VIX tagged the 10-handle on Friday morning as the Commercials staged a raid on the long Speculators. It only took a few minutes, but it suggests a lot of shares traded hands as the computers hunted down and took out the stops. Re-crossing the Intermediate-term resistance at 17.38 confirms the VIX buy signal.

(Bloomberg)  Cboe Global Markets Inc. says not enough traders participated in the eye-catching April 18 VIX futures auction, meaning an innocent explanation — not manipulation — explains the events of that day.

“We want to be clear that we were disappointed with the 18th, and we saw it as a liquidity challenge and nothing more,” Cboe President Chris Concannon said during an earnings call on Friday.

SPX bounces at the 200-day Moving Average

This week SPX challenged Long-term support at 2613.58 before rallying toward the 2-year trendline at 2720.00, but didn’t achieve it. It continues to be on a sell signal. A close beneath Long-term support confirms the new outlook. Note that SPX closed at a loss for the week.

(USNews)  U.S. stocks made up for a shaky week with a strong finish Friday as Apple led a rally in technology companies. The tech giant hit an all-time high after Warren Buffett said he’d made another big investment.

Stocks got off to a mixed start after trade talks between the U.S. and China ended with few signs of progress. The April jobs report showed that hiring continued at a solid clip and wages continued to grow at a slow pace. Apple surged after Buffett said Berkshire Hathaway bought 75 million shares during the first quarter.

Alphabet, Cisco Systems and other technology companies rose, and retailers, banks, and household goods makers also rallied. Investors also cheered strong first-quarter results from companies including Shake Shack and Activision Blizzard.

NDX also bounces at Long-term support

The NDX bounced toward its 2-year trendline, but failed to reach it, leaving an “inside week.”  However, it did manage to close above Intermediate-term support/resistance, calling the sell signal into question.  Declining through Long-term support at 6500.10 confirms the sell signal.

(ZeroHedge)  Today’s surge in AAPL stock, when news of more purchases by Warren Buffett in the first quarter unleashed a buying frenzy, sending the stock to a new all time high, had a secondary effect of accelerating the entire FAANG sector (Facebook, Apple, Amazon, Netflix and Google), which now makes up a bigger piece of the tech pie than ever before.

As the chart below show, FAANGs now accounts for over 27% of the Nasdaq Composite, a new all time high, doubling in the past 5 years. 

It also triggered a warning from none other than Goldman Sachs which looked at a similar ratio, that of the Info Tech sector as a $ of the S&P, and conclude that “Large exposure = large risk“

High Yield Bond Index declines through the 2-year trendline

The High Yield Bond Index declined through the trendline, challenging Long-term support at 185.53, but closing above it. However, Long-term support may not hold. A broken Diagonal trendline infers a complete retracement to its origin. This may happen in a very short period of time.

(SeekingAlpha)  What will trigger the next distressed credit cycle and when will it begin?

I have no idea.

When it does come, I believe it will differ from past periods of corporate distress.

By now, you’ve probably heard that the majority of syndicated bank loans are “covenant-light.” Covenants are terms in a loan agreement that the borrower must adhere to such as a maximum leverage ratio. Historically, bank agreements contained “maintenance covenants” which allowed the lender to take action as soon as a covenant was breached.

UST begins a bounce from the Cycle Bottom

The 10-year Treasury Note Index bounced from the Cycle Bottom at 118.95 in a retracement rally that may retest the Head & Shoulders neckline. This is a common occurrence and it is surprising that it hasn’t happened sooner. The Cycles Model suggests the retest may happen rather quickly.

(CNBC)  U.S. government debt yields slipped on Tuesday even as the Federal Reserve pointed to higher inflation in its most recent meeting on monetary policy.

The U.S. central bank kept interest rates unchanged Wednesday, as was largely expected, but hinted at higher inflation over the coming months.

The committee noted that “overall inflation and inflation for items other than food and energy have moved close to 2 percent.” That was an upgrade from the March meeting in which the Federal Open Market Committee said the indicators “have continued to run below 2 percent.”