SPX Back on a Sell Signal

By: Anthony_Cherniawski

SPX is now beneath its 50-day Moving Average and declining. It is now back on a sell signal, so we may see another several days of decline ahead.

There is an excellent article by Charles Hugh Smith about how investors are being herded into risk assets that cannot be sustained.

VIX is back above its 50-day Moving Average and it is on an aggressive sell signal. The chances of its falling back beneath that level are slim to none, so we may go all in before the breakout to confirm.

We know that 85% of the float of VIX ETFs is shorted.

We also know that the VIX ETFs are horribly suppressed. However, from a Cyclical view, the dominant Master Cycle of the VIX ETFs lag the VIX and the Cycle low which may have happened yesterday was overdue by a week.

Here is another case of herding to keep investors from hedging their portfolios.

TNX appears to have mad a small but impulsive decline from the Cycle Top. An even smaller correction may already be finished. TNX appears to be capable of resuming its decline early next week.

MUT has crossed its Head & Shoulders neckline and is likely to continue through mid-week.

Goldman Sachs is discussing the politicization of share buybacks, but the market may have already taken care of the problem. The crossing of the 200-day Moving Average and the Head & Shoulders neckline may put the kibosh on corporations using junk bonds to finance the buyback of shares.

On a more alarming note, Investment Grade Corporate Bonds (IG) have been declining beneath their 200-day Moving Average since late April. Insurance companies and pensions are the biggest users of IG bonds. I have asked several insurance company executives whether they have a “plan B.” Their response has been from outright indifference to “I don’t get paid enough to lose any sleep over it.”

I hope they wake up soon.

Regards,

Tony

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