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.

3:32 pm

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

2:31 pm

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

7:45 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

10:29 am

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

1:55 pm

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

7:45 am

Good Morning!

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

1:25 pm

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

12:58 pm

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

9:53 am

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

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

10:57 am

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

10:00

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

7:45 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

Source: Bloomberg

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

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

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

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

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

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

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

The Lord’s Prayer

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

3:30 pm

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

2:57 pm

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

9:45 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

10:58 am

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

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

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

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.

10:30 am  Internet issues resolved.

Good Morning!

SPX futures rose to 6128.10, 8 ticks beneath the all-time high of 6128.18 made 24 days ago.  The cash market topped out at 6127.47 thus far, making today’s action a truncated rally.  Today is day 270 of the already extended Master Cycle.   The Cycles Model showed high trending strength over the weekend, but may not have been enough to put it over the top.  A rise in volatility often accompanies trending strength, which suggests a possible reversal .

ZeroHedge reports, “Even though US cash markets are closed today for the President’s Day holiday, US equity futures are open and are trading about 0.2% higher amid muted volumes.

The action, as noted earlier, is in Europe where bonds fell and shares of defense companies rallied on the likelihood of greater military spending, which could force governments to step up borrowing in the coming years. ”

VIX futures rallied to 15.57 this morning, signaling a possible reversal.   The 50-day Moving Average is at 16.32 and the mid-Cycle support/;resistance is at 16.51.  Once above those resistances, the VIX has clear sailing to the week of March 17.

RealInvestmentAdvice comments, “Market Shakes Off Inflation Data

I am back from traveling, and we have a good bit to catch up on since our last report. If you missed it, I provided an update on Tuesday, updating all the weekly technical and statistical data we produce. Most noteworthy in that report was the sharp increase in money flows into the market despite the tariff announcement by the Trump administration and the latest inflation reports.

On Thursday, the market broke out of the bullish consolidation over the last few weeks, successfully retesting and holding support at the 50-DMA. Notably, the bullish trend remains intact, and retail investors continue to pour money into the market, with money flows reaching typical peak levels. With the market elevated, downside risk over the next few weeks will likely be contained to recent January lows. What would cause such a correction is unknown, but if money flows begin to reverse, such will likely provide the evidence needed to rebalance risks accordingly.”

TNX is consolidating around the 50-day Moving Average near 45.00  this morning.   This may be in preparation for a reversal in the next 24 hours.  Trending strength is coming back in a big way, contrary to what most would like to believe.

High Yield Corporate bonds have been on an uptrend since October 2022.  Corporate bonds are sensitive to economic conditions, which are now changing.  Yields may rise as conditions deteriorate.  The Cycles Model indicates an imminent revesal.

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.

3:34 pm

The Agricultural Index is acting like a runaway train, especially after breaking through the downtrend line in January.  I had been suggesting accumulating shares as it has a long way to rally.  However, the current probe higher may be due for a correction back down to the trendline near 375.00.  Could the O.J. futures be an indication?:

ZeroHedge remarks, “Valentine’s Day has arrived, and near-record high cocoa prices mean consumers can expect to pay significantly more this year for a box of chocolates at the supermarket than last year. The price surge has been mainly driven by tightening global supplies, with cocoa inventories in New York and London sliding to new record lows. ”

3:06 pm

Gold made its Master Cycle high on Monday, February 11 at 2968.50.  Today it crossed beneath the Cycle Top support at 2900.99, creating an aggressive sell signal.  The Cycles Model suggests that the price of gold may decline through the end of March in the next Cycle iteration.  Take appropriate action.

12:30 pm

SPX has made a possible reversal at a Cyclical Pivot Point.  This is a very bearish setup, coming within a point of the January 24 high.

7:45 am

Good Morning!

SPX futures attempted to make a new all-time high in the overnight session, but fell short at 6127.40.  It is currently testing 6100.00 as it pulls away for its Cycle high.  Note that the Master Cycle has been revised to yesterday’s high at 6116.91 (cash market)as the potential Cycle high.    Note that a reversal becomes evident beneath 6050.00 and the 50-day Moving Average lies at 5998.02.  While the ending fractal looks complete, there is a small possibility of a final probe higher today.  The sideways motion for the past three weeks have let the air out of the AI bubble.  There is no one left to buy the narrative and liquidity is running out as investors are “asll in.”.

Today’s options chain shows Max Pain at 6080.00.  Long gamma may begin above 6100.00 while short gamma resides beneath 6075.00.

Zerohedge reports, “Us equity futures are slightly lower with yields flat and the dollar lower as traders appear exhausted at the end of a rollercoaster week full of headlines on trade tariffs and rumors on Ukraine peace efforts, as well as a slew of earnings and further proof inflation isn’t going away. As of 8:00am ET, S&P futures were down 0.2%, a modest retreat from Thursday’s near-record close; Nasdaq futures were also lower as Palo Alto Networks fell 6.1% in premarket while Airbnb jumped after beating expectations. Mag 7 are mostly flat to slightly lower, with the exception of TSLA’s +1.6% gain pre-market (GOOGL -0.2%, AMZN little changed, AAPL -0.2%, MSFT -0.2%, META -0.3%, NVDA -0.1% and TSLA +1.6%). Luxury stocks were a bright spot in Europe as Hermès rallied to a record after its holiday-season sales surged. Meanwhile, the China rally continues as a broader index of Chinese stocks trading in Hong Kong closed at a three-year high, as the nation’s growing AI capabilities bolster investor optimism over the market’s outlook. Yields are 1-2bp lower while the USD extends its losses on hopes that Trump’s tariff approach poses less of an upside risk to inflation. Commodities are mixed: energy and ags are higher, base metals are lower. The House Budget Committee advanced a budget resolution yesterday, a major first step towards Trump’s legislative agenda. Today, key macro focus will be the latest Retail Sales, which consensus expects to decline 0.2% MoM but the control group to rise by 0.3% MoM.”

VIX futures are consolidating beneath resistance at 16.29-16.49.  Once above resistance, we may see a steady rise in the VIX through the rest of February.  The Cycles Model suggests a veritable explosion of activity in the first week of March.

The February 19 options chain shows Max pain at 17.50.  Short gamma dominates between 15.00 and 17.00.  Long gamma starts at 20.00 and is gaining conviction up to 60.00.

TNX may be finalizing the retracement to the 50-day Moving Average at 45.01 this morning.  While trending strength may come back to TNX early next week, a reversal off the 50-day appears to be anticipated today.  Should it overshoot the 50-day, the trendline at 44.00 may give support for the reversal.  Yesterday’s 30-year bond auction was a disappointment as fewer buyers appeared.  Note that the dealers must buy any treasury securities that are left unsold.  As the size of the Treasury auctions increase, the dealers may be left “holding the bag” on more and more bills, notes and bonds.  This will drain even more liquidity from the equities market.

ZeroHedge reports, “A stellar 3Y auction, followed by a mediocre 10Y, we conclude the refunding week’s coupon offerings with an even more disappointing 30Y sale, which saw $25 billion in ultra long-dated paper sell to muted market response.

The auction stopped at a high yield of 4.748%, down from 4.913% last month, but tailing the 4.736% When Issued by 1.2bps, a reversal to last month’s 0.7bps stop through and the fifth tailing 30Y auction in the past 8 months.”

USD futures are in decline for the next month, according to the Cycles Model.  This may alter money flow from foreign sources as the currency differential may aggravate losses in equities.

As the USD declines, the Yen may rip higher, since it has crossed above mid-Cycle resistance at 65.57.  This is another liquidity chokepoint that may affect equities over the next month.

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.

 9:00 am

Good Morning!

SPX continues to consolidate between 6033.00 an 6070.00.  Dips are being bought, but sellers wait at the top.  ASfter all this sideways motion, it would appear that the buyers may throw in the towel soon.  Markets top out in exhaustion, where it takes more and more energy to accomplish less and less.  January 31 has become the all-time high for the Industrials at 45045.00.  SPX topped out on January 24.  The NDX has made its peak on December 16 at 22133.00.  The window for a possible new high is closing fast.

Today’s options chain shows Max Pain at 6050.00.  Long gamma may begin above 6065.00.  Short gamma lies beneath 6000.00.

ZeroHedge reports, “Futures are flat, Europe’s Stoxx 600 slipped from session highs and the euro gave up an earlier advance against the dollar sparked by hopes for a Ukraine war ceasefire, after President Donald Trump signaled he’s about to announce reciprocal tariffs on trading partners, just as we warned last night he would. As of 8:00am ET, S&P futures are down 0.1% while Nasdaq futures rise by a similar percentage even as Chinese technology stocks saw a dramatic intraday turnaround to finish lower. TSLA is up 2.2% pre-market with the rest of Mag 7 largely unchanged this morning; CSCO rose 6.8% on the back of a higher revenue forecast. Bond yields are 2-3bp lower, while the USD reversed an earlier loss. Commodities are mostly lower: WTI and aluminum are -1.5% and -0.9% lower, respectively. Today, the macro focus will be PPI and any updates on Trump’s reciprocal tariff plan which the president said in a social media post will be announced on Thursday. Futures contracts on the S&P 500 and Nasdaq 100 erased early gains, while”

VIX futures are consolidating at the lower end of its trading range (15.64-17.18)  The Cycles Model shows rising strength over the next week.

The February 19 options chain shows Max Pain at 17.50.  Short gamma starts beneath 17.00 while long gamma may begin above 19.00.

TNX has pulled back this morning and may test the 50-day Moving Average at 44.97.  The Cycles Model suggests that TNX may resume its rally by early next week.  The target for this probe higher may be the Cycle Top at 48.11.

The Lord’s Prayer

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

7:45 am

Good Morning!

SPX futures consolidated between 6053.00 and 6074.60, a very narrow range.  While retail investors have gone all-out to buy the dips and hedge funds have started to return to the market, they are being met with some large institutional sellers that are selling what retail is buying.  Institutions are reluctant to show their hand when they sell, but the episodes of dip-buying have provided ample cover.  This causes a “truncation” of the rallies where they simply run out of liquidity.  Sentiment is still running high.  However,  the market is approaching the point where retail may run out of cash and leverage, causing the SPX to fall beneath the 50-day Moving Average at 6000.00.

Today is a very busy day, as I am doing a major home renovation.  I may return later to provide additional commentary.

2:00pm

TNX ramped above Intermediate support/;resistance at 45.92 this afternoon after the Treasury Auction results in which the 10-year yield registered at 4.625%.  The Cycles Model implies yields may continue to rise over the next week in anticipation of $175 billion T-bill auction on the 18th.

ZeroHedge reports, “fter yesterday’s stellar 3Y auction, many were expecting today’s sale of benchmark 10Y paper to also be very solid too, especially after the massive post-CPI concession which sent the 10Y surging by over 10bps. It did not quite work out that way, and when the Treasury sold $39BN in 10Y paper at 1:00pm ET, the auction tailed by 0.9bps, the biggest tail since August, in a sale that left a lot to be desired.”

2:11 pm

The 10-year auction may have put a damper on the bounce off the SPX 50-day Moving average at 6005.90 today.  Keep an eye on the SPX as a lot of capital has been channeled into the SPX with poor results over the past several weeks.

2:20 pm

BKX made an extended Master Cycle high last Friday.  It has since dropped beneath the upper trendline near 137.00, causing a potential aggressive sell signal.  Banks are very sensitive to interest rates, as higher money market rates may “pull” deposits out of passbook savings.