7.0 Magnitude Earthquake in Alaska

Yesterday there was a 7.0 magnitude earthquake in Anchorage, Alaska.  My daughter, who lives in Fairbanks, is fine.  Friends who live in Anchorage have lost their home and are seeking shelter from the bitter cold as I write.  Pray for these folks and send whatever help you can.

ZeroHedge reports, “Update II: In a tweet, President Trump said the federal government would “spare no expense” to help the people of Alaska.

Donald J. Trump

✔@realDonaldTrump

To the Great people of Alaska. You have been hit hard by a “big one.” Please follow the directions of the highly trained professionals who are there to help you. Your Federal Government will spare no expense. God Bless you ALL!

VIX consolidated beneath its Cycle Top resistance, closing beneath its weekly Short-term support/resistance at 18.70. Note the right shoulder of the Head & Shoulders formation which is in near-perfect symmetry with the left shoulder. A breakout above the neckline may challenge the February 6 high.

(Barrons) 2:28 p.m. The Dow Jones Industrial Average has gained more than 1000 points this week and could be on course for a fourth day of gains. Given that situation, we’d expect volatility to fall meaningfully. Instead, The Cboe Volatility Index, or VIX, is still elevated. What gives?

Despite the S&P 500’s 2.3% rally Wednesday, the VIX fell just half a point, and today it sits at 18.89, up 2%. Pravit Chintawongvanich, equity derivatives strategist at Wells Fargo, contends that part of the reason that the VIX didn’t budge much…

SPX testing Long-term resistance.

SPX rallied this week up to its Long-term resistance at 2761.65.  What started as a minimal rally early tis week was jump-started by a comment from Fed Chairman Jerome Powell.  Suddenly the fear of future rate hikes turned into a fear of missing out on the rally.

(RealInvestmentAdvice)  All it took was two 10% stock market corrections in a single year and some heavy “browbeating” from President Trump to reverse Jerome Powell’s hawkish stance on hiking interest rates.

On Wednesday, Powell took to the microphone to give the markets what they have been longing for – the “Powell Put.”During his speech, Powell took to a different tone than seen previously and specifically when he stated that current rates are “just below” the range of estimates for a “neutral rate.” This is a sharply different tone than seen previously when he suggested that a “neutral rate” was still a long way off.

Importantly, while the market surged higher after the comments on the suggestion the Fed was close to “being done” hiking rates, it also suggests the outlook for inflation and economic growth has fallen. With the Fed Funds rate running at near 2%, if the Fed now believes such is close to a “neutral rate,” it would suggest that expectations of economic growth will slow in the quarters ahead from nearly 6.0% in Q2 of 2018 to roughly 2.5% in 2019.

NDX tests Short-term resistance.

NDX rallied this week, but did not reach Short-term resistance at 6984.85.  The Cycles Model suggested a Trading Cycle would be finished by Friday. It turns out to have been an inversion. The Model suggests strength may dissipate this weekend.

(24/7WallStreet)  Golden crosses and death crosses are common signals in technical analysis and refer to the relationship between short-term and long-term moving averages. The golden cross typically is seen as a bullish sign, perhaps a stock that has or is about to break out. The death cross, on the other hand, can be a bearish sign, perhaps warning investors to get out of the way or signaling that it may be time short the stock.

Here are five top technology stocks that recently saw their 50-day moving average cross below the 200-day average, a death cross, and could be considered contrarian plays or short opportunities.

High Yield Bond Index breaks above the trendline.

The High Yield Bond Index broke above its long-term trendline and critical support/resistance levels. The sell signal is lifted. High yield bonds must break above the prior high to be bullish. Otherwise, a decline back beneath critical supports will revive the sell signal.

(Bloomberg) Investors pulled cash from funds that invest in leveraged loans, while high-yield debt draws scrutiny from the Federal Reserve for losses it could inflict on investors in a downturn.

Mutual and exchange-traded funds saw outflows of $1.32 billion in the week ended Nov. 28, the third-biggest exodus this year, according to data from Lipper. Their junk bond counterparts also saw a withdrawal of $1.2 billion, the data show.

UST rallies to Long-term resistance.

The 10-year Treasury Note Index rallied to Long-term resistance at 119.64 this week. UST may extend its rally into mid-December according to the Cycles Model.

(Bloomberg) The prospect of an inverted U.S. Treasury yield curve is back on bond traders’ radars. It’s just not the part they expected.

For most of this year, the yield spread between seven- and 10-year Treasuries was the smallest of all benchmark U.S. maturities, never closing above 10 basis points and dipping to as low as 2 basis points in mid-May. Some strategists predicted that the difference would eventually fall below zero and encourage other parts of the curve to invert. That never happened.

The Euro looks weak.

The Euro traded lower this week, but may have the ability to regain some altitude over the next 2-3 weeks.  Granted, there is a triple resistance near 115.00, but that hasn’t stopped it from rallying above it in September.

(Reuters) – European Union finance ministers will seek final agreement on Monday on deeper euro zone integration which, after a year of negotiations, is likely to turn out much less ambitious than initially planned.

Championed by French President Emmanuel Macron, the reforms were meant to prepare the 19 euro countries for the next financial crisis and unite the EU around the single currency at a time of growing eurosceptic sentiment across the bloc.

But the talks ran into many difficulties: Germany did not have a proper government for almost six months, Italy elected a eurosceptic administration and the talks exposed fault lines between the north and the south and even between institutions.

EuroStoxx bounced near the Cycle Bottom.

The EuroStoxx bounced near the Cycle Bottom, having an “inside” week due to converging support and resistance.   Unfortunately, that support may not hold as EuroStoxx is due for a significant lower low by mid-December.

(CNBC) European stocks lost value on average at the end of the week, as key leaders congregated for a major event in Argentina.

By the close the pan-European Stoxx 600 was provisionally 0.25 percent lower with the different sectors struggling to make clear gains.

The European index shed 0.92 percent for the week.

Autos and basic resources fell the most as investors focused on the upcoming trade talks at the G-20 summit, in Buenos Aires on Friday. Investors are paying special attention to a meeting between President Donald Trump and China’s President Xi Jinping.

.The Yen let go of support.

The Yen lost its grip on Short-term support at 88.56, testing prior lows.  The yen appears to be in a weakened condition that may last into mid-December.  A new three-year low may be possible.

(Bloomberg)  The world’s currency prognosticators appear to agree on at least one major trend for the next couple of years: The yen is going to get stronger.

From about 113.30 per dollar now, the yen will probably appreciate to 105 by 2020, according to a Bloomberg survey in which the weakest estimate was for 113. But the more bullish analysts, including Commerzbank AG and Morgan Stanley, see it solidly below 100, reaching levels last seen in 2013. Rather than a result of haven buying precipitated by global chaos, Commerzbank, for one, expects the rally to come from tighter Bank of Japan monetary policy.

Nikkei challenges Long-term resistance.

The Nikkei challenged Long-term resistance at 22289.46, closing above it. While this action plays havoc with traders, the trend hasn’t changed. The Cycles Model suggests that the decline may last into early or mid-December with the weekly Cycle Bottom as a potential target.

(Reuters) – Japan’s Nikkei was flat on Friday morning as investors braced for the results of the weekend meeting between the leaders of the United States and China, while the steel sector was dragged down by a brokerage’s downgrade.

Many investors stayed on the sidelines ahead of the G20 summit in Buenos Aires, where President Donald Trump was due to meet his Chinese counterpart Xi Jinping to discuss trade and other thorny issues.

The Nikkei share average was flat at 22,261.92 at the midday break, after moved in and out of positive and negative territory.

U.S. Dollar tests the high then closes lower.

USD tested the high on Wednesday, then eased down, still closing up for the week.  The Cycles Model calls for a resumption of the decline for the next 2 weeks.  The new Broadening Wedge may be triggered should it decline beneath the lower trendline at 93.67.

(CNBC)  The dollar recovered against its rivals on Thursday as caution before a G20 meeting prompted investors to buy back the currency after comments by the Federal Reserve chief were seen as a sign that a rising trend in U.S. rates may be coming to a close.

The G20 summit on Friday and Saturday is shaping up as a key event for markets given that U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to discuss contentious trade matters after months of tensions between the world’s two biggest economies.

Against this backdrop, risk appetite was likely to remain subdued and benefit the safe-haven dollar, analysts said.

.Gold cxaught between support and resistance.

Gold appears to be caught between support at the Intermediate-term line (1216.70) and resistance at the Short-term level (1224.22).  The Model calls for strength for another week, but time is running out.  A potential retracement target may be the mid-Cycle resistance at 1260.51.  Gold may be extending the right shoulder of a potential Head & Shoulders formation before resuming its downtrend.

(CNBC) Gold edged lower on Friday as the dollar firmed ahead of an expected meeting between U.S. President Donald Trump and China’s President Xi Jinping at the G20 summit, but bullion was on track to post its second straight monthly gain.

Palladium soared to a record high on the back of a structural deficit in the market due to a shortage of supply, putting it just $27 shy of parity with gold.

Spot gold was down 0.11 percent at $1,222.31 per ounce. U.S. gold futures settled at $1,226 an ounce.

Trump and Xi are expected to discuss trade on the sidelines of the G20 summit on Saturday in Argentina, where global trade tensions are expected to dominate the agenda.

Crude finally finds a bottom.

Crude may finally have reached a bottom on Thursday after crashing 35.7% from its high.  It has met both Cycles time and price objectives and appears to be ready for a bounce.  The Cycles Model suggests a three week rally may ensue.

(CNBC) Oil prices fell further on Friday as swelling inventories depressed sentiment despite widespread expectations that OPEC and Russia would agree some form of production cut next week.

The two global oil benchmarks, North Sea Brent and U.S. light crude, have had their weakest month for more than 10 years in November, losing more than 20 percent as global supply has outstripped demand.

U.S. West Texas Intermediate was down 52 cents, or 1 percent, at $50.93, after earlier falling as low as $49.65 Brent was down 76 cents, or 1.3 percent, at $58.75 a barrel by 2:28 p.m. ET, having bounced from a session low of $58.25.

Shanghai Index makes a new monthly low, closes higher.

The Shanghai Index caught itself making a new monthly low, but bounced on Friday.  This may be the start of a short-term bounce that may last through mid-December.  Should it fail, the decline resumes through the year-end and a potential bottom near 2000.00.

(Reuters) – China stocks rose on Friday in thin trading volume, amid caution ahead of a most-awaited meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Argentina. ** The Shanghai Composite index was up 0.8 percent at 2,588.19, gaining 0.3 percent for the week. The blue-chip CSI300 index was up 1.1 percent, climbing 0.9 percent for the week. ** CSI300’s financial sector sub-index was higher by close to 1 percent, the real estate index rose 0.9 percent and the healthcare sub-index was up 1.3 percent. ** The smaller Shenzhen index ended up 0.9 percent and the start-up board ChiNext Composite index was higher by 1.3 percent. ** Trump sent mixed signals on Thursday about the possibility of a deal, whereas China Daily, Beijing’s mouthpiece, said a deal is possible but added that Washington must be “fair minded” in the negotiations. ** The meeting is coming after China’s manufacturing sector reported its weakest growth in two years on Friday morning.

The Banking Index bounces from mid-Cycle support.

— BKX consolidated at mid-Cycle support at 99.35, rallying above Short-term support/resistance. The Banking Index may have gained some time but a resumption of the decline may break through the neckline of the Head & Shoulders formation at 93.00, causing a panic decline.  The Cycles Model calls for a significant low by mid-December which may meet the implied Head & Shoulders target.

(Bloomberg) A second day of police raids at Deutsche Bank AG targeted the offices of its management board as German authorities said they’re making “very rapid” progress investigating suspected money laundering.

All eight members of the panel had their offices searched. In a statement late Friday, the firm said neither current nor former board members have been accused of wrongdoing. Yet with the bank’s leadership now drawn closer to the probe, its shares tumbled to a record low.

The firm’s supervisory board is set to gather Tuesday, and the latest developments are likely to top its discussions. The inquiry touches the bank’s private wealth unit, part of the expansive Private & Commercial Bank division run by Christian Sewing before he rose to chief executive officer in April. According to the company, prosecutors are targeting employees who failed to report money laundering.

(ZeroHedge) As we have repeatedly documented in these pages, Goldman Sachs’s relationship with the Federal Reserve isn’t limited to one between a regulator and regulatee. In fact, for decades, Goldman Sachs, more than any other bank, enjoyed an influence over the Federal Reserve – and particularly the New York Fed, the “first among equals” of the Federal Reserve system – that flips the conventional wisdom on its head: To put it succinctly, it was Goldman that dictates the rules to the Fed, not the other way around.

Any doubters can familiarize themselves with the story of Carmen Segarra, who – at personal risk to any future career in banking or government – came forward several years ago with a cache of secret recordings the revealed the pervasiveness of “regulatory capture” at the New York Fed, which included evidence that her superiors repeatedly brushing aside her insistence that Goldman’s regulatory rating be downgraded because of the “conflict-ridden” nature of some of its deals (note: Segarra was making her recordings exposing the central bank’s unwillingness to challenge Goldman around the same time that the storied “Vampire Squid” was underwriting the $6 billion in 1MDB bonds, despite evidence that the bank ignored its own compliance department’s warnings about the deal). And let’s not forget the incident that unfolded five years ago where a junior Goldman banker received insider information directly from a “source” inside the NY Fed – offering unmitigated evidence of collusion between the two organizations. That banker, though fired from Goldman, was later let off with a slap on the wrist. 

(ZeroHedge) A brand new expose by Bloomberg shines light on modern day loan sharks: city officials that are armed with badges like Vadim Barbarovich, who earned $1.7 million last year, easily giving him the most lucrative job within the government of New York City. His official title is City Marshal, and he’s one of 35 that the mayor has appointed to compete for fees from recovering debts. While traditionally marshals evict tenants and tow cars, Barbarovich has found his place in part of a debt collection industry that allows them to use their legal authority on behalf of predatory lenders.

It’s a practice that dates back to the 17th century. Back then, jobs across the Hudson River for marshals yielded the highest fees. Under current law, marshals are entitled to keep 5% of cash that they collect. The city also has a Sheriff’s office that does similar work, but those employees get a salary. Several mayors have called for an end to the marshal system over the last few decades, but nobody has been successful in getting the state legislature to act upon it.

While Barbarovich’s jurisdiction is supposed to end at city limits, he has worked to recover debts from places like California and Illinois, among others nationwide.

Have a great weekend!

 Disclaimer: Nothing in this email should be construed as a personal recommendation to buy, hold or sell short any security.  The Practical Investor, LLC (TPI) may provide a status report of certain indexes or their proxies using a proprietary model.  At no time shall a reader be justified in inferring that personal investment advice is intended.  Investing carries certain risks of losses and leveraged products and futures may be especially volatile.  Information provided by TPI is expressed in good faith, but is not guaranteed.  A perfect market service does not exist.  Long-term success in the market demands recognition that error and uncertainty are a part of any effort to assess the probable outcome of any given investment.  Please consult your financial advisor to explain all risks before making any investment decision.  It is not possible to invest in any index. 

The use of web-linked articles is meant to be informational in nature.  It is not intended as an endorsement of their content and does not necessarily reflect the opinion of Anthony M. Cherniawski or The Practical Investor, LLC.

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