The Practical Investor

The Lord’s Prayer

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

2:54 pm

Bitcoin fractals reveal that it may decline to 64000.00 before it is finished.  It may go as low as 60700.00, but the bounce from the low may be quick.  Time for bitcoin lovers to load up the truck.

11:17 am

SPX declined this morning, slicing through the 52-day Moving Average at 6894.69 and the nearby Ending Diagonal trendline.  Support may be found for a bounce at 6832.18 or the neckline of the Head & Shoulders formation at 6775.00.  40 S&P companies have made 3-sigma declines today,, revealing market fragility.

10:50 am

BKX may be testing Intermediate support at 169.04 this morning after declining beneath Cycle Top support at 175.18.  Beneath Intermediate support the sell signal strengthens, while the 52-day Moving Average at 166.41 offers another confirmation.  This is a fast moving decline with a possible panic day by mid-week.

8:30 am

Good Morning!

SPX futures declined to 6912.90 after the close yesterday, then recovered near the close this morning.  Holding steady at this level is not a long-term option, since Intermediate support is at 6922.00 and rising while the 52-day Moving Average and Ending Diagonal trendline lie at 6892.00 and also rising.  Support is becoming thinner, while the flat close belies the turmoil underneath the surface.  The next breakdown may be the last time we see these levels.  The  Cycles Model suggests a 6-week decline ahead.  Volatility and velocity may increase over the weekend.

Today’s option chain shows Max Pain at 6965.00.  Long gamma strengthens at 6975.00 while short gamma clusters at 6940.00, then 6900.00.  Short gamma may be waiting for a stumble.

ZeroHedge reports, “Futures are higher but there continues to be tangible angst below the surface as traders are aggressively shorting potential AI losers, while US stocks continue to fall behind the rest of the world.”

The premarket VIX is holding steady above the mid-Cycle support at 17.20.  The Cycles Model suggests a rising VIX with a possible breakout by early next week.  The Cycles Model shows the next 6 weeks to be complex, with the first possible peak at the end of February.

The February 18 (monthly) options chain shows Max Pain at 19.00.  Short gamma is strongly clustered between 15.00 and 18.50 as VIX launches into positive seasonality.  Long gamma begins at 20.00 and runs strongly to 70.00, with an outlier call wall (129,000 contracts) at 100.00.

TNX may have completed its correction at 41.25 yesterday.  It may test the 52-day Moving Avergae at 41.76.  Above it the buy signal is reiterated.  The inverted Head & Shoulders formation has been revised, with a higher target than first projected.  This new target actually matches the Cycles Model projection.

ZeroHedge reports, “After yesterday’s mediocre 3Y auction (which saw a drop in foreign demand offset by record direct bid), moments ago the Treasury concluded the sale of 10Y benchmark paper, and despite a cheerful preview by the Bloomberg MLIV team (which appears to be wrong every time it tries to handicap the outcome), today’s auction was absolutely dreadful.”

USD may finish its correction beneath the Cycle Bottom at 96.65 with a probe lower in the next couple of days.  The Cycles Model suggests a mighty surge out of the low beginning over the weekend with the knock-on rally extending to mid-March.  Dollar shorts may be squeezed, providing more fuel for the rally.

The Japanese Yen is consolidating this morning after testing its February 5 high at 65.75.  A breakout may be imminent.  The Cycles Model shows a massive chaotic move over the weekend that may either cut this rally short, or segue into a massive move higher.   The Bank of Japan raised its key interest rate to .75% in January.  Recent developments suggest another rate hike is possible.  Such a move may destroy the Yen carry trade, as those firms that borrow from the Bank of Japan are shorting the Yen.  A short squeeze may be imminent, forcing the bailout of several major American hedge funds and banks.

Reuters reports, “The Bank of Japan must raise interest rates in a timely fashion to prevent underlying inflation from surpassing its 2% target, central bank board member Kazuyuki Masu said on Friday, keeping alive the chance of a near-term rate hike.”

Bitcoin found support at 65725.00.but still has a way to decline.  Today is a double trending strength day, suggesting a possible bottom test over the next two days.

Gold is testing the trendline near 5100.00.  There appears to be little to no strength in this rally.  Should it not exceed the trendline, the next move may be a decline to a lower level.  The Cycles Model suggests a possible downside target near the mid-Cycle support at 3884.08, a reversion to the Cyclical mean.  The long-term trend is still “higher,” but with some pain ahead of the next push to higher levels.

Silver futures dipped to 81.28 this morning, indicating the rebound may be running out of fuel.  Should it catch support at the 52-day Moving Average at 77.42, it may bounce higher.  It may be on a different Cycle than gold.  The Cycles Model proposes a possible sideways consolidation that may last another month.

Crude oil has dipped below 63.50 this morning, with a possible decline to its Head & Shoulders neckline near 55.50.  The Cycles Model suggests a sharp decline that may trigger the Head & Shoulders formation.

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

11:55 am

The BKX has fallen beneath its Cycle Top support at 175.00.  This may be an aggressive sell signal for those who are informed.  Additional support may be found at 169.00 and again at 166.12.  A decline beneath these supports may strengthen the sell signal.  An aggressive sell signal suggests a reduction of long exposure to the banking sector.

8:10 am

Good Morning!

SPX futures have been consolidating between 6934.00 and and 6967.00 this morning.  While not immediately threatening, pressure may be building for a downside break by the weekend.  Best to prepare before it happens, as it may be a strong decline.  Mutual fund cash is at its lowest, while many investors are leveraged long.  This may not be a dip that will be bought.  Expect a negative employment surprise as the BLM revises its Birth-Death Model.  

Today’s options chain shows Max Pain at 6960.00.  Long gamma may emerge above 6975.00 while short gamma resides beneath 6910.00.

ZeroHedge reports, “US equity futures are flat ahead of today’s delayed January payrolls (full preview here) with the market now expecting a weaker print after the Retail Sales miss and weaker high-frequency data.”

The premarket VIX has risen to 18.35 thuse far this morning, advancing from yesterday’s low at the mid-Cycle support at 17.18.  The Cycles Model suggests a possible breakout above resistance by early next week, if not sooner.

Next Wednesday’s (February 18) monthly options chain shows monster short gamma between 15.00 and 18.50.  Long gamma is strongest between 20.00 and 50.00 with outlier positions to 100.00.

TNX rallied off its morning low at 41.25 , rising to the neckline of the Head & Shoulders formation at 42.05.  It has risen above the 52-day Moving Average at 41.73 and is challenging the Intermediate resistance at 41.98.  Above these levels is a buy signal.

ZeroHedge remarks, “Eight weeks. $90 billion in Treasury bill purchases. And that’s just the appetizer. There’s $9 trillion in rollovers coming due at today’s rates, plus another $2 trillion in new issuance. That’s $11 trillion the US needs to find buyers for while China dumps Treasuries and Japanese capital flows home.”

USD may have completed its mid-Cycle low, ready for a probe higher.  An attempt at overhead resistance starting at 98.03 may be in the works.  This may lead to a consolidation before breaking out above resistance.  The Cycles Model suggests a breakout may be possible early next week.

Bitcoin continues its descent as it corrects the bounce from its February 6 low.  The decline may gain some momentum as the bears “sell the rally.”  The Cycles Model suggests the bottom may be in, but this may be a retest.

Silver may have completed its test of Intermediate resistance at 85.56 and may decline to test the low.  Silver may remain in a corrective state until it breaks out above the Cycle Top resistance at 88.85.  The Cycles Model indicates that the correction may last another week before clarity returns.

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 are consolidating in a tight range (6952.00-6978.00) beneath yesterday’s high.  While it is close to the ATH, 7002.28 made on January 28, it may not be capable of going higher.  The leading stock index, the Industrials are already declining from their high at 50214.00.  The Master Cycle was “on time” for the January 28 high and ran into overtime for the DJIA.  The NDX all-time-high occurred on October 29 at 26182.00.  It’s high on January 28 was a “near miss” at 26165.00.  It may be counted as a “truncated high.”  The reason?  Capex expansion may make the Mag 7 companies turn cash flow negative.  The stock buybacks that inflated stock prices may be a thing of the past.  An aggressive sell signal awaits the SPX beneath 6917.00 while a confirmed sell is located beneath the 52-day Moving Average at 6884.00.

Today’s options chain shows Max Pain at 6955.00.  Long gamma strengthens above 6980.00 while short gamma is concentrated beneath 6920.00.  While the markets may appear stable, underneath it all the 0DTE speculators may aggravate declines that are gamma enhanced.

ZeroHedge reports, “US equity futures are lower, reversing earlier gains and trading near session lows in a narrow, jitter overnight session as traders prepare for a heavy slate of earnings and readings of consumer sales and small-business due later.”

The premarket VIX is consolidating between 17.20 and 17.85 this morning.  It has bounced off the low at 16.90 and may be rising to challenge the Cycle Top and trendline near 21.51.  The Cycles Model suggests volatility may ramp up momentum in the next week.

The February 11 options chain shows short gamma is strongest at 16.00-17.00.  Long gamma is growing between 18.00 and 25.00.

TNX may be making its Master Cycle low as I write, at 41.54.  It may be near its Cycle low, if not already there.  Once accomplished, it may rise very quickly above the Head & Shoulders neckline, triggering a tsunami in yields.  Pressure on yields may come, not from the Treasury, but from corporate bond deals estimated near $740 billion in 2026 alone.

USD futures are consolidating at the Cycle Bottom at 96.69 this morning.  There may be support near 96.50.  Otherwise, it may decline toward the trendline near 95.50.

Bitcoin is looking for support in uncharted territory.  The 50% retracement level is at 66130.00.  The 61.8% Fib retracement lies at 64725.00.  These levels may be tested before the retracement is over.  Under duress, bitcoin may decline to 62000.00.  Volatility may rise later this week and it is uncertain which direction it may take.

Silver tested its Intermediate resistance at 85.10 yesterday, then declined to 80.24 this morning.  the 52-day Moving Average support lies at 76.19.  Should this wide-ranging consolidation decline beneath the 52-day, it may seek support at the trendline at 60.00.  Trending support lies at  the mid-Cycle line at 51.16.

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

1:10 pm

SPX rebounded as anticipated and is due for a reversal in the next hour or so.  An aggressive sell signal may be had beneath 6818.91 while confirmation is beneath the 52-day Moving Average at 6886.86.

RealInvestmentAdvice considers, “For nearly two years, markets were driven by the same speculative narrative that “this time is different.” Bitcoin, precious metals, and AI-linked equities rose not only because of robust fundamentals, but also because investors clung to powerful narratives about inflation, disruption, and monetary collapse. Those speculative narratives are not only seductive but also contribute to investment behaviors that obscure reality.”

8:00 am

Good Morning!

SPX futures declined to 6901.00 where it found round number support and is capable of a final probe higher to 6970.00-6980.00.  This may be completed during the morning hours.  The strong retracement is due to the influence of the DJIA making new all-time high on Friday.  The Industrials sparked a short squeeze that may be due to run out this morning.  The NDX, on the other hand, left its all-time high on October 29 with a near miss on January 28, where the SPX made its all-time high.  This dispersion has caused chaos in the markets, which may resolve in the next couple of days.  However, 0DTE options can change the direction of the market on a dime.

Today’s options chain shows Max Pain at 6910.00.  Long gamma may begin above 6925.00 while sort gamma strengthens beneath 6890.00.

ZeroHedge reports, “S&P futures are unchanged, erasing all overnight losses, extending last week’s choppy price action focused on AI repercussions; Nasdaq 100 futures underperform slightly ahead of an important week that has both the January jobs and CPI report on deck…”

The premarket VIX rose to 19.20 over the weekend before easing back somewhat.  It remains positive this morning, suggesting unease with the markets.  The Cycles Model suggests the VIX may run hot, above the Cycle Top at 24.53, for the rest of the month.

Wednesday’s options chain shows short gamma residing beneath 17.00 while long gamma is strengthening above 18.00.

TNX is rising from its Head & Shoulders neckline this morning as it resumes its uptrend.  It may be due to reach the Cycle Top resistance at 45.07 in the next two weeks.  The long-term target may be considerably higher.

ZeroHedge observes, “Treasury yields hit session highs shortly after midnight ET, when Bloomberg reported that Chinese regulators had advised financial institutions to rein in their holdings of US Treasuries, citing concerns over concentration risks and market volatility.

Citing anonymous “people familiar with the matter” Bloonberg added that officials urged banks to limit purchases of US government bonds and instructed those with high exposure to pare down their positions. The directive doesn’t apply to China’s state holdings of US Treasuries.”

USD is now in correction to its Cycle Bottom at 96.72.  It may linger between the Cycle Bottom and the cluster of overhead resistance for the next week, building enough strength over the week to break out above 98.43 by this weekend or shortly thereafter.

Bitcoin fell back from its reaction high at 71546.00 over the weekend and may be likely to retest the low at 60069.72 before going higher.  While long term investors may start to accumulate shares, it may be too chaotic to be tradable in the short run.

Silver rose to 82.77 over the weekend and may be testing Intermediate resistance at 84.62 or its Cycle Top resistance at 87.95.  The correction may not be over, leaving the possibility of testing trendline support at 60.00 before it is over.   The mid-Cycle support is at 50.89.  The Cycles Model offers little drama in the next two months, suggesting a possible sideways Triangle formation, which consumes time.  The long-term rise is not over, but the short term is not clear, yet.

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

8:20 am

Good Morning!

SPX futures declined to 6730.00 this morning, approximating the proposed decline at yesterday’s close. This morning’s bounce rose to 6848.10, which may allow the SPX to resume its decline to the futures low momentarily, triggering the Head & Shoulders formation. A decline beneath 6780.00 favors this view.  An alternate view is that, should the bounce go above 6860.00, it may be underway to the 52-day Moving Average and trendline currently near 6877.96, a nearly 50% retracement over the next two days.  In this situation, it may go even higher.  The current fractal allows either of these two possibilities.  Traders say a rebound is possible.  Resolution may be revealed shortly.

This morning’s options chain shows Max Pain at a highly contested 6850.00.  Long gamma may gain a foothold above 6875.00, while short gamma lies waiting beneath 6835.00.  On balance, the options market favors a further decline.

ZeroHedge reports, “US equity futures are poised to open higher with Software companies finally bouncing (as previewed here), even though Amazon continues to be deep in the red after its eye-watering capex outlook. US stocks will cap a bruising week in which a rush to unwind crowded trades – from AI shares to precious metals and crypto – triggered margin calls and amplified the market’s slide.”

The premarket VIX tested the Cycle Top at 21.53, then declined to 19.98 thus far this morning.  The rising fractal appears incomplete and may go higher today.  A probe aobve the trendline at 22.00 may allow this to happen. The alternate view may be a correction to mid-Cycle support at 17.11.

The February 11 options chain shows short gamma having the upper hand between 14.00 nad 17.00.  Long gamma has  an even stronger presence above 18, stretching to 40.00.  Hedging has begun.

TNX rose from Intermediate support at 41.98.  The correction may be over, or nearly so.  The Cycles Model suggests the buy signal remains, with strength returning to the uptrend by mid-week.  A rise aobve mid-Cycle resistance at 42.22 confirms the buy signal.

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

1:25 pm

SPX has left clues about its intended decline.  It appears that, once beneath 6800, it may fall to the next support near 6700.00, shown in the chart, where a bounce may ensue.   Should the bounce fail there, the next level of support appears near 6500.00.  There are billions of dollars in levered ETFs feeling the pain and commercials have hit their sell level, leaving a possible air pocket beneath 6800.00.

7:45 am

Good Morning!

SPX futures consolidated above the trendline overnight, testing Intermediate resistance at 6810.00. It has since declined back beneath the trendline and 52-day Moving Average at 6866.60, making new lows.  Semiconductors have joined software companies in leading the momentum sell-off.   Stock buybacks are at a low point and may go lower, considering that the electrical grid is already at capacity.  That means cheap energy is no longer available and data centers may have to build their own power supply.  Increasing capex may take precedence over future stock buybacks, since financing costs may be rising.  The choppiness in price movement, especially beneath 6800.00, may give way to a steady decline to mid-Cycle support at 6527.70, per the Cycles Model.

Today’s options chain shows Max Pain at 6920.00.  Long gamma may be found above 6945.00, whils short gamma resides beneath 6900.00.  Sentiment still leans toward long gamma, but that may change with more downside action.

The premarket VIX has risen to 21.18 thus far this morning, just beneath the Cycle Top at 21.46 and upper Triangle trendline near 22.00.  A breakout may trigger the hedging response by many, while short gamma may be taken behind the woodshed.    The Cycles Model infers that today may be a very strong trend maker for the VIX.  Let’s see if it breaks out.

TNX may be correcting back down to the Head & Shoulders neckline at 42.05 this morning.  No fireworks, just a steady rise in yields over the next two weeks.  The target remains at the Cycle Top at 45.17.

ZeroHedge observes, “Ahead of today’s much-anticipated quarterly refunding announcement by the US Treasury, some were hopeful that Bessent could pull an anti-Yellen and forecast a gradual decline in long-term issuance in coming quarters, sending yields lower. None of the happened, however, and instead the Treasury did not surprise markets, announcing that this quarter’s refunding total would come in line with estimates, at $125BN (to refund $90.2BN in securities).”

USD resumed its rally toward multiple resistance between 98.14 and 98.45.  It may be due for a pullback to the Cycle Bottom at 96.75 after testing the resistance band.  Trending strength may return later next week.

The Japanese Yen may have hit its Master Cycle low this morning at 63.72.  Watch for a bounce above the 52-day Moving Average at 63.98, which may emit a buy signal.  The rally out of this low may be short, but very sharp, as the Yen may rise precipitously to its Cycle Top in just 2-3 weeks.Once a breakout occurs, the rally may be fueled by short covering.  Those participating in the yen carry trade are also short the yen, and may have to reconsider their leverage options, as this may blow up their risk (payback) assumptions.

Bitcoin may be making its Master Cycle low today, having exceeded its Head & Shoulders target.  The Head & Shoulders formation has been noted in this blog since late November.  The Cycles Model calls for as much as two months of correction out of this magnificent low.  The first 3-4 weeks may be choppy, but critical to this rebound.  A buy signal may be found above the Cycle Bottom, currently at 76133.00.  Investor confidence in bitcoin may not return until it rises above the 52-day Moving Average at 88242.00.

Silver has pulled back beneath the 52-day Moving Average at 74.69 this morning.  Should the decline continue, it may seek support at the trendline near 60.00.  The mid-Cycle support is currently at 50.44, while the fractal model suggests a low near 42.00.  Nothing is in stone, just possible correction levels.  This is a Primary level correction, so we may expect a large one.  A final note…the uptrend is not over.  It is correcting for a much higher push.

ZeroHedge remarks, “Legendary financial and geopolitical cycle analyst Martin Armstrong warned in late December to be ready for the “Perfect Storm for Debt, Economy, War, Gold & Silver.” ”

Gold is correcting beneath the Cycle Top at 4876.00 this morning.  It also may show weakness down to the mid-Cycle support at 3836.67 in the next few weeks.

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

1:22 pm

Good Afternoon!

SPX has declined beneath the 52-day Moving Average and trendline, both at 6871.64 this afternoon.  This move offers a sell signal for the index.  Take appropriate action.  There appears to be no buyers of this dip.  Dealers may attempt to salvage a bounce back to the Max pain zone near 6930.00 by the close.  However, should that attempt fail beneath 6880.00, a larger decline may ensue.

8:15 am

Good Morning!

Yesterday SPX declined from the 7000.00 barrier to test the 52-day Moving Average and Ending Diagonal trendline at 6861.10, then bounced.  This morning SPX futures rose to 6941.80, a 61.8% Fibonacci retracement, then fell back  It is currently hovering near the 50% retracement level.  Today is likely to see another test of the 52-day and trendline.  A breakdown may be imminent.   The Cycles Model suggests that a breakdown may lead to a 2-month decline.  The initial target may be the April 2025 low at 4835.04.

Today’s options chain shows Max Pain at 6930.00.  Long gamma emerges above 6940.00 while short gamma dwells beneath 6925.00.

Today’s premarket VIX declined to 17.47, remaining above the 52-day Moving Average at 16.70.  The buy signal persists.  The wide-ranging moves may be in preparation for a breakout.  The Cycles Model anticipates a burst of energy following today’s options expiration.

The February 11 options chain shows  short gamma below 17.00 while long gamma rules above 18.00.

TNX may be consolidating beneath 43.00 this morning.  It may continue its correction by revisiting the Head & Shoulders neckline this week.  From there a steady uptrend may ensue.  The current Master Cycle may terminate near the Cycle Top at 45.20 in about two weeks.

ZeroHedge reports, “Ahead of today’s much-anticipated quarterly refunding announcement by the US Treasury, some were hopeful that Bessent could pull an anti-Yellen and forecast a gradual decline in long-term issuance in coming quarters, sending yields lower. None of the happened, however, and instead the Treasury did not surprise markets, announcing that this quarter’s refunding total would come in line with estimates, at $125BN (to refund $90.2BN in securities).”

USD continues its consolidation to gather strength for the next push higher.  It may probe to Intermediate resistance clustered around the 52-day Moving Average at 98.43.  A break out above it may occur by mid-February.

Bitcoin bounced from its low at 72882.55, testing the Cycle Bottom resistance at 76802.00.  The Cycles Model anticipates a final probe to its Head & Shoulders target in the next couple of days.

Silver found support at its 52-day Moving Average on Monday.  This has encouraged retail dip-buyers to pile in, pushing silver back above its Cycle Top resistance at 86.71.  Should the dip buyers persist, silver may burst to a new all-time high over the weekend.  The question is, will silver continue appreciably higher in an inversion of the Cycle, or will it collapse down to 60.00 over the next two months…or both?  Trading volume has tapered off, giving the impression of limited liquidity.  Should silver surpass 100.00, buyers ma be enticed back in.  Expect volatility to rule the moves.

Gold futures were repelled at the trendline near 4900.00 today after bouncing from their 52-day Moving Average at 4471.00.    A breakout may encourage speculators to bravely buy more, leading to a possible breakout above the high.  But first it must rise above resistance.  Should it go higher, 6000.00 may be the next logical target.

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

3:50 pm

Last week SPX hit its price target.  Today would have been the last day of this Cycle had it not achieved 7002.28 last Tuesday.  The result was that SPX came within 10 points of the all-time high today, having met both time and price for this Master Cycle.

ZeroHedge observes, “Market cycles are once again at the center of the investment narrative as we head into 2026. The optimism is familiar as earnings held up in 2025, the economy avoided recession, and big tech lifted the indexes. However, those victories are already reflected in the price.”

8:00 am

Good Morning!

SPX futures plummeted to a weekend low at 6840.30, challenging the 52-day Moving Average and Ending Diagonal trendline at 6851.72 before regaining higher ground at 69000.00 this morning.  This is the beginning of a broken market, with more selling to come.  Whatever declines that are made today may be redoubled in the next few days.

Today’s options chain shows Max Pain at 694.00.  Long gamma emerges above 6950.00 while short gamma dominates beneath 6925.00.

ZeroHedge reports, “Stock futures slide extending Friday’s rout, although are well off session lows, with aggressive unwinds across commodities and a crypto rout adding to the risk-off mood and sparking cross-asset margin calls.”

The premarket VIX rallied to 19.96 before easing back.  The upper trendline and Cycle Top at 21.76 may be the next to fall.

The February 4 options chain shows short gamma occupying the range from 14.50 to 16.00.  Long gamma rules above 17.00 with the largest concentration  of calls beneath 25.00.

TNX may be working on a deferred period of strength as the Head & Shoulders neckline was tested and held.  The Cycles Model may allow the TNX to rise to the Cycle Top at 45.23 over the next three weeks.

USD futures emerged above the Cycle Bottom at 96.76, creating a buy signal.  This may not be recognized until it rises above its January 16 high at 99.49.  The Cycles Model suggests a burst of energy may be due shortly that may challenge the resistance cluster at 98.48.  The USD may continue its rally through mid-March in the current Master Cycle.  The rally is not being anticipated by the majority of traders.

Bitcoin bounced from its weekend low at 74579.00 to test the Cycle Bottom at 77750.00.  It may be due for another deep dive to its Head & Shoulders minimum target over the next few days.  Once accomplished, bitcoin may be due for a relief rally that may last to the end of February.

Silver futures have resumed their decline after its Friday rout, taking out the Cycle Top at 85.74, then bouncing from its low to retest it.  This move has been simply too fast to trade.  It may continue the decline to test the 52-day Moving Average at 72.74 in the next few days as the dust settles.  The  sell-off was due to a couple of large banks that had shorted silver on margin, thinking that the top was in.  Friday was a margin call day, forcing the massive selling, with more to come.  However, this may not be the end of the bullish Cycle, as buyers are lined up to buy the dip.  In a few more days, the rally may resume to test the top again.  February may be chaotic as actual profit taking may ensue as the high is being approached.  The bull market isn’t over, but it may be more difficult to make money in the days to come.

Crude oil made its Master Cycle high last Thursday with a strong reversal day on Friday.  Over the weekend it plummeted to a low of 61.43 before bouncing back to the mid-Cycle support/resistance at 62.34.  That movement may have precipitated a sell signal.  If so, the Cycles Model infers a decline to mid-March that may fulfill the Head & Shoulders target shown in the chart.

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

7:30 am

Good Morning!

SPX futures declined to 6890.90 in the overnight session, a retest of the Intermediate support at 6897.17.    You may recall the mention of that same support being taken out by the SPX yesterday before its bounce back to Max Pain at the close.  In my options discussion, yesterday, I mentioned that the dealers would be highly motivated to claw back their losses before the close, above 6930.00.  In fact, the took the SPX back to 6969.01, within 6 points of Max Pain (the smallest dealer payout) at 6975.00.  Studies show that over 90% of all options either expire worthless or are sold at a loss.  Yesterday’s action possibly shows the machinations of Wall Street to make that happen.  After careful study of yesterday’s action, I have concluded that my closing comments may have been understated.  Today’s target may be the support levels constituted by  the 52-day Moving Average at 6847.84 and straight line support at 6825.00.  An afternoon bounce may ensue, setting up a possible panic decline on Monday.

Today’s options chain shows Max Pain has been lowered to 6930.00.  Long gamma rises above 6950.00 while short gamma begins beneath 6920.00.  Dealers are expecting a loss, but may be underestimating the amount.

ZeroHedge reports, “US futures slumped, the dollar rallied sharply, the Treasury curve steepened with 10Y yield rising as high as 4.28% and gold and bitcoin tumbled on what was at first speculation and then confirmation, that President Trump is nominating Kevin Warsh – widely viewed as the most hawkish of the handful of candidates – as the next Fed chair.”

The premarket VIX rose to 19.27 this morning before pulling back to 17.71 thus far.  It regained the ground above above the 52-day Moving Average at 16.90.  The Cycles Model suggests wild swings may occur in the VIX until a breakout above the Cycle Top and trendline at 21.93 occurs.

The February 4 options chain shows short gamma between 14.50 and 16.00.  Long gamma becomes firmly established above 17.00.  Calls are heavily concentrated between 17.00 and 22.00.  However, there are growing commitments as high as 60.00.

The 10-year US Treasury yield has moved above the mid-Cycle support at 42.26 this morning.  The Cycles Model suggests a burst of trending energy today followed by a continued rally to the week of February 16. The Head & Shoulders  formation  targets a minimum target at 44.61, while the Cycle Top at 45.23 remains the possible ending price for the current Master Cycle.  Meanwhile, hedge funds exposure to Treasuries has been rising over the last two weeks.

ZeroHedge reports, “After a solid 2Y, and a dismal 5Y auction, moments ago the Treasury completed the sale of the week’s final coupon, and today’s sale of $44BN in 7Y paper was appropriately enough, mediocre at best, not terrible, not great, in the parlance of our times.”

USD has reversed out of its Master Cycle low on January 27 and is building up strength for a breakout above the Cycle Bottom resistance at 96.75.  The Cycles Model suggests the breakout may occur over the weekend.  Rising above the Cycle Bottom offers an early buy signal.  Most traders won’t recognize the change in trend until it surpasses the 52-day resistance at 98.50 or a breakout above its last high at 99.49.  The Cycles Model calls for a rising USD until the week of March 16.  A breakout above the November 21 high may spark a huge short-covering rally, possibly starting in mid-February.

Bitcoin may be testing its November low at 80562.00 this morning.  The Cycles Model suggests a week may be left to complete its decline  to (or possibly beneath) the Head & Shoulders target.  However, the following week also appears to be chaotic.

Silver broke beneath 100.00, making a low at 95.20 this morning.  Its wide-ranging move yesterday spoke of rising volatility and thinning liquidity.  The Cycles Model suggests  a possible 2-month unwind that may go to the mid-Cycle support, currently at 49.33.

Zerohedge remarks, “Always

Parabolic moves don’t fade, they always break. We warned in Silvergeddon earlier this week that silver was morphing into a GameStop-style momentum squeeze, built on leverage and late chasing. That setup is now unraveling, with the ongoing crash inflicting huge P/L pain.”

Gold is in full retreat after making a high at 5595.61 (futures show 5645.60 due to backwardation)  yesterday, with a possible bounce  at the trendline near 5000.00.  A sell signal awaits the decline beneath 5000.00.

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

3:20 pm

SPX may have completed its second bounce. The  bounce may have been motivated by dealers attempting to get the SPX out of short gamma beneath 6930.00.  It may be followed by a decline to the 52-day Moving average and trendline in a support zone between 6825.00 and 6852.00.   Since there may be $40-$5 billion of possible CTA redemptions beneath that level, there may be another bounce back above 6930.00 over the weekend to avert a crisis.  The deferred panic may arrive next week as volatility ramps higher.

10:32 am

SPX is approaching Intermediate support 6895.00.  A decline beneath it produces a possible sell signal.  This is starting to look serious.

ZeroHedge comments, “…aaaand it’s gone!”

8:15 am

Good Morning!

SPX futures rose to 7002.00 this morning, beneath the futures high at 7014.80 made yesterday.  The Cycles Model may allow a marginal new high today.   There is a trading band resistance at 7017.19, giving a possible limitation above 7000.00, round number resistance.  There appears to be a psychological magnet at round numbers that attract, but also repel, once accomplished, so SPX may be at an important turning point.

Today’s options chain shows Max Pain at 6975.00.  Long gamma may emerge above 6990.00 with call strength above 7030.00.  Short gamma rises beneath 6930.00 and strengthens beneath 6900.00.

ZeroHedge reports, “Futures are higher, led by tech, after the first batch of Mag7 earnings with gold breaking new record highs again, rising as high as $5600. As of 8:00am ET, S&P futures are up 0.2% while the Nasdaq if barely in the green…”

The premarket VIX is consolidating just beneath the 52-day Moving Average at 46.91 this morning.  The VIX tends to give advance notice of possible trend changes in the SPX.  A cross above the 52-day Moving Average in the VIX may precede a possible decline beneath the 52-day Moving Average in the SPX by just a few days.    The Cycles Model suggests the VIX may begin to rise in earnest today.

The February 4 options chain show Max Pain at 16.00.  Short gamma shows up in 14.50 to 15.00.  while long gamma rises above 17.00 with some conviction up to 30.00.  Thee appears to be very little fear.

TNX appears to be resting in place, but that may soon change, as the week may end in yet another surge of trending strength.  $200 billion of short term treasury bills are scheduled for auction today, along with $44 billion of 7-year notes.  The rally may extend for three more weeks with a potential target at the Cycle Top resistance at 45.24.

USD is consolidating above its Master Cycle low , but beneath the Cycle Bottom resistance at 96.25, above which a buy signal may be made.  A burst of energy may propel the USD above resistance this weekend, sending it on a rally that may last to mid-March.  USD shorts may panic as it rises above the multiple resistance at 98.52.

The Japanese Yen is consolidating today, with a potential resumption of its rise from its Master Cycle low.   The Cycles Model indicates another week of possible rally prior to a correction back down to the trendline. at 64.75.  Japan’s snap election on February 8 may change the trajectory of the Yen temporarily in a possible double directional change in February.   In the meantime, the BOJ decided not to raise interest rates again from .75% to 1.00% for the time being.

Bitcoin has reversed away from its Intermediate resistance at 90705.00 as it resumes its decline toward the Head & Shoulders target.  While the current Master Cycle may only have a week left in its proposed tour, panic may set in to drive BTC down toward its target.  Should the decline last more than a week, a double panic decline may  ensue the following week.  Keep alert.

Silver futures rose to 121.75 this morning, in a super-extended Cycle.  While this Maser Cycle is beyond its normal boundaries, the Cycles Model shows a potential pivot due tomorrow.  When it occurs, the Cycles Model anticipates a correction lasting to early April.  There are powers that may be interested in driving the price of silver down by 50%.  The Cycles may accommodate them.