The Practical Investor

The Lord’s Prayer

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

8:00 am

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

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

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

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

The Lord’s Prayer

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

12:11 pm

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

11:15 am

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

11:05 am

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

8:15 am

Good Morning!

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

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

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

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

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

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

The Lord’s Prayer

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

1:15 pm

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

8:00 am

Good Morning!

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

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

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

2:00 pm

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

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

8:15 am

Good Morning!

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

1:50 pm

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

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

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

1:40 pm

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

7:30 am

Good Morning!

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

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

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

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

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

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

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

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

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

The Lord’s Prayer

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

11:10 am

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

7:00 am

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

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

8:50 am

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

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

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

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

9:12 am

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

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

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

9:15 am

The Lord’s Prayer

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

11:40 am

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

10:28 am

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

Good Morning!

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

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

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

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

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

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

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

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.