VIX declined to challenge the May 9 low, but did not exceed it. Today’s low qualifies as a retracement low and potentially opens the door for new highs. A rally above mid-Cycle resistance at 15.22 implies that VIX may challenge its Ending Diagonal at 17.50 in the next move.
(Investopedia) The CBOE Volatility Index (VIX) is often called the “fear gauge,” because market watchers use it to measure expected volatility over the coming 30 days. According to a recent paper by John Griffin and Amin Shams of the University of Texas at Austin, however, the VIX may reflect something besides fear: the authors’ findings suggest that traders have their finger on the scale.
SPX throws over its trendline
SPX made a throw-over above the upper trendline of its 5-year Ending Diagonal formation. The throw-over may be the final phase of the rally. SPX is fast approaching an important 8.6-year Cyclical interval that suggests a potential Super Cycle turn may be at hand.
(Bloomberg) The bulls are back in charge after a second weekly advance pushed the S&P 500 Index to a fresh record. But look a little more closely and the signs of unease in the stock market are hard to ignore.
It’s visible in fund flows, where investors are rotating from U.S. stocks to the rest of the world at the fastest pace in two years. And short sellers are getting aggressive, raising bearish bets in three of the past four months.
NDX rallies to another all-time high
NDX posted another new all-time high today. The extension continues in hyperdrive, seemingly unabated. A decline beneath Short-term support and the trendline at 5605.76 may suggest a correction is in order.
(BusinessInsider) At this point, the so-called FANG stocks that have led the market to new highs look unstoppable.
They have even won over Wall Street’s biggest equity bear.
And he’s not holding back his optimism. The collective group of Facebook, Apple, Netflix, and Google could gain up to 40% over the second half of 2017, says Tom Lee, the managing partner and head of research at Fundstrat.
Unconvinced by forecasts for market-wide earnings growth, Lee sees the group of tech titans continuing to deliver profit expansion, which should allow them to keep outperforming. The companies are also mostly immune to wage inflation, improving their future prospects, he says.
High Yield Bond Index Tests Intermediate-Term Support
The High Yield Bond Index continued its bounce above Long-term support at 163.22 while testing Intermediate-term resistance at 166.17. It remains on a sell signal, but must decline back beneath Long-term support to confirm it. The Cycles Model suggests weakness may resume next week.
(Morningstar) There is a significant difference in the perception of ‘junk’ and something called ‘high yield’. However, in the world of fixed income they are the exact same thing
High yield debt refers to anything that is below investment grade, otherwise known as ‘junk status’, typically including a range of corporations that do not have the strength to their balance sheet to be considered above the threshold by the rating agencies – for S&P, ‘junk’ is BB or lower.
USB gaps up to Long-term resistance
The Long Bond broke out, gapping above its April high to challenge Long-term resistance at 155.71. It is now due for a pullback or consolidation that may be over as early as next week.
(FoxBusiness) Treasury yields slumped on Friday as a weaker-than-expected nonfarm-payrolls number triggered a rally in prices of U.S. government paper, casting doubts on growth expectations for the U.S. economy.
The yield on the 10-year Treasury note plummeted 5.8 basis points to 2.159%, the lowest since Nov. 10, erasing nearly all the gains seen since Donald Trump’s presidential election victory. Bond prices move in the opposite direction of yields; one basis point is one hundredth of a percentage point.
Yields for long-dated U.S. government paper plummeted after the Bureau of Labor Statistics said the economy added 138,000 new jobs in May, falling short of the 185,000 expected by economists polled by MarketWatch. Investors said the weak reading was a reflection of the low unemployment rate, which fell from 4.4% to 4.3%, leaving the labor market at its tightest since 2001. Hourly earnings also gained 0.2%.
