This action is reminiscent of the 2011 summer lows. Once the 50-day moving average was re-crossed in late July 2011, it took 13 market days to the August 8 low making nearly a 20% decline.

It appears that the rally is done, or nearly so.

VIX completed 5 waves higher on October 9 and has since made a 57% retracement, near short-term support. There may be one more probe lower to mid-Cycle support at 15.83.

It is not certain whether the retracement is over.

There is room for a further decline to the neckline at 26.60. Once finished, TNX may be ready to launch above the Lip of the Cup with Handle in its next move. The point of recognition may be when TNX approaches or exceeds 30.00.

After an already incredibly busy week, I am expecting guests from out-of-state tonight and plan on leaving for an extended weekend mid-afternoon tomorrow. There will be no Weekend Update, but I plan to send out the mid-week Closing Commentary tonight.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

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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