although short gamma is thinning, long gamma does not apear to have much support at this time.

The Shanghai Composite Index fell to 3242.00 today, declining beneath its major supports, the most important being the 50-day Moving Average at 3360.82.  This is a confirmed sell signal.  The Cycles Model anticipates a decline to the end of January, so buckle up!  Speculation, the backbone of Chinese equities may be drying up.

ZeroHedge remarks, “China’s market turmoiled overnight after the Caixin Manufacturing PMI fell to 50.5 from 51.5 in November (significantly worse than the median forecast of 51.7 by economists).

The findings reflect uncertainties facing Chinese exports, which have powered the $18 trillion economy’s uneven recovery but may take a hit when Trump takes office later this month.

“Exports dragged on demand amid mounting uncertainties stemming from the overseas economic environment and global trade,” Wang Zhe, senior economist at Caixin Insight Group, said in a statement accompanying the release.”

TNX made a morning low at 45.17.  It is consolidating and may retest the trendline near 44.00 by the weekend.  However, the positive trend re-asserts itself by early next week with a burst of trendline strength due on Monday.  However, the current Master Cycle may end next week, as well.  Should the Pivot day be a low, it increases the probability of a resumption of the trend.  A pivot high may allow a three-week correction in the trend.

Bitcoin is back-testing overhead resistance as it completes its Master Cycle by early next week.   Resistance levels are Intermediate resistance at 98045.00 and the Cycle Top at 104176.61.  The Cycles Model shows a burst of speculative energy on over the weekend, favoring the higher resistance.

BKX may be extending its Master Cycle high, first recorded last Friday, day 255.  Today is day 260 of that Master Cycle, within an acceptable range to extend.  The 50-day Moving Average is at 130.02, while the trendline is near 131.00.  Either of these resistance levels may allow the Master Cycle to extend.  Note the similarities between the BKX and Bitcoin performance.

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.

NDX futures rose to 21307.50 this morning, testing the trendline near 21300.00.  It has pulled back since then and is hovering on the positive side.  A retest of resistance usually means that equities may go lower.  The next support is the Intermediate at 21225.38 followed by the 50-day at 20926.01.  Selling pressure may be heavy due to pension rebalancing and year-end profit-taking.

ZeroHedge observes, “It’s true that stocks usually go up most of the time, but the market’s latest two-year run makes any cliché sound like an understatement.

Since bottoming in October 2022, the S&P 500 has returned roughly 66%.

The index is on track for back-to-back annual returns of more than 20% for the first time in over two decades, handily outpacing the 10% gain seen in an average year.

As you might guess, no one on Wall Street expects stocks to fall in 2025.”

SPX futures rose to 5931.80, testing the underside of the 50-day Moving Average at 5938.28, then pulled back.  A failed test usually means that the next lower support may be tested.  That may be the 100-day Moving Average at 5786.96, coinciding with the (red) 14-month Diagonal trendline.  This is critical, since once the Ending Diagonal trendline is broken, the index may fall to its point of origin on October 27, 2023.

ZeroHedge reports, “With the Santa rally dead and buried after the S&P saw two back-to-back 1% drops for the first time since August and sending the S&P sliding back under 6,000, US equity futures finally rose on the last day of 2024, setting stocks on course to snap three days of losses and build on this year’s powerful Wall Street rally. As of 8:00am, S&P futures rose 0.3% and Nasdaq futs were 0.4% higher, with all Mag7 stocks higher. European trading was muted, with several markets shut on New Year’s Eve and shortened sessions in London and Paris. 10Y yields extended their drop, sliding 1bp to 4.52% while the Bloomberg dollar index gained, capping the best year for the US currency since 2015. Bloomberg rebounded and oil dropped. The last day of the year has a sparse macro calendar and includes the Case-Shiller and the December Dallas Fed service activity index.”

VIX futures slid to 16.68, above the mid-Cycle support at 16.24.  Should it hold there today, it’s next target may be a breakout above the December high at 28.32.  Weekly options expire today.  The largest options holdings are short between 14.00 and 19.00.

TNX is consolidating after last week’s push higher.  The pullback may be brief, as trending strength reappears later this week.  The current Master Cycle has a week left to run its course.  The Cycle Top resistance at 47.86 appears to be the likely target, although there is an outside probability of reaching 50.00 in that time period.

Bitcoin may be testing the underside of its 50-day Moving Average at 96528.00 this morning.  Should it be rejected, it may have a week-long decline ahead with no visible support until the mid-Cycle level appears at 72196.30.  Good luck and good trading.

I wish you all a Happy New Year!

3:10 pm

SPX declined to the trading Cycle bottom at 5861.18, then bounced to the 50-day Moving Average at 5938.28 this afternoon, where what was formerly support became resistance.  It may linger just beneath the 50-day until the New Year in light trading.  However, Trending Strength may come back at the end of the week with possible new lows.

9:51 am

BKX has begun its decline from its Master Cycle high on Friday, December 27.  This is critical because it is an indicator of overall liquidity.  The Cycles Model suggests a decline in liquidity until the end of January.  During that time it has the capability to decline to the Cycle Bottom at 91.22.

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 Christmas Morning!  The Christmas Season extends to January 6, the Feast of the Epiphany.

NDX futures have declined beneath the upper trendline of the 13-month Ending Diagonal at 21300.00, giving an aggressive sell signal (lighten long positions).  The next support is at the Intermediate level at 21223.04 (bounced there at 7:30 am), where a confirmed sell signal may be given (sell/sell short).    The 50-day Moving Average lies at 20906.07.  The decline is happening despite record-breaking inflows last week.  The reason?  What comes to mind is year-end rebalancing combined with the buyback blackout.

Today’s options chain shows Max Pain at 21475.00.  Long gamma may begin above 21500.00 while short gamma resides beneath 21425.00.

SPX futures declined to 5910.40 thus far at 8:20 am, crossing beneath the 50-day Moving Average at 5936.52.  This action may confirm the sell signal which is commonly recognized among traders.  There may be a bounce at round number support at 5900.00.   The next following level of support lies at the 100-day Moving Average at 5779.89 while the mid-Cycle support resides at 5571.75.

Today’s options chain shows Max Pain at 5975.00.  Long gamma may begin at 6000.00 while short gamma may begin beneath 5950.00 but strengthens dramatically beneath 5925.00.  Should SPX decline beneath 5900.00, a panic sell-off may ensue for no apparent reason due to short gamma.

ZeroHedge reports, “US equity futures dropped sharply on the second to last day of 2024, crushing a deathly blow to any hopes of a belated Santa rally, as the powerful meltup in technology shares and among momentum chasers crumbled in the final trading sessions of 2024. As of 8:00am, S&P 500 futures slumped 1%, dropping for a 3rd straight session and signaling extended weakness on Wall Street after Friday’s retreat led by tech megacaps weakness; Nasdaq futures also slid 1%. Monday’s weakness was broad based: Europe’s Stoxx 600 index retreated, while Asian stocks snapped five days of gains. Treasuries reversed an earlier slide, and the 10-year yield dropped from near the highest levels since May. The dollar also reversed earlier gains while gold and bitcoin were relatively flat. The US economic data calendar includes December MNI Chicago PMI (9:45am, several minutes earlier for subscribers) and November pending homes sales and December Dallas Fed manufacturing activity (10am)”

VIX futures rose to 18.38, remaining within Friday’s trading range.  The Cycles Model shows no immediate volatility in the calendar, but strength returns next week.

Tuesday’s options chain shows Max Pain near 20.00.  Short gamma resides between 15.00 and 19.00.  Long gamma sows some activity between 22.00 and 35.00, but not a lot of conviction.

TNX has pulled back to its daily low at 45.57.  Futures made a low of 45.54.  The Cycles Model offers no immediate direction.  However, trending strength may begin to rise later this week.

ZeroHedge observes, “Former Wall Street money manager and financial analyst Ed Dowd of phinancetechnologies.com is back with more data on how the Biden Administration propped up a failing economy during the 2024 election year.”

Bitcoin continues its slide beneath the 50-day Moving Average at 96393.70.  The Cycles Model suggests up to another week of decline ending the current Master Cycle.  While on a confirmed sell signal, having a week left in the Master Cycle would make an investor cautious.

Gold futures have been pressed down at the Intermediate resistance at 2651.85 for the past week and may be proceeding lower.  It remains on a confiremd sell signal and may continue in that pattern to the end of January.

1:25 pm

Bitcoin has declined beneath its 50-day Moving Average at 95440.78 after a week-long effort to hold at that level.  The sell signal is confirmed with a lot of empty space beneath it.

1:08 pm

SPX has declined beneath the lower trendline of the 4-month Ending Diagonal at 6001.14, confirming its sell signal.  Additional confirmation comes at a decline beneath the 50-day Moving Average at 5943.00.  Pension rebalancing may be to blame for the sudden drop-off in stocks.   It is estimated that between $20 billion and $30 billion must be sold by year-end.

7:30 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.

Good Christmas Morning!

NDX futures have declined to 21670.80 thus far, after being repelled by the Cycle Top resistance at 21867.85.  It is on an aggressive sell signal, suggesting a reduction in long positions.  A decline beneath the upper trendline near 21300.00 adds further confirmation to the aggressive sell.  Intermediate support lies ar 21212.11 where the sell signal becomes confirmed.

ZeroHedge remarks, “Big tech companies are aggressively investing billions of dollars in AI data centers to meet the escalating demand for computational power and infrastructure necessary for advanced AI workloads.

This graphic, via Visual Capitalist’s Kayla Zhu, visualizes the total AI capital expenditures and data center operating costs for Microsoft, Google, Meta, and Amazon from January to August 2024.”

SPX futures have made a low this morning at 6015.40 thus far.   It has fallen beneath short-term support at 6034.47, placing it on an aggressive sell signal after making a retracement and Master Cycle high at 6049.75.  A confirmed sell signal awaits beneath Intermediate and trendline support at 6002.06.  The new Master Cycle suggests a decline through the first week of February.

ZeroHedge reports, “US equity futures declined after Thursday’s muted session on Wall Street, while markets in Europe and Asia advanced in muted holiday trading as the year draws to a close. As of 8:00am, S&P futures were down 0.3%, after ending Thursday flat, while the tech-heavy Nasdaq 100 fell 0.2% in quiet post-holiday session as mixed jobless claims data did little to change bets on the Fed’s policy outlook. The 10-year Treasury yield hovered near a seven-month high around 4.60%, and the dollar was steady, on track for its best year since 2015. Oil reversed Thursday’s losses and was set to gain.  The macro calendar is quiet: we get the advance goods trade balance, as well as wholesale and retail inventories.”

VIX futures consolidated this morning within yesterday’s trading range.  While VIX is due to move higher, the Cycles Model suggests relative quiet until the week of January 6.  The options chain reveals the path of lest resistance for the VIX is to remain beneath 20 for the next week.

Bitcoin challenged the 50-day Moving Average at 95478.95 this morning before bouncing to 97351.00.  It is due to reverse lower in the next week, possibly from a higher level.  Thus far overhead resistance is at Intermediate support/resistance at 98203.55.  However, it may venture to the Cycle Top at 101348.84 before reversing down.  Bitcoin remains on an aggressive sell signal, suggesting the bounces are places to reduce exposure.

TNX is hovering near 46.00 this morning.  The Cycles Model suggests two more weeks of strength to end the current Master Cycle.  The top of the trading band is at 47.81, a likely target.  However, there is the distinct possibility of reaching 50.00 in that time period.

ZeroHedge reports, “The final coupon auction of 2024 is now the history books and on the day yields blew out to 6 months highs and just shy of the highest level of 2024, it is probably not a surprise that demand was stellar.

Stopping at a high yield of 4.532, this was – not surprisingly after the Fed’s hawkish pivot – the highest yield since May. It also stopped through the When Issued 4.532 by 2.1bps, the biggest stop through since January 2023. It was also the 4th consecutive stop for the 7 year tenor, the longest such stretch on record.”

3:00 pm

SPX has stalled just beneath a possible target at 6052.00, but remains above short term support at 6034.42.  The Cycles indicate a reversal may be made by/near the closing today.  A decline beneath the Short term gives an aggressive sell signal while a decline beneath the Intermediate support/trendline at 6002.11 may be a confirmed sell signal.

8:00 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 and Christmas blessings to all of you!!

NDX futures declined to 21648.80 this morning after having reversed from the Cycle Top at 21834.46, leaving the anticipated Master Cycle high.  The Reversal may be considered an aggressive sell, reducing long positions.  The sell signal is confirmed beneath Intermediate support at 21193.08.

Today’s options chain shows Max Pain at 21775.00 Long gamma may begin above 21800.00 while short gamma resides beneath 21750.00.

ZeroHedge comments, “When most analysts discuss Tesla, they focus on new vehicles or the electric vehicle company’s advancements in autonomy. Yet, according to Launch i/o CEO Jeff Lutz, one of the most significant—and under-discussed—developments at Tesla is happening not in its design studios or on the road, but in its factories.”

SPX futures have declined to 6006.40 this morning after reversing from a probable Master Cycle high at 6043.40.  Today is day 251  which is within the range most commonly achieved for a complete Master Cycle.  While the reversal does not yet offer a sell signal, this is a secondary high from which longs may be sold.  A confirmed sell signal comes beneath Intermediate support at 5994.30.  The 50-day Moving Average lies at 5930.10, beneath which offers the most common recognition of a sell signal.  The Cycles Model makes these signals clearer as we witness a Cyclical reversal prior to the decline beneath the supports mentioned above.

Today’s options chain shows the much-contested 6000.00 offering Max Pain.  Long gamma pulls ahead above 6050.00 while short gamma dominates beneath 5950.00.

ZeroHedge reports, “US stock futures and Treasuries dropped as muted trading resumed after the Christmas holiday, with investors looking to initial jobless claims data and a government bond auction later on Thursday. At 8:00am, S&P futures fell 0.3%; the index closed 1.1% higher on Tuesday, extending this year’s advance to 27%, and on pace for the best full-year return this century. Nasdaq futures slipped 0.4% after adding 1.4% on Tuesday, as a bout of selling started after the Europe open. Most major markets in Europe are still shut for holidays. Treasuries extended their selloff, pushing 10Y yields to a fresh 6 month high of 4.63%, a level which will start denting the Christmas rally meltup. The dollar also gained as the Bloomberg Dollar Index hit a new two year high. The only even on today’s calendar is jobless claims at 8:30am.”

VIX futures made a morning high of 15.53 after completing its Master Cycle low on Tuesday at 14.27.  A buy signal may be made at mid-Cycle resistance at 16.24.  A confirmed buy may be made above the 50-day Moving Average at 16.91.  Today is already showing itself to be e day of strength.  More will come after the New Year.  The new Master Cycle may last until the end of March.

The December 31 options chain shows Mas Pain at 20.00.  Short gamma is found between 14.00 and 19.00 with high conviction  Long gamma may begin above 22.00 and is strong to 35.00.

The holiday Bitcoin bounce was turned back at Intermediate resistance at 98317.93 and is testing the 50-day Moving Average at 95067.969.  A breakdown beneath the 50-day may produce a sharp 1-week decline with the nearest support at the mid-Cycle level at 71299.50.

TNX futures rose to 46.43 this morning. The Cycles Model supports the rally through the week of January 6 with a burst of trending strength this weekend.  The minimum target appears to be 50.00.  Higher targets may be sought.

ZeroHedge tells us, “Powell is admitting that inflation is still too high, but the Fed still plans to cut interest rates by .25%. So why are mortgage rates going up?

The Fed has turned hawkish relative to its recent rhetoric, resisting to slash interest rates as low as it had envisioned. Although it’s continuing to cut, the Fed’s actions primarily influence short-term interest rates, such as the federal funds rate. This is the rate at which banks lend to one another overnight. These short-term rates affect a wide range of borrowing costs including those on credit cards, car loans, and adjustable-rate mortgages.

However, most mortgage rates, particularly those for fixed-rate loans, are more closely tied to long-term bond yields such as the yield on 10-year U.S. Treasury bonds. And right now, 10-year Treasury yields are soaring.”

Gold futures may have made an early master Cycle low on December 19.  However, the next few days may tell us whether it may attempt a probe to the 50-day Moving Average at 2682.17 to actually complete the Cycle.  The positioning of a Cycle high this week may offer a very bearish setup for gold in the month of January.

8:45 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 and Merry Christmas!

SPX futures rose to a morning high at 5981.80, testing the 4-month trendline at 5982.00.  The December 20 high was 5982.06.  Should it stop at/near 5982.00, it would create a flat correction, finishing the bounce from 5832.30 and possibly the Master Cycle, as well.    Holiday trading may be unpredictable, so an alternate possibility may be  a punch through the trendline to 6000.00 in very light trading.

ZeroHedge reports, “US equity futures traded flat in muted pre-holiday trading, signaling another subdued open on Wall Street after Monday’s tech-led rally. As of 8:00am, contracts on the S&P 500 gained about 0.1% and those on the Nasdaq 100 were 0.2% higher. American Airlines shares fell as much as 5.5% in premarket trading after the company grounded all flights nationwide, however the stock then rebounded after the grounding was promptly lifted. European bourses, at least those that are open, and Asian markets both gained. 10Y yields rose 2 basis points to trade above 4.60% for the first time since May, while the US dollar also gained. Oil was flat and bitcoin reversed some of yesterday’s losses. It’s a quiet calendar with just the Richmond Fed mfg index and the Philadelphia Fed non-mfg activity update.”

VIX futures made a morning low at 16.58, possibly creating a Master Cycle low.  There may be a lower pivot at the mid-Cycle support at 16.24, an approximate 75% retracement.  The advice, “Buy the dip.” applies here.  The Cycles Model offers a day of strength on Thursday.  Should we have a Cycle pivot today, the outcome on Thursday may be surprising.  What is more, the new Master Cycle is due to rally to the end of March.

Bitcoin is on a bounce from its 50-day Moving Average at 94034.34 this morning.  There are two possible targets.  The first (and most likely) is Intermediate resistance at 98339.82.  The alternate resistance is the Cycle Top at 101108.16.  The bounce may be finished within the next week.  Once accomplished, a decline may impose itself until mid-February.  A decline to the Cycle bottom is possible.  Contrary to popular opinion, Bitcoin will never take the place of the USD.  It is merely a popular trading platform that may lose all of the profits listed below.

ZeroHedge remarks, “According to Whale Alert, the average profit per BTC is at an all-time high of $67,088, at the time of writing.

“The Potential Profit per Token graph shows the potential profit that holders could make per token if they sold at a specific time,” Whale Alert’s website explains.

Whale Alert has further calculations on this metric that can be found here.

To put this in perspective, this is more than the average American salary in 2024, which is $62,027.”

BKX may be completing its retracement to the 50-day Moving Average at 129.51 sometime this week.  Once complete, it may perform a slingshot move to the Cycle Bottom at 90.91 in the next month.

TNX is advancing to new highs this morning.  The Cycles Model suggests that TNX may continue to rally in strength through the first full week of January.  The closest target may be the Cycle Top at 47.74.  However, a Wave 3 cannot be the smallest Wave.  Therefore, it is likely to have a minimum range of 50.00 (equal to Wave 1).

ZeroHedge remarks, “#4 Thanks to rapidly rising mortgage rates, the average U.S. homebuyer just lost $33,250 in purchasing power in just six weeks…

Mortgage rates hit 7% on October 28, the highest level since the start of summer and up nearly one percentage point from the 18-month low they dropped to in mid-September.

A homebuyer on a $3,000 monthly budget can afford a $442,500 home with a 7% mortgage rate, the daily average 30-year fixed rate on October 28. That buyer has lost $33,250 in purchasing power over the last six weeks; they could have purchased a $475,750 home with the 6.11% average rate on September 17. That was the lowest level since February 2023.”

2:52 pm

Bitcoin has fallen beneath its 50-day Moving Average at 93417.92.  Its a confirmed sell.

8:00 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 and Merry Christmas!

SPX futures rose to 5967.00 over the weekend session and may have begun its decline.  Friday’s short-covering action was defended at the lower trendline of the 4-month Ending Diagonal formation at/near 5980.00.  The SPX did not cross beneath the 50-day Moving Average at 6921.00 at the close on Friday.   While it is possible that another attempt may be made at the Diagonal structure, the place to watch today is the 50-day Moving Average, beneath which the decline resumes.  Today is day 248 of the Master Cycle, leaving approximately 10 more calendar days in this Cycle.   There will be shortened holiday weeks and light trading that may encourage the powers-that-be to close the year on a positive note (above the 50-day).  Should the Master Cycle remain above the 50-day and end near the Ending Diagonal, there is no doubt that January may be a very bearish month.

Today’s options chain shows Max Pain at 5950.00.  Long gamma may begin above 5975.00 while short gamma may begin beneath 5925.00.

ZeroHedge reports, “US equity futures entered the last week of 2024 gingerly and steady in subdued trading as traders, already on the ski slopes or in various warm, non-extradition countries, assessed the outlook for economic growth and interest rates. The dollar gained after a US government shutdown was averted in the last minute. As of 8:10am, contracts on the Nasdaq 100 added 0.4% and those on the S&P 500 were little changed, erasing an earlier gain, following a sharp rebound on Friday after the core PCE index increased at the slowest pace since May. Europe’s stock benchmark edged higher. Market gains will likely be capped by the continued rise in rates which has seen 10Y yields rise 2bps to 4.55%. Oil, gold and bitcoin all dropped while a Bloomberg gauge of the dollar rose after sliding 0.5% on Friday. Today’s macro data include the Chicago Fed, Durable Goods, New Home Sales and the Conference Board Consumer Confidence.”

VIX futures traded in a range between 18.06 and 18.99 over the weekend after closing near the 50% retracement value of last week’s rally at 18.44.    The Retracement may be complete, leaving the VIX with its next target at the Cycle Top (23.58) and beyond.

The December 24 options chain shows Max Pain at 18.00.  Short gamma resides from 14.00 to 18.00 while long gamma begins at 20.00.

TNX futures traded between 45.19 and 45.54 over the weekend.  Should TNX go higher, it may reach the  Cycle Top at 47.69 before correcting to the trendline at 44.20.  There are three more weeks left in the current Master Cycle in bonds.  A possible target may be 5.00 by mid-January.

Bitcoin declined to 93633.39 over the weekend, probing the 50-day Moving Average at 93462.00.   There is likely to be a bounce to retest the Intermediate resistance at 98288.62 or the Cycle Top at 100720.70 this week.  Today is day 259 of the current Master Cycle, so that move may happen within the week.

USD futures have pulled back modestly at it tests the Cycle Top at 107.95.  It is due to reach its peak on New Years eve, the end of tis Master Cycle, where it may end in strength.

9:37 am

BKX is bouncing higher, as it retests the 50-day Moving Average at 129.05 and possibly the upper trendline at 132.00. The bounce may be finished by year’s end with a new Master Cycle to follow.

I may not be available to coment until afteer the Christmas holiday, so I hope that you enjoy yours!

10:58 am

SPX has bounced from its lows this morning as dealers buy back this morning’s short options after the open.  Resistance is at the 50-day Moving Average at 5921.26.  Thereafter, the decline may resume with a big put wall at 5800.00.  Short gamma begins at 5900, so there may even be an attempt to hold SPX there.

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!

NDX futures declined to a morning low of 20744.00 thus far, crossing beneath the 50-day Moving Average at 20781.03.  This is widely recognized as a confirmed sell signal.   Today approximately 40% of all listed companies go into their blackout period, where stock buybacks are curtailed.  In addition,  hedge funds and CTAs may have hit their “sell” levels.  In addition, leveraged funds must start unloading to raise collateral.  Margined accounts may start getting calls on stocks that have fallen hard.  The chaos may increase as the Cycles Model also suggests the decline may be strengthened today and until Christmas.

Today’s options screen appears to be closed as it is Triple Witching day.

Investopedia remarks, “The triple witching hour is the last sixty minutes of the trading day on the third Friday of March, June, September, and December, when contracts for stock index futures, stock index options, and stock options, expire simultaneously.”

SPX futures have reached a morning low of 2801.20 thus far.  The Cycles Model indicates that selling may continue through the holidays as stock buybacks are being curtailed.  In addition, the 50-day Moving Average at 5918.15 has been left behind.  Equities ar at a “make or break” level.  Analysts are holding out hope that the 100-day Moving Average at 5747.77 may provide support.  With two weeks left in the current Master Cycle, the 1987 Trendline near 5300.00 may be a significant support.

The morning expiration shows Max Pain at 5910.00.  Long gamma has the upper hand above 6000.00 while short gamma gains ascendancy beneath 5900.00.  The afternoon expiry shows 5800.00 as the most intense battle zone where both puts and calls contracts number over 50,000.  Thus we see that 5800.00 is a “must hold” level for the dealers.

ZeroHedge reports, “US equity futures and global markets are broadly risk-off to end a turbulent week after the US House rejected a temporary funding plan backed by Donald Trump (38 republicans voted against the bill) which would have avoided a gov’t shutdown that otherwise will start a midnight, with trade war concerns mounting (Trump said “I told the European Union that they must make up their tremendous deficit with the US by the large scale purchase of our oil and gas. Otherwise it is tariffs all the way!!!”). Expect elevated volumes today due to the last option expirty/quarterly rebalance of the year. As of 8:00am ET, S&P futures are down 0.8%, Nasdaq futs tumble 1.4%, with technology stalwarts such as Tesla and Nvidia sliding in early trading as momentum reversed with a bang. Europe’s Stoxx 600 weakened 1.7% as Novo Nordisk A/S fell by the most on record on the back of disappointing data from a treatment trial; the rest of the world not much better: FTSE -95bps, DAX -1.3%, CAC -1.05%, Nikkei-29bps, Hang Seng -16bps, Shanghai -6bps. 10Y treasury yields dipped a little after surging in the past three days, down 2bps to 4.54%, with the Bloomberg US dollar index also easing back a bit as both the yen and euro gain. Bitcoin tumbled amid the riskoff mood, sliding as much as 8% to a low of $92K and dragging down MicroStrategy Inc. and other crypto-related companies in premarket trading. Oil reversed earlier losses with gold also rising on expectations of aggressive Chinese stimulus. Today’s economic calendar will see the November core PCE, personal income and spending as well as the latest UMich data.”

VIX futures rose overnight making a morning high at 26.51 before pulling back thus far.  The pullback may find support at the Cycle Top at 23.58.  The Cycles Model suggests that trending strength may intensify today and remain strong through next week.  While volatility spikes tend to fade, as it did in August, today’s backdrop is structurally different.  There is much more leverage in equities and leveraged ETFs must sell in down markets regardless of liquidity.   In addition, bond convexity is troublesome.

The December 24 options chain shows Max Pain at 18.00.  Short gamma still dwells between 14.00 and 17.00.  Long gamma may begin above 20.00, but conviction fades at 28.00.  There may be some surprises over the weekend.

TNX pulled back to 44.98 this morning after breaking out of its perceived (1 year) downtrend.  The fact is, TNX never lost its longer-term uptrend held since July 2020.  Having noted that, the current Master Cycle still has three weeks to go.  Structurally, Wave 3 cannot be the smallest Wave.  By definition, the minimum rally may be to 50.00.

Bitcoin is testing its 50-day Moving Average at 91807.29 this morning.  This is not good for the longs as volatility may be increasing the weekend and next week.  The problem with Bitcoin investors is that the do not have a sell discipline.  Today may be a pivot point where selling may become imperative.

3:11 pm

NDX has gone negative again.  It appears to lead the indices lower starting today and possibly the next week.  There are a couple more short-term supports that may cause a bounce, but there are at least two more weeks of decline ahead.

11:10 am

The Agricultural Index is declining from its Master Cycle high on December 11, offering good news to consumers (maybe not to farmers).  The Cycles Model suggests a decline to mid-January.  However, that may come with growing shortages after the holidays.  The normal corrective decline usually goes to either the 50% retracement at 359.66 or the 61.8% Fibonacci retracement value at 353.59.  However, we may see the decline go to the Cycle Bottom at 336.30.  Note that the longer term downtrend was broken this month.

10:08 am

Yesterday BKX declined beneath its 50-day Moving Average, giving a confirmed sell signal  The Cycles Model indicates a lower target by year end.  The next support may be the mid-Cycle level at 113.14.  Should that be exceeded, the Cycle Bottom at 90.67 may be the primary target.

7:30 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.

Good Morning!

The NDX Cycle inversion stopped abruptly at the FOMC announcement yesterday.  It declined and closed beneath the upper Ending Diagonal trendline near 21350.00.  In the overnight market, the NDX futures bounced to 21326.00 thus far, back-testing the trendline.  Declining beneath the Cycle Top at 21725.50 and the trendline gave us aggressive sell signals (lighten the long positions).  Today the next support is the Intermediate support at 21018.79 while the 50-day Moving Average lies at 2755.85.  Both are confirmed sell signal (sell all /sell short).  The Cycles Model indicates the decline may continue through the holidays.  While some advisors may advise to “buy the dip,” the Cycles Model says the opposite, “Sell the bounce.”

The NDX options chain turned short gamma beneath 21300.00.  That is why the dealers are attempting toraise the bar on today’s options chain.  Otherwise the dealers will suffer Max Pain instead of the speculators.

SPX futures have bounced to a morning high thus far at 5913.50, testing the underside of the 50-day Moving Average at 5914.85.  The 50-day Moving Average is commonly recognized as an important  support/resistance point, beneath which may lie a confirmed sell signal.  Yesterday was a Cyclical pivot day that may lead to another two weeks of decline in the SPX.  People ask, “How bad can it get?”  The next major support beneath the 50-day is the 1987 trendline at 5300.00.  Should that not hold, the next level is the Cycle Bottom at 4958.48.

Today’s options chain shows a possible Max Pain level near 6000.00.  Long gamma may begin above 6100.00 while short gamma rules beneath 6050.00.  The market may decline “For no good reason.”

ZeroHedge reports, “US futures staged a partial recovery on Thursday after the worst Fed day rout since the 2013 Taper Tantrum, suggesting the selloff after the Federal Reserve’s hawkish pivot was overdone, even as stock indexes  in Europe and Asia retreated as equity markets caught up with post-Fed moves in the US. As of 8:00am, S&P futures advanced 0.5% following the US benchmark’s biggest lost for a scheduled Fed decision day since 2001. Nasdaq 100 contracts rose 0.4% even as chip leader Micron crashed 13% on disappointing guidance. 10Y yields rose again, hitting 4.53%, the highest level since May and nearly 100bps higher than the 2024 lows reached in September. The dollar retreated after soaring on Monday even as the yen cratered after the Bank of Japan left rates unchanged, disappointing a lot of generally clueless strategists who were expecting a hike. Oil and bitcoin also rebounded after sliding on Wednesday. Key events today include the latest GDP revision, initial and continuing claims, existing home sales as well as the October TIC flows data.”

The NYSE Hi-Lo Index has turned negative last Friday by closing beneath 0.00 for the first time since August 5.  The Cycles Model indicates that the downtrend in New Highs/New Lows may continue until the end of January.  The minimum anticipated decline appears to be -650.00 out of over 3000 equities found in our domestic markets.  That may be the lowest since October 2022.

VIX futures have given back approximately half of their gains, settling at 20.52 thus far.  Yesterday gave us the second largest one-day spike in VIX history.  The Cycles Model calls for another two weeks of rally before some respite may be seen.

The December 24 options chain shows a residual short gamma cluster between 14.00 and 16.00.  Long gamma has a weak presence at 20.00, but no conviction above it.  The December options chain shows short gamma between 14.00 and 15.00, but no appreciable long gamma residing above it.  It appears that the options market was caught like “deer in the headlights.”

Bitcoin has bounced from its Cycle Topo at 99220.55 this morning.  It has an aggressive sell signal, suggesting speculators may wish to lighten their longs.”  Intermediate support lies at 97773.55, where a confirmed sell signal may be found.  Those waiting for the “ideal” exit may not find it, as BTC makes high volatility moves in both directions.  Be warned that the Cycles Model indicates an increase in trending strength by the weekend.

TNX futures rose to a morning high of 45.53, breaking above its prior high at 45.05 on November 15.  There may be a short-term pullback over the weekend to test Intermediate support at 43.31, but the trend is still higher through the New Year.  TNX has erased all indications of a downtrend, lending confusion to the markets expecting lower rates.

Gold futures declined to 2596.91 this morning before a bounce.  The Cycles Model anticipates another week of decline before a meaningful bounce.  While there may only be a week of decline, the minimum target appears to be near 2300.00.

Crud oil futures have declined beneath their Intermediate support at 69.45, giving a sell signal.  Further decline beneath the Head & Shoulders neckline at 68.55 confirms the sell signal with potential subsequent results shown in the chart.

ZeroHedge remarks, ” Oil prices are higher this morning after API’s overnight report signaled a sizable drawdown in US commercial crude inventories and Kazakhstan pledged to comply with OPEC+ production quotas.

The cartel member had earlier unsettled markets by signaling that it would adhere to its original plan of raising oil output by 190,000 barrels a day, according to Rebecca Babin, senior energy trader at CIBC Private Wealth Group, despite OPEC’s decision to delay production hikes.

Still,“the rally remains fragile, with broader macroeconomic factors continuing to dominate price movements,” Babin said.”

USD opened higher this morning after yesterday’s  anticipated spike to the Cycle Top.  There may be a bit more to this rally until the weekend.  However, USD may decline over the following two weeks as it back-tests support, most likely at the Intermediate level (106.17).