SPX Stalls At Intermediate-Term Resistance


VIX challenged Short-term resistance at 21.77 on Tuesday, but eased back toward long-term support at 16.51 at the close on Friday. The Primary Cycle [C] that may have just started may be a multiple of the Primary Wave [C] of February 2018.

(RealInvestmentAdvice)  All Quiet on the Western Front is a 1929 novel which describes German soldiers’ extreme physical and mental stress during World War I, and subsequent detachment from civilian life felt by many soldiers upon returning home.This novel was eventually made into a major motion picture.

The phrase “all quiet on the Western Front” has become a colloquial expression meaning stagnation, or lack of meaningful change, in any context.

Many financial markets ended 2018 with considerable volatility.The stock market, as measured by the S&P 500 index, fell from its peak in early October to a December 26th low by over 21%.

SPX stalls at Intermediate-term resistance

SPX declined to Short-term support at 2599.18 on Tuesday, then bounced back to retest Intermediate-term resistance at 2665.37, leaving a flat week. Wave [B]s are rogue waves that often do the unexpected. In this case it appears to most investors to have solidified the bullish case. The Cycles Model disagrees. There is a probable Head & Shoulders neckline that, if reached in the next few weeks, may indicate the target of this decline.

(Bloomberg)  This week brought something new for stock investors whiplashed by December’s drubbing and subsequent January snap-back: a lull in the action.

The S&P 500 Index inched 0.2 percent lower this week as earnings season kicked into high gear, its smallest weekly move since October. That leaves the gauge up 6.3 percent in January after the 9.2 percent tumble in December.

But is this the pause that refreshes, or the eye of the hurricane?  The equity rally “has lost some of its sparkle as the mood turns slightly more risk-off than a week ago,’’ Aliza Mason, an equity derivatives strategist at Grupo Santander, wrote in a note. That’s left investors stuck “halfway between hope and despair.’’

 NDX challenges Intermediate-term resistance

NDX declined to Short-term support at 6561.25, then bounced to challenge Intermediate-term resistance at 6764.69, closing above it. The Cycles Model suggests that NDX is either at or very near the end of its rally. There is a potential Head & Shoulders formation that, if triggered, may erase up to 3 years of gains. Stay tuned.

(ZeroHedge)  In the span of a day, China has gone from threatening to crash US markets if President Trump doesn't agree to a trade deal to helping the US rebut reports that trade talks weren't going as smoothly as President Trump and the Wall Street Journal had let on. During a press conference on Thursday, Ministry of Commerce Spokesman Gao Feng denied reports that a meeting involving high-level trade officials in Washington had been cancelled (the FT had cited US frustrations with China's reluctance to cave on demands relating to curbing IP theft and certain structural reforms) - backing up Larry Kudlow, who sparked a brief rally just before the close on Wednesday when he appeared on CNBC to deny these reports.

Kudlow said yesterday that the most important meeting, between a Chinese delegation led by Vice Premier Liu He, the country's top economic official, was still slated to take place in Washington next week.

High Yield Bond Index closes again above Intermediate-term resistance

The High Yield Bond Index declined to its trendline near 195.00, then rallied again above the Intermediate-term resistance at 197.17 and making a new retracement high. The 2 ½ year trendline is due for a retest that, if broken, may clear the way to a potential Head & Shoulders formation that may wipe out up to two years of gains.  

(Benzinga)  Investment-grade corporate bonds are rallying to start 2019, but concerns remain about a potential raft of downgrades for BBB-rated bonds.

Those bonds, which represent a major chunk of the U.S. corporate bond market, are rated one to three notches above junk territory and almost half of those bonds cling to a rating that is just one level above high-yield status.

Concerns about the vulnerabilities of BBB-rated corporates were among the factors behind a 2018 decline of 3.8 percent for the Markit iBoxx USD Liquid Investment Grade Index, one of the most widely followed gauges of high-quality corporate debt. That benchmark allocates over half its weight to BBB-rated debt.

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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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