The Practical Investor

The Lord’s Prayer

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

2:19 pm

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

8:15 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

3:32pm

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

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

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

:00 am

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

8:00 am

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

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

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

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

The Lord’s Prayer

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

12:11 pm

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

11:15 am

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

11:05 am

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

8:15 am

Good Morning!

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

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

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

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

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

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

The Lord’s Prayer

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

1:15 pm

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

2:00 pm

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

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

8:15 am

Good Morning!

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

1:50 pm

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

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

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

1:40 pm

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

7:30 am

Good Morning!

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

11:10 am

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

7:00 am

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

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

8:50 am

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

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

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

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

9:12 am

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

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

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

9:15 am

The Lord’s Prayer

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

11:40 am

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

10:28 am

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

Good Morning!

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

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

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

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

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

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

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