My start this morning was delayed due to a late work night and early morning dentist’s appointment. I have more activities planned for the day, so my reportage may be spotty.

However, there is good news for our bearish positions this morning. SPX broke down as anticipated with a 2.5 point gap which suggests that selling pressure overwhelmed the always bullish HFTs this morning.

There are two probable scenarios today. The first is that there may be a bounce without much more ado. I estimate the bounce to go as high as 2100.00 (a little over the 61.8% retracement) before rolling over again.

The second scenario suggests an extended third wave hare that may decline to mid-cycle support at 2031.60 or the 50-day Moving Average at 2002.98. This opens the probability of a decline to the trendline at 1880 in Wave 1.

VIX broke above its prior high and week-long trading range, renewing the buy signal for VIX. I would like to see it put some distance between it and mid-Cycle support at 16.29.

The Hi-Lo Index is back on a sell signal. This is the clearest it’s been for a while.

TNX is declining. USB/UST are rising from their Master Cycle lows on Tuesday, as previously discussed. This bolsters our observation that money flows may now support a serious multi-week decline.

All the best,

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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