VIX has completed its pullback to the declining trading channel trendline. This morning it has crossed above the 50-day Moving Average and is on an SPX aggressive sell signal. This would be confirmed above mid-Cycle resistance at 13.54.

SPX may end up bouncing at its Short-term support at 1975.19 or mid-Cycle support at 1973.41. The t op of that bounce would be the ideal short entry point. However, for those who have waited for this moment, it may be good to have a partial short position and add at the bounces. This is an old Jesse Livermore practice that I have adopted.

ZeroHedge has an article entitled, “The Bigger They Are, The Harder They Fall.” This suggests that a 20-30% decline may be in the offing. Of course, they don’t tell you when.

The Hi-Lo index is on a confirmed sell, subject to closing beneath 83.00 today. Should the market continue to decline another tranche of short positions may be put in prior to the close.

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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