Crash of the Chinese stock market. This is the second largest single day crash in Chinese stock market history as over 1500 companies are halted at limit down for the day. European stocks were bid lower, although of their lows for the day.

This activity has put US Stocks down as well. The SPX Premarket is lower by approximately 11-12 points as of this writing. There is a good likelihood for a decline below 2000.00 before any meaningful bounce. It remains on a sell signal.

VIX broke above its 50-day Moving Average on Friday, putting it on an aggressive sell signal despite the close beneath it. This morning’s VIX futures are up .65, re-emerging above the 50-day. A confirmed sell signal would be above 15.05, the daily mid-Cycle line.

TNX is declining, as expected. We may expect this decline to persist for some time, possibly as long as early September, before yields final bottom out.

WTIC made a low of 47.20 this morning as the decline in commodities gathers steam. The Cycles Model suggests a continued decline with an occasional bounce through late August.

Gold is essentially on the same pattern, but delayed aby 2-3 weeks behind crude. It has completed another impulse lower, but may be subdividing to make way for an even larger decline.

MUT broke the neckline of its Head & Shoulders formation on Friday. Based on that, we may see it challenge the October 15 low in short order.

This implies that money is fleeing the High Yield complex, which may bring a halt to buybacks and dividends being financed by High Yield bonds.

Regards,

Tony

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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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