VIX bounced off the low of November 8 to challenge its weekly Cycle Top at 20.40, but closed beneath it. Note the higher high and higher low as it gains technical strength. VIX is positioned for a resumption of the rally through the end of the month. Normal seasonality would call for calm through Thanksgiving week. However, this may not be a normal season.
(MarketWatch) What does it mean that the VIX is only barely higher than average, even as the stock market is experiencing remarkable volatility?
The VIX VIX, -9.21% is the CBOE Volatility Index. Though its calculation is complex — derived from the implied volatilities of S&P 500 SPX, +0.22% options maturing over the subsequent month — it is generally known as an “investor fear index.” Contrarians interpret high levels to be bullish and low levels as bearish.
SPX is rejected at the trendline
SPX was rejected as it tested its 2.5-year trendline, closing beneath it and maintaining its sell signal. It also closed well beneath its weekly Long-term support at 2782.06. Technicians call this action “The Kiss of Death.” The Cycles Model now implies a two-week decline that may test its weekly Cycle Bottom at 2103.60.
(RealInvestmentAdvice) In this past weekend’s newsletter, I touched on the outcome of the mid-term elections and why it would likely not be as optimistic as the mainstream media was portraying it to be. To wit:
“It is likely little will get done as the desire to engage in conflict and positioning between parties will obliterate any chance for potential bipartisan agenda items such as infrastructure spending.
So, really, despite all of the excitement over the outcome of the mid-terms, it will likely mean little going forward. The bigger issue to focus on will be the ongoing impact of rising interest rates on major drivers of debt-driven consumption such as housing and auto sales. Combine that with a late stage economic cycle colliding with a Central Bank bent on removing accommodation and you have a potentially toxic brew for a much weaker outcome than currently expected.”
NDX approaching the neckline
NDX fell away from its Long-term resistance at 7127.14 in probable resumption of the decline. NDX remains on a sell signal as it approaches the Head & Shoulders neckline. The Cycles Model suggests further declines through the Month of November.
(CNBC) Stocks posted sharp weekly losses on Friday after a strong downturn in technology shares.
The S&P 500 fell 1.6 percent this week, while the Dow Jones Industrial Average and Nasdaq Composite both declined more than 2 percent.
Technology, the biggest sector in the S&P 500 by market cap, was the second-worst performer this week, falling 2.5 percent. The sector dropped following a 5.4 percent decline in Apple. Wall Street analysts worry iPhone sales will slow down. Tech-related shares like Amazon and Netflix were also down 7 percent and 5.7 percent, respectively. Sharp losses in Nvidia dragged down the chips sector and the overall tech sector on Friday.
High Yield Bond Index retesting resistance
The High Yield Bond Index challenged its Short-term resistance at 200.99, closing beneath it. It is on a sell signal. High yield bonds are also anticipating further weakness through the end of the November.
(Reuters) – A long-reliable warning signal for stock investors that the tide is about to turn against them briefly flashed caution amid last month’s sell-off but does not appear to be calling an end to the bull market just yet.
Like stocks, junk bonds – the high-yielding debt issued by the riskiest corporate borrowers – had a rough October, but nothing close to the magnitude of bloodletting over in equities.
Merrill Lynch’s benchmark index for junk bonds fell 1.6 percent last month, its biggest drop since 2016, while the S&P 500 .SPX sank nearly 7 percent and the Russell 2000 index of small stocks plunged 11 percent to mark the poorest monthly performance for both since 2011.
