BKX has lost all Model supports and appears to be capable of declining to its daily mid-Cycle support at 59.36. Should it stop there and bounce, we may have the setup for our first Head & Shoulders formation in this decline.

Note that it is already below the 50-day moving average at 64.66. That has traditionally been the trigger point for a Flash Crash. Banks certainly have the fundamental reasons for going lower, including another loss in the third quarter as well as legal issues with the enforcement authorities.

SPX is bouncing from its Broadening Wedge trendline and the 13-year Orthodox Broadening Top trendline precisely at 1697.00. Adding a 13-year trendline to an hourly chart is just too much clutter, but believe me, it is there. The point is, the 13-year trendline did provide resistance aon the way up and a modicum of support for the first week of August, but no resistance whatsoever on the way up in September. That suggests that its ability to produce more than a cursory bounce on the way down is nil. I expect that it and the Broadening Wedge trendline will be crossed in the next 24 hours.

VIX is not finished yet with its move from Friday’s low. It appears that the 50-day moving average at 14.12 or the trendline at 13.85 may be the stopper.

TNX declined beneath its 50-day moving average, but may not go any further. Wednesday’s low still appears to be the bottom of Primary Wave [4]. The Cup with Handle target appears to be operative in the next move higher.

Regards,

Tony

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