1:23 pm
SPX may be ready for a probe to the 50% retracement value at 6074.42, or possibly higher over the next few market hours. Most investors do not perceive the change of trend, as small as it is. However, a lot of damage can be made by a 4-week decline. It is observed that, “The bull market takes the escalator up, but a bear market takes the elevator down. ” Speaking of elevators, should SPX slip lower, all bets are off.
9:47 am
BKX has declined beneath its Cycle Top, giving it a confirmed sell signal. Be aware that there may be a rebound near the 50% retracement level at 136.20. The Cycles Model suggests the decline may continue through the 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 Morning!
SPX futures rose to 6060.70 in the overnight session, a 38.2% Fibonacci bounce off the decline. Should the bounce go higher, it may reach the 50% retracement value at 6074.00 or the 61.8% Fibonacci value at 6080.60. The Cycle Top lies at 6085.00 and may be the final resistance to the bounce. The mantra as the market went higher was, “Buy the dip.” At this time the psychology may be reversed to, “Sell the bounce.” Equities saw an inflow of 141.08 Billion in the month of November, the largest monthly inflows on record. The result is that momentum is at its most overbought level since 2007.
Today’s options chain shows Max Pain at 6065.00. Long gamma may begin at 6075.00 while short gamma lies beneath 6060.00.
ZeroHedge reports, “Futures inch higher, reversing earlier losses even as bond yields gain 3bps to rise to a one week high, and the USD is once again rising. As of 8:00am ET, S&P 500 and Nasdaq 100 inched up 0.1% and 0.2% respectively with Mag7 names mostly higher premarket, even as other large cap tech names are hit post-earnings after software giant Oracle slid as much as 8.8% after quarterly results underwhelmed. Nvidia looked set to extend losses following news that China is probing the AI chipmaker over alleged anti-monopoly violations. US-listed Chinese shares also slipped, ceding gains notched the previous day after Beijing pledged to loosen monetary policy. The commodity complex is weaker as energy items fail to hold yesterday’s gains. Today shapes up to be a quiet macro day ahead of CPI.”
Just as the SPX has a spike high, so the VIX has a spike low, leaving it well beneath the normal markers of a change of trend. The decline in volatility does not mirror the underlying risks in stocks. That is why the Cycles Model provides the Master Cycles, showing a potential change in trend at the peak or the low. At this time a short-term support/resistance at 14.62 may be used to take aggressive positions while most others may wait for the crossing of the 50-day Moving Average at 17.58. The less skilled may use a fixed number, such as 25.00 to denote a change in trend, leaving them well behind the curve.
Tomorrow’s options chain shows virtually no short gamma in the VIX. Long gamma may begin at 17.00 and is moderately populated to 28.00. However, the December 18 options chain shows Max Pain at 17.50 with short gamma residing from 13.00 to 17.00. Long gamma may begin at 18.00 and is well populated to 55.00. The August 5 spike high is coming back into view with options traders.
Bitcoin is challenging its short-term support at 97023.00. That offers a potential aggressive sell signal, allowing investors to lighten their long positions. The next support beneath is the Cycle Top at 93563.50. This strengthens the sell signal and may offer a level from which to short. The Cycles Model suggests a potentially choppy month of December, with two weeks of decline followed by a possible year-end bounce.
TNX has risen above the mid-Cycle support/resistance at 42.04, creating a buy signal. The Cycles Model indicates growing trending strength this week and possibly extending through early January. The Cycle Top at 47.50 is within reach of the next phase higher. Above that, the enxt possible resistance may be at 53.00.
The Shanghai Composite rose through the Cycle Top at 3435.40, but reversed to close beneath it on day 266 of the current Master Cycle. The reversal may have begun a new Cycle that may extend to the end of January. Should the neckline of the Head & Shoulders formation be crossed, during this time, the full decline may be imminent. .
FEZ, the EuroStoxx 50 ETF rose to the mid-Cycle resistance at 50.67 yesterday, then reversed down to its close at 50.17, beneath the 50-day Moving Average at 50.18. This action has potentially completed its Master Cycle on day 252 and created a sell signal. Should that be so, a decline may follow that potentially may extend to the end of January. Unfortunately, many investors look at the retracement as the beginning of the Christmas Rally. Sadly, that may not be so.
USD futures have risen to 106.46 this morning as the rebound may take it to the Cycle Top at 107.54. The Cycles Model suggests the current Cycle may extend to the year-end. Should the USD rise above the Cycle Top, it may proceed higher in what is called an extended correction.
The Yen is completing its brief correction to the mid-Cycle support at 65.83 before resuming its rally. This may only provide temporary relief for those utilizing the Yen carry trade for financing. What may follow has the potential of a very powerful Wave rising through mid-March. This is not one to be on the wrong side.
The Euro futures have declined to 105.18, still within yesterday’s trading range. However, the Cycles Model calls for yet another week of decline to new lows, should it decline beneath the Cycle Bottom at 104.96. Following that, there may be a potential bounce to the year-end.
