The “hope trade” lingers for yet awhile. Any rumor of a settlement could boost the SPX back up to the H&S neckline. If so, I will re-label this spike as Wave [c] of 2. It may even go back to 1700.00 briefly. Everything is tentative, yet, so I may post another look at the SPX later. What I do know is that tomorrow is a double pivot day, so it makes te most sense that we get a spike from this low before the market turns down hard.

Tomorrow is also a Cyclical anniversary (2.15 years) from the August 8, 2011 low. It makes this a potentially significant turn.

VIX made quite a jump higher this morning. There is a strong likelihood that VIX may test the Cycle Top at 16.36 for support. We’ll be watching for more developments later today and tomorrow.

VIX is heading toward its Trading Cycle high either Friday or next mid-week. You can see that it made its minimum H&S target. The next target may be the Ending Diagonal trendline at 18.00 or slightly higher.

TNX broke through its Declining Wedge this morning. We may expect to see a bit of hesitation today, but that may also be resolved in the next day or two.

TLT topped on Friday and appears ready for a further decline. A decline beneath the 50-day moving average may change common perception on the risk level of the long bond.

Regards,

Tony

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