Normally this is where the SPX back-tests the 50-day Moving Average. Today is not a Pivot day, so I would not be surprised if SPX simply touches the 50-day and resumes its decline, but we have to be patient. It is not in the nature of a decline to miss a retest of support/resistance.

A decline beneath 2017.00 raises the probability that the decline has resumed.

The Hi-Lo Index opened above its mid-cycle support/resistance at 63.92 and is going higher. That may be due to hedge funds “buying the dip.” I have noticed that the Hi-Lo has been starting lower, but moving up intra-day. This may be the evidence of hedge funds buying the SPX.

This puts the Hi-Lo back on “aggressive sell,” not confirmed sell. It appears to be a normal retracement after an impulsive decline. I will reconsider my position should the Hi-Lo go above 262.00.

VIX has completed 5 waves from its Minor Wave 2 low. A retracement is in order. It appears that a decline is most likely to go to 17.30, but may go as far as the 50-day Moving Average at 15.72.

Respectfully,

Tony

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