VIX rallied to challenge Intermediate-term resistance and mid-Cycle resistance at 14.31-14.88 on Monday, but reversed back down, making an extended Master Cycle low on Thursday.This extension is nearly a month beyond the average Master Cycle duration.A breakout above the resistance zone may provide an initial buy signal.

(ZeroHedge) In the last two days, someone, or more than one, has been aggressively buying VIX Calls (bearish market bets that gains as risk re-emerges) relative to puts (bullish bets)...Sending the Call/Put ratio soaring... It seems these notable spikes in VIX Call buying coincide with severe market turning points. Major build up of large VIX bullish (market bearish or hedging) bets...

Trendline resistance holds…again

SPX made a new all-time high on Friday at 3027.98 while hitting both the lower Ending Diagonal trendline and the upper Orthodox Broadening Top trendline at their intersection.In addition, the weekly Cycle Top resistance is at 3023.95. A new sell signal may be had at a decline beneath Short-term support at 2923.92.“Point 6” remains beneath the December 26 low.  

(Bloomberg) Technology shares propelled U.S. stocks to all-time highs after Alphabet posted strong results and a jump in gross domestic product failed to deter expectations that the Federal Reserve will cut rates next week. The euro traded near a two-year low.

The S&P 500 and Nasdaq Composite indexes hit fresh intraday records as Twitter and Google-parent Alphabet rallied after their sales beat estimates, though Amazon slid on lower-than-forecast earnings. The second-quarter GDP report came in the wake of Thursday’s European Central Bank meeting, where Mario Draghi failed to deliver the dovish signals investors sought.

NDX meets at Cycle Top resistance

NDX made a new all-time high on Friday as it rose to test its Cycle Top resistance at 8056.91.The Master Cycle reversal was extended for two weeks. The combination of price and time may be enough without a catalyst.  

(Bloomberg) FANGS dominated the U.S. newsflow in late trading today, with Amazon and Alphabet topping the agenda.

• Prime time, or not. Amazon's shares fell in late trading after second quarter profit missed expectations, and it forecast operating income for the current quarter of $2.1 billion to $3.1 billion, well below the $4.34 billion estimate — even after a record Prime day. Investors are concerned it's returning to a big spending cycle to fuel faster deliveries in the face of greater competition.

• Alphabet beat expectations with second quarter sales—excluding payments to partners—that came in at $31.71 billion. Revenue from its own online properties, including Search and YouTube, climbed 18% to $27.34 billion. Shares also climbed. The news may help calm concern about slowing growth for the Google parent.

High Yield Bond Index still short of April 1 high

The High Yield Bond Index stalled again this week without making a new all-time high. A decline beneath Intermediate-term support at 211.18 may give a sell signal. The Cycles Model warns the next step down may be a large one.   

(Bloomberg) Hedge fund manager David Einhorn says that he’s shorting U.S. corporate debt as protections for creditors deteriorate.

His firm Greenlight Capital is wagering against both junk and investment grade debt, according to an investor letter seen by Bloomberg. The macro position will provide a hedge for the firm’s bullish equity positions in addition to being an attractive, standalone bet, the letter said. The cost of taking such a position is “quite low” as credit spreads tighten, according to the letter.

“Rating agencies have been complacent and allowed debt/Ebitda and debt/equity ratios to deteriorate without a corresponding reduction in credit ratings,” Einhorn said in the July 25 letter. “Meanwhile, we are a decade into an economic recovery and there are signs the economy may be slowing.”

Treasuries challenge Short-term support

The 10-year Treasury Note Index declined to challenge Short-term support at 127.63, closing beneath it. The Cycles Model suggests that, while there is evidence of a low on July 18, the Master Cycle low may stretch into a new low next week.  

(CNBC) U.S. government debt yields were little changed Friday after a Commerce Department report suggested that global growth concerns and trade war fears kept business investment lower in the second quarter despite a better-than-expected headline GDP print.

While overall GDP growth slowed to 2.1% from 3.1% in the prior quarter, the print still topped Dow Jones expectations of just 2% growth. A surge in personal consumption helped propel GDP in the month between April and June while a slowdown in business investment weighed on the results.

At around 4:22 p.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was little changed at 2.074%, while the yield on the 30-year Treasury bond was slightly lower at 2.594%.

The Euro declines to a new low

The Euro declined to a new 1 ½ year low as it probes toward a long-standing Head & Shoulders neckline. This action confirms a sell signal. The Cycles Model suggests a probable bounce at the neckline in the next week.

(ZeroHedge) It is ironic that the setting for his speech was London. The UK, of course, never gave up the pound in favor of adopting the euro. Still, as the years drag on the biggest menace to Europe’s common currency isn’t a profligate Greek government nor the unfavorable productivity of Club Med. The euro may not disappear all at once, but it is in danger of withering.

In the land of future Brexit, Mario Draghi promised in the hot summer of 2012 to do whatever it took to save his currency. Had he actually been successful, would there have been a Brexit? Would Italian and Dutch populists be entrenched where they are? Would Germany have been poised to follow the same path?

It was not supposed to be about bringing the borrowing costs of PIIGS governments down. That was his immediate concern, sure, and it was the method behind his madness, but Step 2 was actual, meaningful recovery. 

 EuroStoxx consolidates 

Note:StockCharts.com is not displaying the Euro Stoxx 50 Index at this time.

The EuroStoxx 50 SPDR consolidated above critical support at 37.26. The sell signal may be triggered beneath the mid-Cycle support, also at that level.The Cycles Model suggests a probable seven-week decline may lie ahead. 

(CNBC) European stocks closed higher Friday, after the European Central Bank suggested it could lower borrowing costs to tackle a slowdown in the euro zone..

The pan-European Stoxx 600 closed provisionally almost 0.4% higher, with most sectors in positive territory. Telecoms stocks were the biggest gainers, rising over 2%.

The ECB held interest rates steady on Thursday, but outgoing President Mario Draghi all but pledged to ease monetary policy further as the growth outlook deteriorates.

The Yen declines beneath Short-term support/resistance

The Yen declined beneath Short-term support at 92.52.It appears to be on a buy signal. The Cycles Model suggests that may be due for a trading Cycle low in the next week before pushing higher. A breakout may propel the Yen to the upper Broadening trendline.

(Kitco News) - Investors looking for a cheap, safe-haven asset should look at Japanese yen and not gold, said Goldman Sachs.

“We think both assets can play an important role in diversifying risk in a strategic asset allocation and protect against both growth and rate shocks,” Goldman strategists led by Alessio Rizzi wrote in a recent note.

Considering gold’s latest surge, Goldman feels the metal’s upside could be limited, which is why the yen might be “a more attractive hedge tactically.”

Nikkei probes above Long-term resistance

The Nikkei Index probed above Long-term resistance at 21556.80 after a Master Cycle low in the previous week. Usually a 2-3 week rally follows a Master Cycle low, and this may be no different. The Cycles Model calls for another week of strength before a potential breakdown  

(Investing.com) – Japan stocks were lower after the close on Friday, as losses in the Paper & Pulp, Railway & Bus and Real Estate sectors led shares lower.

At the close in Tokyo, the Nikkei 225 lost 0.45%.

The best performers of the session on the Nikkei 225 were Fujitsu Ltd. (T:6702), which rose 9.35% or 735.0 points to trade at 8598.0 at the close. Meanwhile, Chugai Pharmaceutical Co., Ltd. (T:4519) added 4.58% or 330.0 points to end at 7530.0 andNTT Data Corp. (T:9613) was up 2.81% or 39.0 points to 1429.0 in late trade.

U.S. Dollar probes above critical support

USD probed higher above Intermediate-term support/resistance at 96.98. This move has temporarily revoked a potential sell signal. The Cycles Model calls for a potential reversal early next week.Trump may get his wish after all.

(WaPo) President Trump gave mixed signals this week as to whether he would intervene and try to weaken the U.S. dollar, telling aides Tuesday he had ruled out the idea but telling reporters on Friday he was still open to it.

On Tuesday, Trump rejected a recommendation from senior adviser Peter Navarro that the United States should take steps to weaken the U.S. dollar to boost U.S. exports, people briefed on the exchange said. Trump said intervening could damage the U.S. economy and cause problems that would difficult to control, the people said.

But on Friday, Trump told reporters he had not ruled anything out. He said the strong U.S. dollar was making it harder for U.S. companies to boost exports, something he blamed in part on the Federal Reserve’s decision to raise interest rates last year.

Gold consolidates

Gold consolidated in the middle of last week’s trading range. The Cycles Model calls for a final probe above 1454.40 in the coming week. However, a breakdown beneath Cycle Top support at 1390.05 may produce a sell signal.

(CNBC) Gold eased off a one-week peak on Thursday as robust U.S. economic data outweighed the European Central Bank’s decision to hew to an accommodative monetary policy, with investor focus on next week’s Federal Reserve meeting.

Spot gold was down 0.72% at $1,415.51 per ounce. U.S. gold futures fell 0.55% to $1,415.6.

Earlier, prices rose as much as 0.5% to $1,433.46, a one-week high, after the ECB left benchmark rates unchanged, with the bank’s chief sounding the need for a “significant degree of monetary stimulus” down the road.

“Gold sold off on good news out of the U.S. with the fact that we are going into the Fed meeting next week,” said Bob Haberkorn, senior market strategist at RJO Futures.

Crude consolidated beneath resistance

Crude consolidated, closing beneath Short-term resistance at 56.42 this week. The Cycles Model suggests the Broadening Wedge formation may be triggered in the next two weeks.

(OilPrice) The US oil and gas rig count fell by 8 this week, according to Baker Hughes, adding to months of losses, as US oil production falls to lowest levels since October 2018.

The total number of active oil rigs in the United States fell by 3 according to the report, reaching 776. The number of active gas rigs decreased by 5 to reach 169.

The combined oil and gas rig count is now 946 for the week, with oil seeing a 85-rig decrease year on year and gas rigs down 17 since this time last year. The combined oil and gas rig count is down 102 year on year.

Year-to-date, the oil rig count has fallen from 858 active rigs since the beginning of the year to 776, while gas rigs have fallen from 187 to 169 during that same time.

Agriculture Prices probe beneath support

The Bloomberg Agricultural Subindex probed beneath Intermediate-term support at 40.26 where it closed on Friday. It appeared to have made a Master Cycle low on Tuesday. The Cycles Model suggests that the rally may have legs through mid-August.

(Bloomberg) The U.S. just unveiled $16 billion more in federal aid for agriculture. Farmers were of course happy for the funds, but mainly, they want an end to Donald Trump’s trade wars.

“America’s farmers ultimately want trade more than aid,” said Zippy Duvall, president of the American Farm Bureau Federation, the nation’s largest general farm organization. “It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.”

The fresh package comes after last year’s $12 billion tranche for farmers. Agriculture incomes have been depressed in the wake of China’s retaliatory tariffs which hurt demand for everything from cotton to pork to soybeans. For Trump, appeasing his rural-voter base has become crucial ahead of 2020 elections.

Shanghai Index makes a new low, then bounces

The Shanghai Index made a potential Trading Cycle low on Monday, then bounced above Short-term resistance at 2933.30. The Cycles Model suggests a period of strength that may last a week or more to test round number resistance at 3000.00. The decline may resume thereafter and it may persist through late September.  

 (CNNBusiness) Asian markets traded higher on Wednesday, with stocks in Shanghai leading the way on hopes for a resumption of US-China trade talks next week.

US negotiators are expected to travel to China to resume talks on a trade agreement, a person familiar with the plans told CNN. The negotiations will be the first face-to-face talks since President Donald Trump met Xi Jinping, his Chinese counterpart, at the G20 summit last month.

The Shanghai Composite Index rose 1.1%. Hong Kong's Hang Seng gained 0.9%, while Japan's Nikkei rose 0.5%.

The Banking Index surges to its Diamond formation trendline

BKX made a late Cycle surge to the upper trendline of its Diamond formation. This completes “point 5” of the formation. This may be the end of the summer rally which usually comes at this time. 

(BusinessInsider) Alvarez & Marsal, a consulting firm, ranked Europe's largest banks in terms of performance. We picked the worst 10.

A&M ranked the banks based upon 13 different "key performance indicators" across profitability and resilience in areas such as growth, operating efficiency, risk, liquidity, and solvency.

In doing so it shows which banks are the strongest and safest of Europe's banks, and which are the riskiest.

Given Deutsche Bank's struggles in the past eight months it is no surprise that they are near the back of the pack. British banks such as Lloyds and Barclays also ranked poorly.

In the report, A&M said "European banking has become a battle only for the brave," adding that "four banks are falling behind the pack and need to rethink their strategy and restructure parts of their business."

(Bloomberg) There’s one Nordic bank that hedge funds have singled out for a particularly aggressive attack, and it’s got nothing to do with money laundering.

Sydbank A/S, Denmark’s third-biggest listed bank, almost rivals Deutsche Bank AG when it comes to bets against it in the form of short interest. Funds have taken negative positions on about 6.7% of its free-floating shares, which is roughly a percentage point below Deutsche, according to data compiled by IHS Markit. Bets against Sydbank, which in Denmark has been given too-big-to-fail designation, have more than doubled since January.

(ZeroHedge) While the western world (and much of the eastern) has been preoccupied with predicting the consequences of Trump's accelerating global trade/tech war and whether the Fed will launch QE before or after it sends rates back to zero, Beijing has quietly had its hands full with avoiding a bank run in the aftermath of Baoshang Bank's failure and keeping the interbank market - which has been on the verge of freezing - alive.

Unfortunately for the PBOC, Beijing was racing against time to prevent a widespread panic after it opened the Pandora's box when it seized Baoshang Bank, the first official bank failure in an odd replay of what happened with Bear Stearns back in 2008, when JPMorgan was gifted the historic bank for pennies on the dollar.

And with domino #1 down, the question turned to who is next, and could it be China's Lehman.

(NorthmanTrader) You’d think that the drop in yields and a Fed about to cut rates would’ve brought about some relief to credit card bills. No Sir.

And you might think that the highest interest rates on credit cards ever would deter consumers from loading up on additional credit card debt. Oh no.

Pedal to the metal and the cumulative picture spells trouble.

Look at the data.

Credit card companies are charging interest rates on credit cards with the widest spread above the Fed funds rate ever. Not only that, these are the highest credit card interest rates ever. But there is no inflation. Right.

Looks like consumers are getting screwed.

As a natural consequence personal interest payments are racing higher: