E VIX And SPX Rally

VIX pressed down to the 10-handle, but did not go beneath the Master cycle low of December 21. A buy signal may be forthcoming should the VIX rally above its Long-term resistance at 14.24.  The breakout above the resistance zone implies higher targets to come.

(ZeroHedge)  What could possibly go wrong?

  • Russell 2000 speculative positioning has never...ever... been more long.

  • VIX futures positioning is near its shortest ever.

  • Treasury futures speculative positioning has never...ever...been more short.

SPX rallies to the upper trendline

 

 

SPX found support at its weekly Cycle Top at 2243.15 and bounced to the upper trendlines of two Orthodox Broadening Tops. It closed at the higher trendline. 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.

(Reuters)  The Dow came within a hair's breadth of hitting 20,000 for the first time ever on Friday as Wall Street staged a swift recovery, helped by technology stocks.

A rise in Apple pushed the three major indexes to record highs.

Apple's shares rose 1.1 percent to $117.86 after Canada's Competition Bureau said it did not find sufficient evidence iPhone maker had engaged in anti-competitive conduct, closing a two-year investigation into the company.

The Nasdaq is on track to be the biggest gainer in Wall Street's first trading week of the year, rising about 2.6 percent. The S&P was set to gain 1.8 percent and the Dow 1.1 percent.

The NDX challenges the upper trendline of the Orthodox Broadening Top

NDX made a new all-time high as it challenged the upper trendline of its Orthodox Broadening Top. It must cross beneath its Cycle Top support at 4938.23 to give it an aggressive sell signal.  A further break of the weekly Short-term support at 4865.65 confirms a sell signal.

(IBD)  The Nasdaq composite climbed above the 5500 level Friday and the Dow Jones industrial average fell just short of 20,000 on Friday.

The Nasdaq rose 0.6%, off its best levels of the day. The S&P 500 picked up 0.4% and the Dow 0.3% as well. All three major indexes set record highs intraday.

Among Nasdaq 100 bellwethers, Facebook (FB), which just reclaimed its 50-day and 200-day moving averages Thursday, jumped 2.3%; Alphabet (GOOGL) popped above an 824.40 buy point, rising 1.5%, Amazon (AMZN) was trying to crack through the 800 level, rising 2% to 795.99. Netflix (NFLX) faltered late to close down 0.6%.

High Yield Bond Index closes beneath its Cycle Top

The High Yield Bond Index closed the week on a sour note, by not participating in the stock rally. There may be a very short window for a rally on Monday, but once it declines beneath last week’s low at 163.11, it assumes a sell signal. A broken Diagonal trendline near 160.00 implies a complete retracement of the rally.

USB may have completed a bounce…for now

The Long Bond appears to have completed its bounce to weekly Short-term resistance at 150.71. The Cycles Model allows for a short pullback, then another attempt at mid-Cycle resistance at 158.62 over the next week or two. The probable target for the final decline appears to be its 35-year trendline at 137.75.

(WSJ)  U.S. government bonds pulled back Friday as the latest jobs report showed solid wage growth, raising the prospect of higher inflation and tighter monetary policy.

The U.S. economy added 156,000 new jobs last month, compared with the forecast of 183,000 by economists polled by The Wall Street Journal. Average hourly earnings for private-sector workers rose 10 cents, or 0.39%, from the previous month, beating expectations and marking the largest annual gain in more than seven years.

Along with being good news for workers, wage growth can signal broader inflation, which erodes the fixed returns of bonds and can lead to a faster pace of interest-rate increases from the Federal Reserve.

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