The Practical Investor

8:30 am

The Lord’s Prayer

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

12:00 pm

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

Good Morning!

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

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

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

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

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

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

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

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

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

8:15 am

The Lord’s Prayer

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

3:30 pm

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

Good Morning!

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

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

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

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

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

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

ZeroHedge observes, “Look out above… for yields

The headlines look very strong.

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

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

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

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

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

7:45 am

The Lord’s Prayer

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

10:20 am

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

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

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

Good Morning!

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

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

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

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

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

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

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

8:30 am

The Lord’s Prayer

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

1:00 pm

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

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

Good Morning!

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

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

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

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

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

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

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

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

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

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

8:30 am

The Lord’s Prayer

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

10:24 am

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

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

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

Source: Bloomberg

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

Good Morning!

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

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

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

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

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

2:30 pm

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

1:00 pm

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

7:45 am

The Lord’s Prayer

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

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

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

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

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

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

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

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

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

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

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

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.