SPX broke through its cluster of supports this morning, testing Hourly Cycle Bottom at 1400.21. Having completed yet another impulse, it is now retracing back to the 50-day moving average at 1413.17. This level will be attacked, since the loss of the 50-day support is a major breakdown. Once that support is lost for a second time today, selling should resume shortly with a minimum decline to 1344.00. The next model support is the next round number in SPX…1300.00.

There may be a bounce at 1388, which is the panic trigger and 200-day moving average. The loss of support at the 50-day moving average is now bringing a heightened awareness of how shaky the markets are. Crossing 1388.00 should bring an avalanche of selling, including a potential flash crash.

The Lip of the Cup with Handle is being tested for support. Hourly Cycle Top support is nearby at 19.56, but the VIX may not decline that far. Minor retests of this sort are not to be feared.

TLT appears to have concluded its retracement at its Hourly mid-Cycle resistance and Intermediate-term resistance at 123.10. This also corresponds with daily mid-Cycle resistance in TLT and USB. Once it crosses the Lip of its Cup with Handle near 119.64, the decline really begins in earnest, contrary to Tyler Durden’s view of a smashing rally in the long bonds.

I’ll be in touch later with more breaking news.

Best wishes to you and yours for the Holiday Season.

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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