E Changes Ahead Maybe For SPX And VIX

VIX challenged its weekly Short-term resistance at 12.30, staying above the Master cycle low of December 21, although marginally beneath resistance. The successful retest of the December low is an indication of a probable change in trend. A buy signal may be forthcoming should the VIX rally above its Long-term resistance at 14.11. The breakout above the resistance zone implies higher targets to come. The abrupt turn made in August 2015 may be repeated here.

(ZeroHedge)  There’s a big disconnect for traders. Everyone keeps telling Bloomberg’s Richard Breslow that there’s so much uncertainty out there that it’s too dangerous to trade. They also assume every time we get yet another flailing gyration in a given day’s price action that someone knows something — and it’s big.

The truth is, no one knows anything at the moment. There are enormous uncertainties on every continent and where the ball stops bouncing is anybody’s guess. And your guess is as good as the next guy’s.

SPX closes between the Broadening Top and Cycle Top

SPX made a weaker retest of the upper trendline of its Orthodox Broadening Top, but could not breach its weekly Cycle Top support at 2254.56. A decline beneath the Cycle Top support gives the SPX a sell signal. The smaller Broadening Top formation suggests a decline to 2000.00 or possibly lower may occur.

(ZeroHedge)  When looking at the latest weekly fund flows, it is clear that the Trump trade is over if only for the time being. As BofA reports, citing EPFR data, the last week saw the largest precious metal inflows in 5 months ($1.3bn), the 4th consecutive week of bond inflows ($4.5bn), and a week of modest $1.7bn equity inflows, however US stocks saw $2.5 billion in outflows, representing the 4th weekly outflow in the past 5 weeks.

The NDX challenges the upper trendline of the Orthodox Broadening Top

NDX challenged the upper trendline of its Orthodox Broadening Top for another week, making a marginal new high Friday morning. It must cross beneath its Cycle Top support at 4972.94 to give it a possible sell signal. A further break of the weekly Short-term support at 4928.18 confirms a sell signal.

(Reuters)  U.S. stocks were up but off their best levels of the session on Friday afternoon as Donald Trump’s inaugural speech as U.S. President reinforced worries for some investors about future trade policies.

In his speech, Trump said U.S. policy will be to buy American and hire American.

Stocks cut gains during the speech, and some strategists said the comments fueled investor concerns about potential protectionist trade policies under Trump, while others said the move in stocks was part of a trend to “buy the election and sell the inauguration.”

High Yield Bond Index challenges Short-term support and trendline

The High Yield Bond Index bounced off its Intermediate-term support at 161.18 and the Ending Diagonal trend line just above it. High Yield Bonds are on a sell signal. The Cycles model suggests a probable two week decline ahead. A broken Diagonal trend line near 161.50 implies a complete retracement of the rally may occur. Is this the canary in the coalmine?

(InternationalAdvisor)  As inflation is rising and interest rates seem to have bottomed, investors are reducing the duration of their bond portfolios. But is duration risk really a factor in all fixed income asset classes?

JP Morgan AM announced yesterday it is launching a European high yield short duration strategy “for investors who wish to maintain their holdings in fixed income whilst limiting exposure to rising rates and still achieving a reasonable level of income in the current low interest rate environment”, said its head of European distribution Massimo Greco. Historically, however, high-yield bonds correlate much more strongly with equities than with interest rates. Moreover, US high-yield bonds tend to historically correlate negatively with treasuries.

USB finds support. Going higher?

The Long Bond challenged weekly Short-term support at 150.14, but may be capable of a sharp rally from that support. The Cycles Model allows another attempt at mid-Cycle resistance at 158.72 over the next week. The larger pattern may not be finished, allowing it to resume shortly with a target near the 35-year trend line at 137.90 by mid-February.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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