SPX Declines To Intermediate-Term Support


VIX rallied above weekly mid-Cycle resistance at 15.04, confirming a new buy signal. Analysts don’t seem to be paying much attention to the fact that the VIX is not only above all critical resistance levels (15.80 – 16.63), but also above its 12-month average of approximately 15.90. Things can happen quickly and violently at these levels.

SPX declines to Intermediate-term support


SPX declined to bounce from Intermediate-term support at 2947.77 after breaking through round number support at 3000.00. The narrowing trading range may have produced a modified Diamond formation. Interestingly enough, a break through the trendline at 2950.00 triggers the formation with a similar target as “Point 6” of the Orthodox Broadening Top. The Cycles Model suggests a rapid decline ahead. Prepare for a potential “limit down.” 

(CNBC) The White House is weighing some curbs on U.S. investments in China, a source familiar with the matter told CNBC. This discussion includes possibly blocking all U.S. financial investments in Chinese companies, the source said.

It’s in the preliminary stages and nothing has been decided, the source said. There’s also no time frame for their implementation, the source added.

Restricting financial investments in Chinese entities would be meant to protect U.S. investors from excessive risk due to lack of regulatory supervision, the source said.

  NDX sits on the Diamond Trendline


The back-and-forth motion of the NDX as it was squeezed into a tighter pattern created a Diamond formation. Its target agrees with “Point 6” of the massive Orthodox Broadening Top formation. We seldom have multiple confirmations of the general market direction, but in this case it should put us on high alert for a decline beneath the lower trendline at 7625.00 for a confirmed sell signal.  

(ZeroHedge) For an equity market at near all-time highs, there’s been a remarkable number of important blow-ups in recent months: WeWork, Uber, Lyft, Tesla/Nio, Netflix, marijuana stocks, vaping, and crypto currencies all come to mind. That’s important, because these are all “platform” companies/products – the exact business model that has driven significant increases in stock market value over the last 5 years. Let’s hope 2019 is just a bump in the disruptive road, because we need more of this sort of innovation. Not less.

Let’s start with some examples:

#1: WeWork, which was supposed to remake the concept of office space/leasing, had to pull its IPO, fire the company’s founder from his CEO slot, and now faces an unexpected capital crunch.

High Yield Bond Index challenges Intermediate-term support


The High Yield Bond Index declined to challenge Intermediate-term support at 209.59 where it bounced. A decline beneath it invokes a sell signal. The Cycles Model warns the next step down may be a large one.   

(SeekingAlpha) U.S. junk bonds are heading for their first weekly loss since mid-August after posting negative returns for three consecutive sessions and fund outflows in the week ended Wednesday.

Thursday's 0.6% fall was led by the energy sector and extended a weekly loss to 0.21%, pushing yields to 5.67%, according to Bloomberg Barclays index data.

CCCs led the decline with a 0.12% drop, their eighth straight decrease; yields on CCCs increased 6 basis points to 10.64%.

Treasuries rise above Cycle Top support

The 10-year Treasury Note rose above Cycle Top resistance at 130.11. Should support give way, there may be a resumption of the decline. This week the markets were kept afloat again through permanent open market operations (POMO) to stabilize bank reserves and keep the markets liquid. The Cycles Model suggests the decline may resume through mid-October.

(ZeroHedge) After a strong 2-Year, and poor, tailing 5-Y auction, moments ago the US Treasury concluded the last coupon auction for the week, selling $32 billion in 7 year paper in what was no less than a spectacular auction, with a high yield of 1.633%, which while above last month's 3-year low yield of 1.489%, stopped through the When Issued by a solid 0.5bps, the biggest stop through since March.

Confirming the strong demand for today's paper was the impressive surge in the bid to cover, which jumped from a ten year low of 2.159 in August to 2.492, the highest since March, and far above the 2.37 six auction average.

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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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