Confidence In SPX Shattered


VIX corrected all the way to Long-term support at 15.96 before rallying above its weekly Cycle Top at 21.04.  A breakout above the neckline of the Head & Shoulders formation may challenge the February 6 high. Wall Street doesn’t seem to be concerned.

(Bloomberg)  The recent turbulence that’s roiled financial markets shouldn’t be feared -- it’s normal, according to the co-head of UBS Group AG’s wealth-management unit.

“It’s quite surprising how what would be considered a relatively normal amount of volatility, if you think back a decade or two ago, now we’re hyperventilating about what are pretty normal market moves,” Tom Naratil, co-president of global wealth management at UBS, said in an interview in New York. “It brings more opportunities for us. We’re in the advice business, and uncertainty actually increases demand for advice.”

SPX repelled at the trendline, now at the neckline

SPX finished its rally to Intermediate-term resistance and the 2.5-year trendline at 2800.00 before making a new monthly low just above the Head & Shoulders neckline at 2610.00. The sentiment went from fear of missing out on the rally to “Look out below!’ as confidence was shattered by political mis-steps and bad economic news.

(Bloomberg)  After six weeks of stomach-churning swings, a cry’s gone up from stock pickers: Make it stop.

For the group that bemoaned last year’s one-way market as impossible to trade, it’s no small irony. Life’s only gotten harder since October as the S&P 500 lurches from rally to rout at an alarming rate. So with just three weeks left in the year, many active managers are looking to make up lost ground and say they’d welcome a return of that historical calm.

NDX is repelled at Long-term resistance

NDX attempted a rally to Long-term resistance at 7140.19, but couldn’t make it.  The Cycles Model suggests weakness may continue for at least another week with potentially devastating results. The Head & Shoulders neckline is in striking distance, which may accelerate the decline.

(Bloomberg)  How bad has the start to December been for U.S. stock investors? Almost $1 trillion has been wiped from the value of stocks in just four days of trading.

The Russell 3000 has plunged 4.9 percent this week as of 3 p.m. Friday in New York, as the six-week rout in American stocks deepened amid concern global growth is slowing and the Trump administration will escalate trade tensions.

Apple’s 5.4 percent plunge lowered its value by $45 billion, while Amazon’s 3 percent slide left it worth $24 billion less than a week ago.

High Yield Bond Index reverses most of its gains

The High Yield Bond Index continued its rally toward the October 3 high, but reversed down beneath all critical levels except the Long-term support.  It is likely on a new sell signal, but confirmation may be found beneath Long-term support at 193.97.

(CNBC)  Stock markets have been gripped with fear this week over a deteriorating economic growth outlook and questions regarding the U.S.-China trade truce.

While investors have typically pointed to the yields on different U.S. government bonds for warning signs on growth, the secondary market of corporate debt may also be a key to market directionality from here.

During the first bout of stock market volatility in February, so-called investment grade and high-yield (or junk) bonds remained relatively resilient. However, in October and after the S&P 500 plunged 7 percent having its worst month since November 2008, credit markets also started exhibiting some signs of distress, underperforming equities.

UST rallies above Long-term resistance

The 10-year Treasury Note Index continued its rally above Long-term support/resistance at 119.64 this week. UST may extend its rally into mid-December and may reach mid-term resistance at 122.93, according to the Cycles Model.

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Disclaimer: Nothing in this article should be construed as a personal recommendation to buy, hold or sell short any security.  The Practical Investor, LLC (TPI) may provide a status report of ...

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