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

3:45 pm

SPX has reversed from the trendline, declining beneath the 52-day Moving Average.  It may be considered a sell signal.

RealInvestentAdvice observes, “The price movement in the broad S&P 500 index is relatively calm. Yet the market’s undercurrent, as measured by sharply diverging returns across stock sectors and factors, is anything but calm. The current market picture we paint is well embodied by a quote from Jules Verne in 20,000 Leagues Under the Sea.”

10:00 am

SPX has reached the 52-day Moving Average at 6893.66and the Ending Diagonal trendline near 6895.00.  Round number resistance at 6900.00 beckons, but it may not linger much longer.  Time and price have both been met, allowing a reversal to deeper lows.

Today’s options chain shows Max pain at a highly contested 6865.00-6870.00.  Long gamma begins at 6900.00 while short gamma rules beneath 6860.00.

ZeroHedge reports, “US equity futures trade near session highs, after rising much of the overnight session amid muted volumes. Yesterday, US stocks recovered their early losses starting just after the EU close and that momentum has carried through to global markets today with what appears to be re-grossing in EU and continued momentum in the Japan trade.”

VIX declined to 18.89 this morning, completing a 61.8% Fibonacci retracement of its latest probe from the low.  A breakout may be imminent.  However, today’s options expiration shows Max Pain at 19.00, which suggests an explosive move higher may wait until after today’s close.

TNX is moving higher after master Cycle reversal.  The change in trend may not be recognized until the 52-day Moving Average at 41.75 is surpassed.

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

11:42 am

NDX is also at an inflection point.  It may bounce to the 52-day Moving Average at 25409.71…or fail imminently.  The NDX may have a “hair trigger” that has the potential to reverse the bounce at any time.  The sell-to-buy ratio is asymmetric, with very few buyers.  Short gamma may be creating its own market.  Bounces may only create more short gamma by 0DTE speculators.

11:23 am

SPX has made its bounce at 6775.50.  The 50% retracement level is at 6884.00 while the 52-day Moving Average lies at 6895.00, near Max Pain at 6900.00.  This market is being driven by the options.  Dealers are attempting to escape gammadegon.  Will they succeed…or get sucked further down by short gamma?

7:45 am

Good Morning!

SPX futures declined to 6793.90 over the extended weekend, testing Friday’s low at 6794.65.  Remember that the Ending Diagonal trendline and 52-day Moving Average are at 6892.00, confirming a sell signal last week.  The final support lies at 6775.00, which is the neckline of a Head & Shoulders formation (not shown on the daily chart).  Hedge funds went on a massive buying spree last week as Friday’s low appeared to be a match of two prior lows since mid-January.  However, the bounce remained under the 52-day and trendline at 6892.00.  Should the SPX decline to new lows today, the last money to come in will be the first to go, adding momentum to the decline.

Today’s options chain shows Max Pain at a highly contested 6900.00.  SPX may open deeply into short gamma with a put wall at 6800.00 and another at 6770.00.  Add in the 0DTE speculators and an option-driven panic may ensue.

ZeroHedge reports, “US equity futures woke up after President’s Day and chose to resume their selloff (after a modest bounce on Monday’s holiday failed to hold) dragged by Tech, as the risk-off moves on AI disruption fears continue. As of 8:15am ET, S&P 500 futures were down 0.5% with Nasdaq 100 contracts falling 1.0%.”

The premarket VIX rose to 22.71 thus far, clearly above the trendline and Cycle Top at 21.60.  The Cycles Model suggest today may be a panic-up day.  In fact, the Model suggests higher velocity in the VIX through the rest of the month.  Under-the-hood stress is building.  VIX has a long way to catch up with the VVIX (Velocity).  The next two weeks may capture higher stress levels in the VIX.

Tomorrow’s options chain shows Max Pain at 19.50.  Short gamma rests heavily between 15.00 and 19.00.  Long gamma is well populated between 20.00 and 30.00.  However, there is a very large institutional presence at every 5 points to 100.00.

The 10-year US Treasury futures declined to 40.12 over the extended weekend while today’s market opened at a low of 40.25 in an extended Master Cycle.  While TNX could go lower, it may have made a Trading Cycle low as well.  A reversal may be imminent.  Bond volatility is picking up and may show up in a couple of panic sessions before the end of the month.    l

USD futures are coming off their corrective low at the Cycle Bottom.  Today may show high trending strength as it rises to challenge overhead resistance between 97.34 and 98.35.  A break through may result in a bloodbath for the dollar shorts.  The Cycles Model suggests the USD may continue to rise through mid-March.

The Japanese Yen has made two Master cycle highs within two weeks of each other.  This is highly unusual and may indicate another surge may be on its way instead of a reversal.  If so, another move higher may upset the heretofore smooth sailing of the Yen carry trade.  Some very large institutions are involved in the carry trade, including banks and insurance companies.

Bitcoin has been repelled at the Cycle Bottom resistance currently at 69510.00.  The next level of possible support lies near 65000.00, then 63000.00.  Should it go lower, it may exceed the prior low at 60069.72.  The Cycles Model suggests that, should there be no recovery soon, bitcoin may continue its decline to the end of April to much deeper lows.  This could be the signal for easily liquidity for the markets.

Silver futures have resumed their decline to a morning low of 72.29.  The Cycles Model offers the view that silver may continue its decline for at least another month.  Should it do so, the next level of support lies near 63.00-68.00, then near 37.00.  Those who purchased recently may be trapped.  In addition, those who bought leveraged silver ETFs may see their account plummet dramatically.

Gold futures have sunk to 4758.74, beneath the Cycle Top support at 5001.17 and Intermediate support at 4768.00.  The 52-dy support lies at 4603.00 and beneath that lies the mid-cycle support at 3902.00.  Gold may decline to the mid-Cycle support and still be on a long-term uptrend.  However, a move of that magnitude may wash out a lot of speculators (weak hands).

Crude oil declined beneath its mid-Cycle support at 62.44 this morning.  The decline has resumed with the potential of several high velocity moves in the next few weeks.  The minimum decline may go to the neckline.  However, should it go beneath it, the full impact of the head & shoulders formation may be felt.

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 rose to a weekend high at 6869.00 thus far.   A week of massive short selling turned into a vicious squeeze on Friday.  It may attempt to test the 52-day Moving Average and trendline at 6892.00 yet this morning.  Should it fail to overcome resistance, the squeeze may turn into a rout.  Critical support lies at the head & Shoulders neckline at 6775.00.  Should it break down beneath that level, the formation becomes activates with the consequences shown o the chart.  The Cycles Model allows until the end of March for the downside follow-through.  The market is closed for President’s day today

Premarket VIX is consolidating between 20.36 and 20.86, poised beneath the trendline and Cycle Top resistance at 21.60.  An imminent breakout is possible.

Bitcoin is open for business today.  It has been testing the Cycle Bottom resistance at 70046.00 this morning.  Should it hold, the minimum decline may be near 63000.00.  There is an outside probability of a decline beneath 60100.00.  The consequences of a deeper low would limit the upside possibilities.

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

7:45 am

Good Morning!

SPX futures declined to a morning low at 6801.70 thus far.  It may decline to the Head & Shoulders neckline at 6775.00 before a bounce.  There is a furious turnover as hedge funds shift from shorting the Mag 7 to shorting software, while small companies shine.  The NYSE Hi-Lo Index showed  a net increase of 337 more new highs VS new lows on February 11 with the SPX showing only a 9-point gain for the day.  The rotation to smallcap stocks cannot add back the volume that is lost from the Mega-stocks being punished. No matter where the SPX lands, a bounce may form today to relieve the oversold condition.  The Cycles Model suggests the recovery may only be short-lived.

Today’s options chain shows Max pain at 6925.00.  Long gamma may begin above 6940.00 while short gamma rules beneath 6900.00.  To achieve the minimum dealer payout, SPX must rise bac above 6900.00 by the end of the day.  The bounce may be a barn burner.

The premarket VIX has risen above its Cycle Top at 21.56 this morning, offering a buy signal.  Hedges may be bought on a pullback, as the overhead resistance has been pierced.  The Cycles Model suggests the rally may gain serious momentum early next week.

The February 18 options chain shows a concentration of short gamma from 15.00 to 19.900.  Long gamma may begin above 20.00.  A wall of calls (374,719 contracts) resides at 25.00.

TNX futures declined to 40.67 while the cash market shows a low at 40.71.  There is a short term support at 40.90 which, when exceeded, may signal a reversal.  This decline represents a 62% Fibonacci retracement of the rally from the October low.  A rally above the 52-day Moving Average at 41.76 may signal the onset of a 2-month rally to 45.00, or higher.  Despite the decline, bond volatility is rising.

Yesterday, ZeroHedge observed, “After a mediocre 3Y, and a dismal 10Y auction yesterday, moments ago the Treasury concluded the sale of the week’s final refunding auction, when it unloaded $25BN in 30Y paper to seemingly endless demand.”

Bitcoin may be attempting a bounce this morning.

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.