The short-term uptrend is broken and SPX is trading back inside its larger Orthodox Broadening Top. However, it has also developed a smaller Orthodox Broadening Top (green). In order to fulfill its structure, it should decline to 1960.00-1980.00 in the next couple of days before a bounce. The bounce may either go back to mid-Cycle support/resistance at 2056.70 before proceeding back down to lower levels. Today’s decline may be considered an aggressive sell signal for SPX.

The larger Orthodox Broadening Top suggests a Wave 1 low may be made at 1750.00-1765.00 before a bounce. Let’s watch closely to see which formation is key to this process. Perhaps both are involved in this decline to some extent.

VIX has challenged the upper trendline of its declining Broadening Wedge. A pullback may go to mid-Cycle support at 13.22 before a breakout occurs. VIX is on an aggressive SPX sell signal that may be confirmed as it rises above its prior high at 15.74 or the 50-day Moving Average at 15.68.

Today is the first day since the October 15 low that we have seen the Hi-Lo decline during regular trading hours. An aggressive sell signal is imminent beneath 6.00 and confirmed beneath -75.00.

Respectfully,

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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