Last night I noticed that SPX was near the lower trendline of its Ending Diagonal. A check back this morning shows the probe hit the Diagonal. This may not be good for the SPX.

VIX stayed above its mid-cycle support at 13.86. The reversal is now above the 50-day Moving Average at 15.27 which may stand as confirmation of the reversal.

GLD just lost Intermediate-term support at 117.80 and may be preparing to break through its Cycle Bottom at 116.23 in a decline that may extend through mid-December.

HYG spiked on October 23 and has been in decline since then. This is not being confirmed by MUT, which remains bearish. This tells us that liquidity is becoming a real issue, where on the 15th, there was none and on the 23rd there seemed to be ample liquidity. This is driving the media schizophrenic trying to interpret what seems to be going on. Does anyone really know?

I would call this the “death lunge” for high yield bonds. Russell Napier has a commentary about the source of funds for this gyration.

Regards,

Tony

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