My earlier thesis of an unfinished retracement in SPX hit the nail on the head. Note that it didn’t go above the March 23 high, verifying the weakening uptrend. I recalibrated the Megaphone formation and verified it as an Orthodox Broadening top rather than a Broadening wedge. The formation may be triggered at 2103.00, so this is where I expect a Flash Crash to begin.

The lack of liquidity has me very concerned, since the last time this was tested was on October 15, when the market declined 3% in three hours. The last two levels at which you should be short are the rising trendline at 2090.00 and the 50-day Moving Average at 2082.08.

As I had surmised, the VIX is being suppressed into the close of trading in the VIX options at noon today. I suspect that it will liven up after 3:00 when the options settle. The two confirming levels for a VIX sell signal are 14.62 and 15.15. Presumably they will be attained as the SPX crosses its 50-day Moving Average.

WTIC has broken out above its Wave [a] high at 54.24 and at 55.86 it appears to be gaining strength for a much higher push. Mid-Cycle resistance at 69.51 is the apparent target, but whether it attains it or goes higher is still anyone’s guess.

I’ll be out with a Mid-week Report after the close.

Regards,

Tony

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