VIX declined beneath all but the July 26 low. However, it was a record weekly closing low. The inverted Head & Shoulders formation still survives due to the probability that today’s low may have been a Master Cycle low.  

(TheFelderReport)  RealVision recently put together a compilation of several market pros’ views (including yours truly’s) regarding the very serious and unique risks investors face today. It’s now on YouTube so it’s free to watch but if you’re active in the markets I highly recommend a subscription to RealVision. In my humble opinion, it’s the only financial television worth watching.

SPX continues to challenge its Broadening Wedge

SPX continues to challenge its Cycle Top and Broadening Wedge trendline at 2589.16.  A decline beneath the upper Diagonal trendline at 2550.00 may signal an end to the rally.  A further decline beneath the lower Diagonal trendline at 2500.00 gives a probable sell signal and suggests a much deeper decline may follow.  

(Reuters) - A surge in shares of heavyweight Apple helped push up major Wall Street indexes on Friday, as investors also assessed a mixed U.S. labor market report.

Shares of Apple, the world’s most valuable publicly traded company, rose 2.8 percent as shoppers streamed into the company’s stores to buy its latest iPhone. Apple also gave a better-than-expected sales forecast for the holiday shopping season.

U.S. job growth accelerated in October after hurricane-related disruptions in the prior month, the Labor Department said. But wages grew at their slowest annual pace in more than 1-1/2 years in a sign that inflation probably will continue to undershoot the Federal Reserve’s 2-percent target.

 NDX goes parabolic

NDX has expanded its throw over above the Ending Diagonal formation. This week it made another all-time closing high.  Short-term support and the lower Diagonal trendline lie at 6065.32.  A decline beneath that trendline may produce an aggressive sell signal.    

(IBD)  U.S. stock indexes were mixed midday Friday, as the market disregarded a miss on October payrolls.

The Nasdaq rose 0.4%, while the S&P 500 added 0.2%. The Dow Jones industrial average rose 0.1% and the small cap Russell 2000 was flat.

Volume in the stock market today was down on both major exchanges.

October payroll increases rolled in at 261,000 — about 20% below expectations. Bulls looking for upbeat angles could point to upward revisions in August and September and the fact that the economy rebounded quickly from the effects of hurricanes.

High Yield Bond Index consolidates beneath its Cycle Top

The High Yield Bond Index made an effort to rise above Cycle Top resistance at 184.94 without success.  A break of the upper Diagonal trendline and Short-term support at  180.93 may tell us the rally is over.  What’s happening in Europe is also happening in the US.

(Reuters) - Calling the top in world markets and getting the timing of it right seems like a lottery, but predicting the catalyst for the turnaround may be less random.

High-yield, or so-called “junk”, bonds are on a tear that puts even record-busting stock markets in the shade. Last week, the yield on the Merrill Lynch global high-yield bond index fell below 5 percent for the first time ever. The European index yields barely 2 percent.

To put that into context, European junk bonds yield less than 10-year U.S. Treasuries trading around 2.35 percent.

USB rises above Long-term support

The Long Bond rallies above Long-term support at 152.53.  This another week or more that may allow USB to rise to mid-Cycle resistance at 157.94.  Should it break above that level, it may complete the right shoulder of a potential Head & Shoulders formation.  .  

(Economist)  FOR the umpteenth time in the past decade, a great turning-point has been declared in the government-bond market. Bond yields have risen across the world, including in China, where the yield on the ten-year bond has come close to 4% for the first time since 2014. The ten-year Treasury-bond yield, the most important benchmark, has risen from 2.05% in early September to 2.37%, though that is still below its level of early March (see chart).

Investors have been expecting bond yields to rise for a while. A survey by JPMorgan Chase found that a record 70% of its clients with speculative accounts had “short” positions in Treasury bonds—ie, betting that prices would fall and that yields would rise. Meanwhile a poll of global fund managers by Bank of America Merrill Lynch (BAML) in October found that a net 85% thought bonds overvalued. In addition, 82% of the managers expected short-term interest rates to rise over the next 12 months—something that tends to push bond yields higher.

The Euro consolidates beneath Intermediate-term support

The Euro consolidated at the lows after last week’s sell-off that put it on a sell signal.  Its target appears to be Long-term support at 112.68 or possibly mid-Cycle support at 111.16.  Any residual strength it may have had appears to have evaporated as it goes into a Master Cycle low in the next two weeks.

(PoundSterlingLive)  The Euro has weakened due to long-term negative growth prospects but could a restocking drive keep the single currency supported?

The decision to reduce stimulus in the Eurozone was thought of as a sign of good health but markets are unimpressed, and the Euro will not rise until the longer-term prospects for growth pick up, says a strategist at leading French lender, Société Générale. 

Growth leads to spending and higher inflation which makes central banks put up interest rates.

Higher interest rates tend to strengthen the currency as foreign investors tend to move their money to where it can earn more interest.

EuroStoxx  makes a new two-year high

The EuroStoxx 50 Index continued higher, reaching for the weekly Cycle Top resistance at 3728.36.  While the rally appears strong, it may be nearing its limit. The Cycles Model suggests that Stoxx may retain strength for another week or so, possibly challenging its Cycle Top. However, a reversal has the potential to set a cascading decline into motion over the next two months.     

(Bloomberg)  European stock investors riding the region’s economic and profit momentum are betting the 2017 rally has further to run.

Company chiefs and money managers alike are shifting their focus from the perils posed by a stronger euro to the tailwinds from the economic rebound. Even as European equities trade near a 2015 high, investors have been increasing exposure this year on bets the region’s growth will ignite earnings. Analysts haven’t been this optimistic about the outlook for European profits in the coming year since 2011.

The Yen retests its retracement low

While the Yen may have made a Master Cycle low last week, it appears that weakness may linger for the next few days. We may anticipate a probable two to three week-long rally to follow that has the potential to break out above the prior highs. A lift above the resistance cluster between 89.23 and 89.75 puts the Yen back on a buy signal  

(SeekingAlpha)  Business Insider had the opinion that the Bank of Japan (statement) is boring because it kept its monetary policy unchanged for the umpteen time. I would disagree because this is only true on the surface. In Japan, monetary policy is decided from the top. It requires the buy-in from the Prime Minister himself unlike the United States where central bank independence is respected.

Nikkei exceeds initial target 

The Nikkei has gone from strength to strength as it powers the Nikkei to a new decades-long high.  Should it extend yet further, it may rally to 22627.00, its next target/resistance area.  The Cycles Model does not support the extended rally.  In fact, it suggests a major low may be anticipated in two to three weeks.

(Livemint)  The search for the world’s frothiest stock market is heating up. Most eyes are on the Donald Trump rally in New York. Some gaze at Narendra Modi’s Mumbai. Perhaps, though, we should be looking at Shinzo Abe’s Tokyo.

Abenomics is having a good moment. Japan is enjoying its longest run of growth in 11 years, unemployment is at 23-year lows and Prime Minister Abe’s big 22 October election win frees him to toss more stimulus at Asia’s No. 2 economy. But a 30% surge in the Nikkei 225 Stock Average over the past year? Seriously?

Tokyo shares are benefiting from the we-are-the-world stock boom. The extent to which it’s racing ahead of the 19% gain in the MSCI World index, though, raises questions.

U.S. Dollar makes a reversal pattern

USD broke out above Intermediate-term resistance at 93.26 to complete its retracement rallly.  The Cyclical period of strength may have ended on Friday.  A decline beneath Short-term support at 92.83 activates a sell signal that may lead to a panic decline.  The lower trendline of the Orthodox Broadening Top at 90.00 may be the next attractor, but the Orthodox Broadening Top formation calls for a breakout beneath the trendline, as indicated by “point 6.”  .  

(Reuters) - Speculators' net short bets on the U.S. dollar fell to their smallest in nearly three months, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

   The value of the dollar's net short position was $8.02 billion in the week ended Oct. 24, down from net shorts of $12.65 billion the previous week. Investors have pared back net short bets on the dollar for four straight weeks.

Gold declines beneath Intermediate-term support

Gold declined beneath Intermediate-term support at 1284.49, reinstating its sell signal.  A further break of Long-term support indicates that the decline may proceed beneath the lower trendline of the Broadening Wedge and possibly trigger that formation.  

(Reuters) - Gold edged higher on Friday, reversing earlier losses after the Catalonian

parliament's independence declaration from Spain led investors to seek safety from political upheaval.

 Catalonia's declaration was in defiance of the Madrid government, which was preparing to impose direct rule over the region.             

 "Catalonia is a small microcosm of the total European situation. But what it represents is the idea of an unstable European Union," said Dan Huffey, senior market strategist at RJO Futures in Chicago.

 "(These are) all reasons why we would look for a safe haven like gold to rally," he added.

Crude makes a new retracement high

Crude ramped higher in a probable Trading Cycle inversion, making a new retracement high.  A sell signal may be made by crossing the support cluster between 50.39 and 49.10.  The next Cycle low may occur in the next two weeks.

(Reuters) - Oil prices jumped about 2 percent on Friday, with global benchmark Brent crude rising above $60 per barrel, on support among the world’s top producers for extending a deal to rein in output and as the dollar retreated from three-month peaks.

Saudi Arabia and Russia declared their support for extending an OPEC-led deal to cut supplies for another nine months, the Organization of the Petroleum Exporting Countries’ secretary general said ahead of the group’s next policy meeting on Nov. 30. The pact currently runs to March 2018.

Brent futures LCOc1 rose $1.14, or 1.9 percent, to settle at $60.44 a barrel after hitting a session peak of $60.53, the highest since July 2015 and more than 35 percent above 2017 lows touched in June.

Shanghai Index extends its high

The Shanghai Index consolidated beneath last week’s high where the decline was halted at Short-term support at 3350.76.  This may also be known as an inversion rally, which was discussed last week.  Once the inversion is complete, the potential for a sharp sell-off rises.    

(ZeroHedge)  It is hardly a secret that thanks to nearly $4 trillion (at least) in credit creation in 2017 - more than the rest of the developed world combined - China has been the proverbial (and debt-funded) "growth" dynamo behind the recent period of "coordinated global growth." Unfortunately, much if not all of this was window dressing for the just concluded 19th Communist Party Congress, which in not so many words, made Xi Jinping into a de factoemperor with no apparent or otherwise heirs.

The problem is that with the Congress now over, so is the period of coordinated global growth.  

The Banking Index extends the run for the Broadening Top

BKX extended its run for the upper trendline of its Broadening Top formation and Cycle Top resistance at 105.66. The residual strength left for this week may have run out on Friday. If the Orthodox Broadening Top formation is correctly identified, the next level of support may be the mid-cycle line at 80.07.   

(ZeroHedge)  Last week, WSJ stoked fears that the Feds might be ramping up another probe into abuse and manipulation in the foreign exchange market when it reported that Wells Fargo had abruptly terminated four bankers from its FX business and transferred another. Now, Wall Street’s paper of record is reporting that Federal prosecutors are investigating Wells for abuses in its FX shop - but the scope of the investigated is limited to one disputed trade.

According to WSJ, prosecutors have subpoenaed information from Wells and from the recently fired bankers as they investigate a trade and ensuing dispute between Wells and one of its clients, Restaurant Brands International Inc.

RBI owns several fast-food franchises, including Burger King, Tim Hortons and Popeyes Louisiana Kitchen. In an amusing twist, both companies count Warren Buffett’s Berkshire Hathaway as one of their largest shareholders.

(ZeroHedge)  In all the euphoria over yesterday's "dovish taper" by the ECB, markets appear to have forgotten one thing: the great Central Bank liquidity tide, which generated over $2 trillion in central bank purchasing power in 2017 alone - and which as Bank of America said last month is the only reason why stocks are at record highs, is now on its way out.

This was a point first made by Deutsche Bank's Alan Ruskin two weeks ago, who looked at the collapse in global vol, and concluded that "as we look at what could shake the panoply of low vol forces, it is the thaw in Central Bank policy as they retreat from emergency measures that is potentially most intriguing/worrying. We are likely to be nearing a low point for major market bond and equity vol, and if the catalyst is policy it will likely come from positive volatility QE ‘flow effect’ being more powerful than the vol depressant ‘stock effect’. To twist a phrase from another well know Chicago economist: Vol may not always and everywhere be a monetary phenomena – but this is the first place to look for economic catalysts over the coming year."

He showed this great receding tide of liquidity in the following chart projecting central bank "flows" over the next two years, and which showed that "by the end of next year, the combined expansion of all the major Central Bank balance sheets will have collapsed from a 12 month growth rate of $2 trillion per annum to zero."

(ZeroHedge)  Spanish stocks have given back all of their gains from yesterday's chaotic on-again-off-again headline-hockey surrounding Catalan independence as it appears all but inevitable that the separatists will pull the trigger any minute now.

The contagion has spread to European bank stocks which have tumbled to unchanged on the week...

(Bloomberg)  Community banks and credit unions face a lot of challenges today, and they make a good case for lightening some unnecessary regulatory burdens. But instead of focusing on these smaller institutions, Congress is considering easing up oversight for some of the biggest banks in the country. This would increase the risk of another financial crisis.

In the aftermath of the crisis, Congress determined that banks with more than $50 billion in assets -- roughly the 40 biggest in the country -- posed an outsized risk to the economy. The 2010 Dodd-Frank Act directed the Federal Reserve to apply stricter oversight and regulation to such institutions. The law was carefully drawn to force the Fed to impose tougher capital, liquidity, and leverage requirements, while it also empowered the central bank to make adjustments based on a bank’s size and complexity.