Stock Market Support Lost at 50 Day Moving Average
Stock-Markets / Stock Markets 2013 Oct 04, 2013 - 10:15 AM GMT
The 50-day moving average has lost its ability to support the SPX and it may be possible that the Intermediate-term support is also ineffective. The cash equivalent in the overnight futures is already at 1674.60. We may see a gap down beneath that level in the morning.
A larger Broadening Wedge trendline show up at 1670.00, but it is too large to show on the already busy hourly chart. I may be switching to a daily chart to follow the goings-on in the SPX.
The next level for an appreciable bounce may be at 1610.00, where the Weekly Ending Diagonal Trendline and daily mid-Cycle support lie. This would be considered a common target for Minor Wave C. However, I would consider this an absolute minimum target for a Minor Wave C nested inside a larger Cycle Wave c.
I wanted to show you the weekly chart of the VIX, since it shows the bigger picture of what may be coming. The Ending Diagonal which encompasses Cycle Wave c in the VIX is very near to a breakthrough. A jump above 19.00 would do the trick, setting off a new and higher target for the VIX. Ending Diagonals completely retrace themselves, so there is a very high confidence target of 48.00 once the Diagonal trendline is surpassed.
However, it is nested within a larger Falling Wedge which encompasses the entire Cycle a-b-c decline from November 2008. Both Falling Wedges and declining Ending Diagonals have a 98% success rate after the upper trendline is broken, so we are very close to a spectacular move in the making.
The Cycle Model confirms this and suggests the first target may be reached by next Wednesday. There is always the possibility that the first attempt may fall short of its intended target at 48.00. However, we may see the Head & Shoulders target being met at a minimum.
TNX appears to have completed a 77% retracement of Minor Wave 1 of Intermediate Wave (C). Today is day 90 (and a Primary Cycle low) of the new Master Cycle after a Trading Cycle high on September 5. The next wave higher could extend through early November. This move could take TNX near 40.00.
Today gold attempted a retest of Short-term resistance at 1328.29, but could get the elevation needed. Today is also a strong pivot day for gold, which condemns it to another 4 weeks of decline into the next Master Cycle low.
Regards,
Tony
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