E VIX Plunges, Gold Rises, Euro Rally Fizzles And Dollar Weakens

VIX revisited the lower trendline of its massive Ending Diagonal formation on Wednesday, making a key reversal after the FOMC announcement on Wednesday. An aggressive buy signal may be forthcoming should the VIX rally above its Short-term resistance at 11.90. The breakout above the higher resistance zone at 13.33-13.94 implies higher targets to come. The abrupt turn made in August 2015 may be repeated here.

(CNBC)  Something strange happened to Wall Street’s so-called fear index on Wednesday.  The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, broke below 10 for less than a minute Wednesday at 2 p.m. ET, right after the Federal Reserve decided to keep interest rates unchanged.While some experts questioned the significance of the move given its brevity, it did mark the first time since Feb. 16, 2007, that the index fell below 10. Experts who spoke to CNBC said the move could have come as a result of an algorithmic glitch or some other anomaly, but it’s very difficult to pinpoint the exact cause.

SPX revisits the Broadening Top

SPX revisited the upper trendline of its Orthodox Broadening Top which began in July, but did not make a new high. A decline beneath the Cycle Top support at 2267.81 and Short-term support at 2262.72 gives the SPX a sell signal. A break of those supports may send the SPX to its cycle Bottom at 1906.04, or possibly lower.

(RealInvestmentAdvice)  As we conclude week two of the new Presidential cycle, it certainly has not been dull.

The markets have started struggling with an Administration which is hanging up on heads of state, threatening to send troops to Mexico, discussing border taxes and thinking about doubling the required wages for HB-1 visas. Of course, those issues are still currently offset by hopes for a sea of infrastructure spending, tax cuts and reform and an increase in jobs and wages.

The “hope” is most clearly seen in the sentiment surveys, but remains elusive in the “hard data.” As noted recently by Charlie McElligott via RBC:

“The US data has been running at such a clip, as a matter of fact, it’s an increasingly (and massively rhetorical) popular question asked by clients: when do analyst / strategist expectations begin to overshoot?

The NDX retests the Orthodox Broadening Top

NDX retested the upper trendline of its Orthodox Broadening Top, but could not make a new high. NDX must cross beneath its Cycle Top support at 5015.49 to give it a possible sell signal. A further break of the weekly Short-term support at 5008.41 confirms a sell signal.

(ZeroHedge)  Tired of your barista giving you attitude, spitting in your coffee if you only mention Trump, or misspelling your name on your morning cup of joe? Surely a robot could do better. Well, we are about to find out, because on Monday, Cafe X opened its very first robotic cafe in San Francisco’s Metreon shopping center Digital Trends reports. Promising “precision crafted specialty coffee in seconds, the way the roaster intended,” Cafe X thinks that anything a human can do, its machines can do better. Or rather just one machine. 

Nicknamed Gordon, after a Cafe X employee, this robot mans, or robots, two standard professional coffee machines in order to serve up espressos and lattes. In the San Francisco location, customers can grab a cup of coffee with beans from AKA Coffee, Verve Coffee Roasters, or Peet’s. While the coffee itself may not make Cafe X stand out from the competition, the startup hopes that the robot’s efficiency and utility will.

High Yield Bond Index bounces off Intermediate-term support

The High Yield Bond Index declined through its Ending Diagonal trendline to bounce off Intermediate-term support at 161.40. High Yield Bonds are on a sell signal. A broken Diagonal trendline implies a complete retracement of the rally may occur.  s this the canary in the coalmine?

(CNBC)  The great run for high-yielding corporate debt may be ending, some strategists argue.

The High Yield Corporate Bond ETF (HYG) has outpaced the 20+ Year Treasury Bond ETF (TLT) by more than 11 percent in the last three months, rising nearly 3 percent as the TLT got crushed after the U.S. election. High-yielding bonds are often called “junk bonds,” as they carry higher risk of defaulting, along with low credit ratings.

As Erin Gibbs, equity chief investment officer at S&P Global, points out, a significant chunk of the HYG’s 1,034 holdings are concentrated in communications; the fund’s top-weighted constituents include Sprint, Western Digital and French telecommunications company SFR Group. Energy names are also highly represented in the fund.