VIX rallied from its mid-Cycle resistance at 14.59 before closing above Long-term support at 11.11. VIX is on a buy signal. The inverted Head & Shoulders formation now has a completed right shoulder giving a potential target for the next move higher when the neckline is exceeded.  

(Barrons)  The CBOE Volatility Index spiked to 14.5 early Wednesday morning and is hanging out at the 13 level as of this afternoon. Meanwhile in ETF land, the leveraged ProShares Ultra VIX Short-Term Futures (ticker: UVXY) is up more than 5% and its unleveraged sister ProShares VIX Short-Term Futures (VIXY) notched a 2.5% gain.

Harvard Management Company took the other side of the bet on volatility, according to filings submitted to the Securities & Exchange Commission last week. Quarterly holdings documents showed that Harvard’s endowment added a modest stake in the ProShares Short VIX Futures ETF (SVXY). I wonder what they are using the ETF for? Assuming, the position remains open, Harvard Management will have to see the market remaining calm.

SPX tests Short-term Support

SPX declined to weekly Short-term support on Wednesday at 2552.96, which is in the vicinity of a 6-year Diagonal trendline.  A decline beneath weekly  Short-term support and the upper Diagonal trendline may signal an end to the rally.  A further decline beneath the lower Diagonal trendline at 2525.00 gives a probable sell signal and suggests a much deeper decline may follow.  

(Bloomberg)  Soapmaker and real-estate stocks have taken over a rally that used to be led by social networks and smartphone makers. Companies with stable earnings and dividends have shepherded gains in November, the first time this year that the two best-performing industries are defensive ones.

So, while this looked like just another boring week in the bull market, it was actually a departure from the first 10 months, when leadership was rotating among cyclical companies. Investors are evincing an appetite for safety even as the market is poised for its longest streak of monthly gains in a decade.

 NDX stalls near the high

NDX made a new high on Thursday, then pulled back on Friday.  The Cycle Top is at 6266.33 while the lower Diagonal trendline and Short-term support are at 6140.00.  A decline beneath that trendline may produce a sell signal.    

(BusinessInsider)  All is not well beneath the surface of the stock market.

Market dislocations are running rampant, suggesting turbulence ahead that could go well beyond the modest weakness that major indexes have seen over the past two weeks. And to make matters worse, some of the market’s most ominous technical indicators are flashing serious warning signals.

John Hussman, the president of the Hussman Investment Trust and a former economics professor, is particularly concerned about the growing dispersion of stock market returns.

High Yield Bond Index challenges Short-term support

The High Yield Bond Index challenged Short-term support at 182.64, closing above it.  A break of the upper Diagonal trendline near 180.00 and Short-term support may tell us the rally is over.  

(ZeroHedge)  Following this month’s drop in junk bond prices and the 40 bps spread widening in high yield last week – the largest since November 2016 – Bank of America has come up with an apt title for its weekly fund flow report: “Nightmare on Bond Street”…

… and with good reason: last week, US junk bond funds and ETFs reported a $4.43bn outflow this past week – the third largest outflow on record and the largest since August 2014. This follows a smaller $0.94Bn outflow the prior week. Non-US HY contributed an additional $2.3bn worth of redemptions, bringing the global junk outflow figure to -$6.7bn, also the 3rd largest ever.

USB continues to consolidate at Long-term support/resistance