Crude just broke below its prior low at 63.72, hitting 63.47 as I write this memo. It appears that it will decline to its Wave [iii] target of 58.45 in the next 24 hours, creating another 10% down day panic.

JNK, which has a big presence in the financing of oil and gas development in the US, has triggered its Broadening Wedge formation which has a target of 31.60. It is now in the free-fall zone, since it has violated all probable supports, including the Cycle Bottom support at 39.19.

This may remove one of the sources of financing for stock buybacks, which have reduced the float of stocks.

Finally, XJY appears to have made its low on Friday, as it has risen above its hourly cycle Bottom and the Ending Diagonal trendline. It would be best to see it rally above the upper trendline of the Ending Diagonal at 83.00 for confirmation, but this is a good sign.

In addition, USD/JPY has retreated from a high of 121.85 to 120.82. Once beneath 120.00, the source of funding for SPX may also start to dry up.

Regards,

Tony

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