VIX is Reversing, Other Stock Market Indicators are Faltering

By: Anthony_Cherniawski

The NYSE Hi-Lo index is acting strangely today. It appears that it may fail at exceeding its prior high of 420.00 from the previous week. That would complete a “failed” point 5 of its Orthodox Broadening Top that I also pointed out last week. A bearish portent for the Hi-Lo.

That may explain the action in the SPX, which made a new high at the open, but is treading beneath the upper trendline of its trading channel.

Note that volume has picked up considerably and not all of it is positive. Again, we must see SPX drop beneath 2060.00 to have a reversal in place. That would give us an aggressive sell signal that, for the time being, would not be supported by the Hi-Lo index.

VIX, on the other hand, appears to be on the upswing, although its must break mid-Cycle resistance at 13.58 just to get an aggressive sell signal. The 50-day Moving Average is at 15.80, where the sell signal would be elevated to a confirmed status. Of course, that would also constitute a breakout of the sub-Minute Wave (iv) high, which also confirms the sell signal.

Wednesday’s low at 11.91 makes a probable Master cycle low in VIX, giving a probable month or more of rally in the VIX.

We also see a probable declining Broadening Wedge, which is very bullish for VIX. A rally above the upper trendline at 15.00 would give a probable target near the Head & Shoulders neckline at 31.06.

The Yen is due for a triple Trading Cycle low either today or Monday. I have seen double clusters of Pivots before, but this is the first triple Pivot. Two of the three pivots fall today, so this may be why SPX is still above support. By Monday, all three of the pivots may be in effect, telling us a very powerful reversal in the Yen may be at hand.

This, in turn, may remove the liquidity of the Yen Carry Trade that has boosted the SPX for the last 43 days.

The Euro, on the other hand, may experience a triple Pivot reversal between Monday and Wednesday next week. It still has a final probe to make to its Probable target of 122.00.

From there, XEU should rally to its mid-Cycle resistance at 132.96 before resuming its decline.

Regards,

Tony

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