The Practical Investor

1:25 pm

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

1:08 pm

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

7:30 am    The Lord’s Prayer

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

Good Christmas Morning!

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

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

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

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

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

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

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

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

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

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

3:00 pm

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

8:00 am     The Lord’s Prayer

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

Good Morning and Christmas blessings to all of you!!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

8:45 am   The Lord’s Prayer

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

Good Morning and Merry Christmas!

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

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

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

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

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

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

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

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

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

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

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

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

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

2:52 pm

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

8:00 am    The Lord’s Prayer

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

Good Morning and Merry Christmas!

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

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

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

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

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

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

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

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

9:37 am

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

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

10:58 am

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

7:45 am   The Lord’s Prayer

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

Good Morning!

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

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

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

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

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

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

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

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

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

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

3:11 pm

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

11:10 am

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

10:08 am

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

7:30 am     The Lord’s Prayer

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

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3:05 pm

SPX has just crossed the lower trendline of the 4-month Ending Diagonal at 5970.00.  This is a confirmed sell/sell short signal.  SPX is now treading at November levels.  This is serious.

2:08 pm

SPX is now making a new low beneath short-term support.  This creates an aggressive sell signal.  Confirmation lies beneath Intermediate support at 5984.57.  Take appropriate action.

8:00am    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 this morning to 6067.60 thus far.  Resistance lies near 6085.00 while support lies near 6030.00.  Institutions (the Fed?) often buy futures in the premarket to attract retail buyers who fear missing out.  Their positions are often taken off by the end of the day, leaving retail investors for better or worse.  The all-time high in the DJIA and SPX remains at December 6.  There are approximately two weeks left in the current Master Cycle which may go either way.  Let’s turn to today’s Fed decision.  .According to the market, there’s a 95% chance. That will bring the fed funds target range down to 4.50%-4.25%, the Fed Funds rate to 4.33%, and GC between 4.40% and 4.35%.  If so, it may be the last cut.  However, we may see rate increases as early as January, due to Yellen’s overemphasis on auctioning off T-bills rather than notes and bonds to artificially keep rates low.

Today’s options chain shows Max Pain at 6070.00.  Long gamma becomes strong at 6100.00 while short gamma may begin at 6030.00.

ZeroHedge reports, “US equity futures and global stocks rebounded on Wednesday as investors awaited the Fed’s final policy decision of the year, where the US central bank is widely expected to cut 25bps. As of 8:00am, futures for the S&P 500 advanced 0.3%, on pace for their 58th record high of the year, while Nasdaq 100 futs rose 0.2% after both indexes fell on Tuesday. We are seeing some momentum reversions early with TSLA (-2.5% pre mkt after closing at a new ATH yday) and NVDA (+2.7%) the standouts on light news. The Stoxx 600 was set for its first day of gains in five sessions, while Asian equities also gained, snapping a three-day losing streak (FTSE +20bps, CAC +40bps, DAX +40bps, Nikkei -72bps, Hang Seng +83bps, Shanghai +62bps). US treasuries dropped, the yield on the 10Y TSY rising 2bps to 4.41% as the dollar index also gained, as did oil, with WTI rising 0.6% to $70.51. Elsewhere, Bitcoin slid 1.55% to $104,740 as global equities chop around ahead of FOMC this afternoon (consensus expects 25bps cut and messaging of slowing pace of cuts going forward, full preview here). If that wasn’t enough, tomorrow we also get BoE/BoJ. On today’s macro calendar we get housing start and building permits, but the highlights is the 2pm FOMC decision and 2:30pm Powell press conference.

SPX breadth peaked on the 29th of November and has been heading down since then, despite the expectation of a .25% rate cut.  There is a lot of selling under that rosy exterior.

VIX futures have eased back, from yesterday’s high at mid-Cycle resistance at16.05, to 15.27 this morning.  The pullback may be short-lived, as trending strength is due to arrive by the end of the week.

While today’s options chain is closed to new investors, there is a huge open interest at the 60 call strike today.  A large buyer may have sneaked under the wire to place that order in the pre-market.

TNX is consolidating after yesterday’s run-up.  There is a possibility of retesting Intermediate support at 43.21.  Otherwise the trend continues higher.   There is no indication of a rate cut ing the Cycles Model.  However, we cannot rule it out.

10:00

BKX, our liquidity proxy, may have slipped beneath the trendline at 131.00 this morning.  If so, the decline may resume, with an occasional bounce, through the end of the year.  Even more bearish would be a bounce to the year-end, since the next Master Cycle may contain a further decline.

7:30 am    The Lord’s Prayer

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

Good Morning!

The US 30 Cash futures (DJIA) declined this morning beneath the upper trendline of its year-long Ending Diagonal formation at 43700.00.  It formed a double top above its trendline (throw-over) and made its final peak on December 6.  You may ask, “Wait a doggone minute!  Where is the rally?”  Your eyes are not fooling you.  The DJIA has been in decline since December 6 and has made a morning low at 43545.00, approaching its 50-day Moving Average at 43375.00.  Yesterday its sell signal has been confirmed at Intermediate support at 43783.66.  It is at an important pivot point.  Either the DJIA joins it Tech brethren in a rally to the end of the year, or it resumes its decline to the end of the year. Choose wisely.

SPX futures declined to 6054.20 thus far this morning.  It remains on an aggressive sell signal this morning.  Further confirmation lies at its short-term support at 6038.56.  The SPX is caught between the Blue Chips and Tech in a no-man’s land of non-performance, neither up nor down.  The markets have reached a Cyclical pivot point.  In the next two days a directional decision may be made.  The Cycles Model infers that, whichever way it turns, it will be with strength.  The current Master Cycle has a possible three weeks in which to run that decision.

Today’s options chain shows Max Pain at 6070.00.  Long gamma kicks in above 6100.00.  Short gamma may begin at 6050.00 and strengthens beneath 6030.00.

ZeroHedge reports, “There is only so much the US can “exceptionally” decouple from the rest of the world, and on Tuesday US futures finally succumbed to the persistent selling in markets around the world, as traders awaited the Federal Reserve’s final interest-rate decision for 2024 and its monetary policy forecasts. As of 8:00am, S&P futures dropped 0.3%, while Nasdaq 100 futs eased back 0.2% after the relentless rally in tech stocks pushed the gauge to a fresh all-time high on Monday as AAPL/GOOGL/AMZN/TSLA/AVGO all reached new ATHs. TSLA (+3% pre-mkt) on an u/g away while NVDA (-1.5% pre mkt) continues to be under pressure. Europe’s Stoxx 600 fell 0.4% as weaker crude prices weighed on oil-related stocks (FTSE -70bps/DAX +15bps/CAC +30bps). A key Asian gauge dropped 0.5% after erasing gains as concerns over China’s economy persist (Shanghai -73bps/Hang Seng -48bps/Nikkei -24bps). US rates rose with 10Y TSY yields rising +4bps @ 4.43%. The Bloomberg Dollar Spot Index adds 0.1%. The Aussie dollar is the weakest of the G-10 currencies, losing 0.5%. The yen outperforms with a 0.2% gain. Crude oil extended its drop as WTI dropped 0.8% to $70.15. Meanwhile, Bitcoin adds another +90bps to $107,040 as global equities chop around ahead of a slew of central bank rate decisions the next few days (FOMC tomorrow). There is a busy macro calendar today with retail sales, industrial/mfg production, business inventories and the NAHB housing index all on deck.”

NDX futures declined to 22009.60 thus far this morning.  It is out on a limb (Cycle Inversion) with the nearest support being the Cycle Top at 21667.34.  It is also losing internal strength as the Magnificent Seven (70%of all trading volume) may have whittled down to the Magnificent Two.  NVDA, the bellwether of these leaders, has declined beneath its 50-day Moving Average and is on a confirmed sell signal.  I am stating facts, not giving investment advice.  NDX is at a pivot point from which it may finish off the year.  This is not a good place to hitch your retirement plan.

Today’s options chain shows Max Pain at 22060.00.  Long gamma resides above 22080.00 while short gamma appears to be scarce.  This one-sided optionality may be courting disaster.

IBD reports, “Dubbed the Magnificent Seven stocks, Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta Platforms and Tesla lived up to their name in 2023 with big gains. And all of them boasted solid year-to-date gains in the final month of 2024.

Due to their outsized market capitalizations, Magnificent Seven stocks hold a disproportionate influence on the market-cap weighted Nasdaq composite and S&P 500 indexes.”

VIX futures have risen to a morning high at 15.22.  It is on a confirmed buy signal above its 50-day Moving Average at 14.07.  The Cycles Model may be confirming an upside panic in the VIX developing this week.  Should it occur, the panic Cycle may last until early January.

The December 18 options chain shows Max Pain at 17.50.  Short gamma resides between 13.00 and 17.00.  Long gamma begins at 18.00 and shows strong support to 60.00.  Do those out-of-the-money longs know something we don’t?

TNX rose to a morning high at 44.34 before pulling back in a brief consolidation. The Cycles Model calls for a surge of trending strength beginning today and lasting through the year-end.  Don’t underestimate this rally, as it may break through the Cycle Top resistance at 47.55.  T-bill issuance is likely to fall with the new administration.  With it, liquidity provided by T-bills being recycled in RRP, providing further liquidity for the markets, is likely to dry up.

The Shanghai Composite has decline today to 3357.77, closing beneath Intermediate support at 3363.90.  The sell signal is confirmed.  The Cycles Model suggests the decline may strengthen by the week-end, creating a possible panic decline.   This decline appears to be in place through the end of January.

FEZ (ETF for EuroStoxx 50) has had a brief spurt of strength before reversing back down today.  This may be misleading, as analysts are calling the recent bounce a “tailwind” and peak bearishness is behind us.  Unfortunately, not.  The Cycles Model shows the decline resuming through the end of January.

Gold futures fell through its 50-day Moving Average on Friday.  Yesterday it retested its 50-day at 2683.73, closing beneath it.  Today it has decline further to 2646.19 thus far.  The Cycles Model calls for a continued decline until the year-end.  A potential panic may develop by the weekend.  Analysts have moved the red line from the 50-day to the hundred day Moving Average at 2610.00.  You can see that major support has already been broken.  The Cycles Model infers a much deeper decline.

Crude oil futures have declined beneath the 50-day Moving Average at 70.35 yesterday and today it has plummeted beneath Intermediate support at 69.31.  The Head & Shoulders neckline lies at 68.55.  The Cycles Model suggests the decline may continue beyond Christmas, leaving crude oil at new lows.

USD continues its rally, reaching a new high at 107.08.  Today, the USD is primed for a double shot of strength as it continues to rally into the year-end.

10:40 am

BKX is testing its upper trendline at 131.00 for support.  Should it hold, the banking index may bounce to its Cycle Top at 135.05 by year-end.  However, a break of the trendline may bring BKX considerably lower by  year-end.

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 6066.10 this morning, bouncing off Short-term support at 6029.00.  SPX has gone sideways since it made its all-time high on December 6.  While corporate analysts project a new all-time earnings record for 2025, their estimates may be as much as 30% off their actual mark.  Current indications are the economy is slowing, raising the risk of an earnings slowdown that may leave investors high and dry.  The Cycles Model is not based on corporate earnings, but on human behavior.  A note of caution is in the air.  telling us that, after 4.3 months of nonstop growth, the chance of error is rising.  What can possibly go wrong?  This week may bring clarity  as the Cycles Model calls for a decline.

Today’s options chain shows Max Pain at 6050.00.  Long gamma may begin above 6075.00 while short gamma lurks beneath 6040.00.

ZeroHedge reports, “The last full week of 2024 started off with a burst of US exceptionalism which helped US equity futures shrug off downbeat performances in other global markets as traders prepared for a slate of interest-rate decisions by major central banks due later this week. S&P and Nasdaq futures both traded at record high, as did Bitcoin which hit a fresh all-time high of $106,000. As of 8:00am ET, S&P futures were 0.3% higher and Nasdaq futures gained 0.5% as the panic chase of momentum, which pushed the index at an all-time high on Friday, continued. MicroStrategy advanced more than 6% in premarket trading, fueled by its pending inclusion in the index following the software maker’s transformation into a leveraged bet on Bitcoin. Monday’s US stock performance stands in stark contrast with broad losses in Asia and Europe as weaker-than-expected retail data in China weighed on sentiment. A contraction in the euro-area’s private sector also dragged on European equities. Treasuries climb, pushing US 10-year yields down 2 bps to 4.38%. The Bloomberg Dollar Spot Index falls 0.1%. Oil dipped with WTI falling 0.9% to $70.60 a barrel. Today’s key macro events are the Empire Fed Manfuacturing index and S&P Global PMI prints for the US.”

VIX futures have risen to a weekend high at 14.40, above the 50-day Moving Average at 14.23.  This gives the VIX buy signal.  The Cycles Model called the Master Cycle low on December 6.  Since then its has risen to the 50-day, but not exceeded it until this morning.  While VIX has been consolidating until now near its floor, the VIX Volatility (VVIX) has been steadily rising, suggesting internal turmoil.  At the same time, speculators have been running big shorts on the VIX.  They are chasing nickels on the downside while the real dollars may be on the upside.

Wednesday’s options chain shows Max Pain at 17.50.  Short gamma is heavily lodged between 13.00 to 17.00.  Long gamma may begin above 118 and is attracting large positions up to 60.00.

NDX futures have reached a marginal new high (above Friday’s high at 21886.74), reaching 21896.60 this morning.  NDX has been finding support at its Cycle Top at 221607.98 thus far.  This raises the possibility of the NDX continuing its panic momentum until the end of the year.  However, note that only 5 companies have been pulling the weight of the NDX.

RealInvestmentAdvice observes, “Understanding the trajectory of corporate earnings is crucial for investors, as these earnings significantly influence stock valuations and market performance. Economic indicators such as Gross Domestic Product (GDP), the Institute for Supply Management (ISM) Manufacturing Index, and the Chicago Fed National Activity Index (CFNAI) provide valuable insights into the economic environment that shapes company profitability. These indicators can also help investors evaluate whether Wall Street’s earnings estimates are realistic.”

Bitcoin has exceeded its December 6 all-time high this morning.  It is now sporting a double top that may extend over the next week.  Since Bitcoin is an international speculator’s haven, it may be indicative to money exiting other countries as well as a touch of speculative fever domestically.  Please note the charts below.  Speculative fever may take Bitcoin to 110000.00 to 112000.00.

12:30 pm

ZeroHedge remarks, “Bitcoin’s price rallied almost 5% over the weekend to set a new all-time high above $106,000 amid speculation that it may become a United States reserve asset.

CK Zheng, chief investment officer of ZK Square, told Cointelegraph that Bitcoin has likely entered “Santa Claus mode,” as many investors fear missing out and look to allocate more capital into the asset class.”

2:20 pm

ZeroHedge explains, “Last October, when we pointed out that China’s FX outflows had just hit a whopping $75BN – the single biggest monthly outflow since the 2015 currency devaluation – we concluded that the “unfavorable interest rate spread between China and the US will “likely imply persistent depreciation and outflow pressures in coming months”, or in other words, September’s biggest FX outflow in years is just the beginning, and very soon – in addition to geopolitics and central banks – the world will also be freaking out about the capital flight out of China… not to mention where all those billions in Chinese savings are going and which digital currency the Chinese are using to launder said outflows.”

The Shanghai Composite has fallen beneath its Cycle Top at 3468.22 on Friday.  Today is slipped a bit lower as it is on a Cyclical sell signal.  The 50-day Moving Average at 3335.12 is a universally recognized support level, implying a sell signal beneath it.  Should SSEC fall beneath that level, we may see liquidity moving from China to Bitcoin as a safe haven.

FEZ (ETF of the EuroStoxx 50) decline to 49.59 thus far today, beneath its 50-day Moving Average at 49.92 today.  This implies a sell signal may have been recognized by European investors.  Europe has no tech sector, so the NDX may be logical choice for European investors.  Bitcoin may also be considered a haven.

ZeroHedge reports, “Europe is disintegrating as legacy political regimes are collapsing over across the world.

Just one week after Marine Le Pen precipitated the collapse of the French government, on Monday, Chancellor Olaf Scholz lost a confidence vote in the German Parliament on Monday, a defeat that effectively ended the increasingly unpopular government he has led since 2021 and ushered in elections early next year.

German lawmakers voted to dissolve the existing government by a vote of 394 to 207, with 116 abstaining.”

TNX is consolidating beneath Friday’s high at 44.03, having decline to 43.61 this morning.    It may pull back to Intermediate support at 43.13.  However, the Cycle Model suggests a burst of trending strength awaits TNX as early as tomorrow.  The current Master Cycle continues its upward surge through early January.  The next target may be the Cycle Top at 47.53.

1:00 pm

SPX has fallen through short-term support at 6040.00.  The next support lies at 5957.21.  The Cycles Model does not anticipate a significant bounce until Fed day (Wednesday).

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!

SPX futures have bounced this morning to a high at 6074.20 thus far.  The Cycles Model suggests the bounce may be over this morning.  If so, the stage may be set for a week-long decline.  Recall that the all-time high was made a week ago.  After Tuesday’s decline, the SPX has done little more than go sideways.  Thursday’s day of strength was to the downside, which suggests a possible change in trend.  If the Model is correct, the bounce may not make a new high.  On the other hand, equity forecasters are positive of new highs.

This morning’s options chain shows Max Pain at 6065.00.  Long gamma may begin at 6075.00 while short gamma may start beneath 6030.00.  You can see that the SPX moves have been guided between the gamma clusters.

ZeroHedge reports, “US equity futures pointed to a strong end to the week, as a premarket surge in Broadcom powered gains across the entire chip and tech complex, even as European bourses dipped and Asian markets took it on the chin after the latest Chinese stimulus disappointment. As of 8:00am S&P500 futs gained 0.4%, and Nasdaq 100 futures rose 0.7%, with shares in Broadcom surging 15% after it predicted a 65% increase in sales of AI chips in the fiscal first qtr; if gains holds, the stock will hit a record high, inching closer to a $1 trillion market cap. Peers Marvell, Micron, Nvidia and Advanced Micro Devices also rose. US 10Y yields gained 3bps rising to 4.35%, highest since Nov. 25; the dollar reversed earlier gains with the euro bouncing after Macron named centrist Bayou as the new French PM. Crude oil futures rose to a weekly high. On tap today we have US Import/Export prices (8:30am ET), Eurozone + UK Industrial production, Japan Industrial production”

NDX futures made a new all-time high at 21820.70 this morning.  Despite the appearances of healthy momentum, the new high was made by a very limited number of stocks.  Broadcom’s surge was accompanied by Marvell, Micron, Nvidia and Advanced Micro Devices.  What started this summer as the Marvelous Seven is now only five stocks.  Those owning these stocks participated in the rally.  Others did not.  NDX is in s throw-over formation which  is due for a reversal.

VIX futures have pulled back to 13.37 this morning, thereby completing its correction of the first probe from the low.  The Cycles Model suggests the launch of the next phase higher in strength today.  The 50-day Moving Average is at 14.36.  Will the VIX move above the 50-day?  Watch closely, as that will indicate a new buy signal.

The December 18 options chain shows Max Pain at 17.00.  Short gamma resides between 13.00 and 16.00.  Long gamma begins at 18.00 and is well populated to 55.00.  There is a growing concern about the equities valuations among options investors.

Bitcoin is consolidating beneath yesterday’s secondary high.  The Cycles Model suggests more than a week of decline before a bounce.  A lot of damage can be done in that short period.  While the Cycles Model has given an aggressive sell signal thus far, serious downside risk appears beneath the Cycle Top and Intermediate support at 95513.48.

TNX futures have risen to 43.55 overnight, while the cash market has risen to 43.46 thus far.  Yesterday’s day of strength broke TNX above its Intermediate support/resistance at 43.08.  The path is clearly higher with a month to go in the current Master Cycle.

Yesterday ZeroHedge observes, “After a solid 3Y auction on Tuesday and a stellar 10Y yesterday, moments ago the Treasury concluded the week’s coupon issuance with a decidedly soggy 30Y auction, one which pushed yields to session highs.”

Gold has slipped beneath the trendline at 2700.00 and the 50-0day Moving Average at 2684.00 to create a sell signal.  The Cycles Model offers a two-week decline for gold that may challenge the mid-Cycle support at 2491.38.