Stocks are Down, VIX is Higher, But No Signal This Morning
Stock-Markets / Stock Markets 2018 Jan 29, 2018 - 03:34 PM GMT
Good Morning!
TNX futures are higher this morning as to blows out prior resistance levels into a clear Wave (5) rally that is still in its early stages. It is approaching its Weekly Cycle Top resistance at 27.80, but is likely to blow through it. The Head I Shoulders pattern usually indicates the terminus of Wave 3. The Monthly Cycle Top is near 35.00 and may be the ultimate target of this final Primary Wave [1] off its all-time low.
ZeroHedge reports, “The recent frantic moves in Treasurys and the dollar continued on Monday as we enter what is set to be a juggernaut of a "rollercoaster week", and while the dollar collapse seems to have slowed for now, this is as a result of an acceleration in the Treasury selloff, with 10Y yields blowing out to 2.72% for the first time since early 2014, and now deep into what Jeff Gundlach called the "danger zone" for equities.”
SPX futures are lower this morning. They must decline beneath the Cycle Top at 2860.26 to conclude the rally. A sell signal is likely to happen as SPX crosses its lower Ending Diagonal trendline at 2850.00 or the VIX breaks out. Today is 256 of the (258-day) Master Cycle and with it, SPX is expected to break down this week.
VIX futures are noticeably higher this morning, but haven’t yet broken out. A breakout may occur either at the prior high of 12.81 or the Cycle Top resistance at 12.99. I prefer the latter since there is a lesser chance of a pullback. As it stands, there is a high likelihood of Wave 1 ending at the neckline instead of its current position in an orderly market. However, we have been warned that the VIX may become very disorderly once it breaks out above resistance.
USD futures have bounced over the weekend with a high at 89.26. However, the Cycles Model suggests yet another week of decline. A close above the Cycle Bottom at 89.66 suggests the decline may be over, but as long as it stays beneath that level, the Cycles Model suggest another possible bearish move.
USD/JPY appears to be hovering at its Cycle Bottom support. However, the declining Wave structure does not appear complete. The Cycles Model forecasts yet another week of decline for both USD and USD/JPY.
Regards,
Tony
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