Sell In May And Go Away!

The VIX challenges Cycle Top Resistance.

The VIX made its Master Cycle low on April 28 and has reversed course. It challenged the Cycle Top resistance at 38.77, closing beneath it. A rally above that level produces a buy signal for the VIX.

(ETFTrends) Equity markets have had a wild ride in 2020, with stocks climbing to all-time highs across the board, only to plummet below 2018 lows with roughly a month, and then rally back to October 2019 highs within nearly another month.

All of this back and forth has many investors frustrated or elated, while volatility has gone from tepid, to boiling, and now reached a calm that seems ready to boil over at any minute.

Stocks finished the month well off the highs made Wednesday, as stocks reached some technical levels, and joblessness continued to surge. But one thing that has not been discussed as much lately, is how the CBOE Volatility Index or VIX, often referred to as the pain index, had done anything but induce pain lately, possibly suggesting that that may be about to change.

SPX Has Declined Beneath The Mid-Cycle Support. 

SPX probed above mid-Cycle support/resistance and the old Head & Shoulders neckline at 2861.93.While the loss for the week was not great, the positioning for the SPX indicates a probable sell signal. That may be confirmed with a decline beneath Short-term support at 2705.58.

(MarketWatch) Will the U.S. stock market retest bear-market lows put in on March 23?

That is perhaps the most prevalent question on Wall Street. And while there’s no way of knowing the answer for sure, if history is any guide, when the stock-market slips into a bear market, typically defined by a decline of at least 20% from a recent peak, it tends to return to return to that low more often than not, according to data from Bespoke Investment Group.

So far, the Dow Jones Industrial Average DJI the S&P 500 SPX and the Nasdaq Composite COMP indexes were struggling to start off trade in May, after an uptrend in April that produced the best monthly gains in years.

NDX Reverses At The Cycle Top.

NDX reversed at its weekly Cycle Top at 9048.45.It closed beneath it Christmas 2018 trendline but above its Intermediate-term support at 8612.86.A decline beneath that level confirms a sell signal.

(ZeroHedge)  Today in “buying the dip” news…

Scores of retail investors took their first shot at the stock market this past March, while equities fell more than 30% as a result of the coronavirus shockwave that hit the country. And it’s retail that has helped act as a “formidable force” to put a bid under stocks for the last month, according to Bloomberg.

In fact, E*Trade, Ameritrade and Schwab all saw record signups in the three months ending in March as a result of retail investors wanting their first taste of the market.

Schwab opened a record 609,000 new accounts with almost half of them coming in March alone. It also saw 27 of its 30 most active trading days ever, including every session in March. Ameritrade saw net new assets of $45 billion – of which, about 60% of which came from retail clients.

High-Yield Bonds Rejected at Intermediate-term Resistance.

High Yield Bond Index probed toward Intermediate-term resistance at 181.86, but was rejected. It closed beneath the weekly Cycle Bottom at 171.16 and is on a sell signal.It has already met all its short-term downside targets, but other long-term targets still remain. Among them is the 2009 low at 39.96.

(ZeroHedge) Yesterday, when discussing the Fed’s latest $6.66 trillion balance sheet, we said that more than one month after the Fed announced its backstop for investment grade bonds and ETFs (followed shortly after by an expansion into fallen angel junk bonds), “what is most interesting is that so far the Fed has not yet purchased a single corporate bond, whether investment grade of fallen angel junk. In other words, without lifting a finger, the Fed’s “whatever it takes” jawboning managed to inject trillions “in value” in countless debt and credit products.”

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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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