VIX declined this week, but failed to go beneath its Wave (3) low at 11.02. Should it reverse from this week’s low, it may qualify as a truncated wave. The implications are enormous, since it implies that the declining energy may have been dissipated. The ensuing reversal may be strong.

(WSJ)  Two major stock and options market indicators were on the same page this week, an unusual alignment that some strategists view as warning that stock indexes could be headed for a fall.

The S&P 500 closed at fresh highs the last two days, signaling investor enthusiasm for stocks. The CBOE Volatility Index, which measures expectations for swings in the S&P 500, also climbed those two days, a sign of increased hedging activity. That is unusual at a time when the market is rising.

SPX hits a double Broadening trendline  

SPX surged beyond its Cycle Top Resistance at 2220.79, intersecting with the upper trendlines of two Orthodox Broadening Tops. The smaller Broadening Top has a possible average target of 1604.50. It appears that point 5 of the Orthodox Broadening Top may be complete.

(ZeroHedge)  In his latest letter to clients, Art Cashin’s tries his best to explain yesterday’s unprecedented market melt up, or as he puts it, how “Technical Levels, Algorithms And Even Dow Theory Help Rout Shorts”

Wednesday’s opening gave no hint of the day that would lie ahead. Stocks opened mixed and indecisive in moderate volume.

The bulls managed to put together a rather half-hearted, meek rally and they spent much of the morning in a very narrow range.

Separately, and unnoticed by most, the Dow Transports embarked on a more intense rally, aided by the airlines.

The NDX challenges its Cycle Top

NDX challenged its Cycle Top at 4895.33, also completing a potential Diamond formation. Should the NDX decline beneath the lower trendline of the Diamond, it may produce a sell signal with a bear market target near 3800.00.

(Bloomberg)  U.S. equities set records as phone companies rallied for a second day and were joined by tech companies as well as stocks that pay high dividends. The S&P 500 Index jumped 1.3 percent to 2,241.35 at 4 p.m. in New York, surpassing its previous high reached on Nov. 25.

The Dow Jones Industrial Average added 1.2 percent as all but three of its 30 stocks advanced. While the S&P 500 is up 3.7 percent since the U.S. election, the groups leading the market Wednesday — phone, utility and tech stocks — were those that have lagged behind big moves in financial and energy stocks the past month.

High Yield Bond Index lags behind stocks

The High Yield Bond Index rallied, but could not close above its July 14 high at 164.17.  Time for a continued rally may have run out, putting MUT in danger of a reversal.  It will give a sell signal by declining beneath its Short-term support at 159.18.  A failure at Long-term support at 155.94 may produce a sharp decline to mid-Cycle support at 145.93.

(FT) There was no shortage of buyers when Microsoft sold $20bn in bonds this summer to fund its acquisition of LinkedIn. After years of low interest rates — and with rates in some countries heading into negative territory — debt issued by US companies such as Microsoft looked very

But after Donald Trump’s pledge to push for an aggressive fiscal stimulus of the US economy, these blockbuster corporate debt sales suddenly look like hallmarks of a very different market environment. As investors and markets try to anticipate what a Trump presidency will mean, one early conclusion is that a dose of fiscal shock treatment will result in much higher interest rates and accelerating inflation.attractive compared with the meagre returns offered by government bonds.

USB resumes its decline

The Long bounced through Wednesday, then resumed its decline. It appears to have made a significant low today. There is a high probability that a bounce may begin for another one to two weeks that may challenge weekly Short-term resistance at 156.48. There is room for more downside but a brief consolidation appears imminent.

(Bloomberg)  A closer look at the current breakdown of interest payments on U.S. debt should cause President-elect Donald Trump’s Treasury Secretary pick Steven Mnuchin to pause before endorsing the sale of ultra-long bonds as a cushion against rising rates.

At least that’s what Cullen Roche, founder of San Diego, California-based brokerage Orcam Financial Group LLC, says after pointing out that despite the surge in total U.S. debt over the past decade, the government’s annual interest costs have been relatively flat.