VIX Warns That Stocks Are in Trouble, Pre-Crash Formation
Stock-Markets / Stock Markets 2012 Aug 29, 2012 - 11:10 AM GMTI changed the Elliott Wave pattern in the VIX to conform with that of SPY. As you can see, it broke above intermediate-term support and is preparing to break above Cycle Top resitance at 16.72 and the 50-day moving average at 17.11. The VIX has a very long way to go in a very short period of time. The open gap at 34.49 still waits to be filled.
SPY hasn’t yet broken down below mid-cycle support at 141.11. When it does, the tightening trading bands suggest a powerful move is in the making. A common move within tightening bands may be another zigzag to 142.54, then a violent move to the downside, breaking all supports.
Folks, this is a pre-crash formation and highly unpredictable until it breaks to the downside.
Wave (2) appears finished in TLT, adding yet another worry for the Feds and the banks. A breakdown below 120.55 would be disastrous for our financial system, since the banks are leveraged to the hilt. There may already be a number of financial institutions that are insolvent. A drop in TLT would exacerbate their tenuous condition. Then the bad news stars coming out.
Regards,
Tony
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