The SPX Premarket attempted to stay above the trendline in overnight action. However, it has lost upward momentum without making a new high and is threatening to cross beneath the short-term rally trendline.

The larger 4.3-year trendline is still the most important, so a decline below 2040.00 may indicate that the longer trendline is also being taken out.

USD futures have climbed to 96.08, creating more overlap in the Wave structure. Wave [c] may not be complete, but the current action makes analysis more difficult. For the moment, I stand by my call that Wave [c] may drop even lower, since a Wave [c] of 3 is generally larger than [a]. Wave [c] must reach 93.92 simply to be equal with [a]. Otherwise this appears to be an oddity in the Wave structure.

Could the Central Banks be at it again? The reason I say this is because USD/JPY is on the rise again, perhaps to stimulate a potential rally in SPX.

At the moment, SPX isn’t paying it any attention.

ZeroHedge reports, “…But while equities remain surprisingly uneventful despite loud warnings by both JPM and Goldman now that another bout of volatility and equity downside is coming, in FX there has been a substantial change, one which has seen the US dollar rise for a fourth day, the longest winning streak in a month, driven by the latest round of hawkish Fed jawboning courtesy of the Chicago Fed's Charlie Evens yesterday, which in turn has pushed down prices of oil, gold and copper.”

VIX futures have flat-lined in the overnight market. However, it also closed very near its Pennant trendline. What’s surprising is that the bottom has been flat since last Friday when it last made a low of 13.75.

Dana Lyons reports, “Data from the volatility market suggests that expectations in the near-term may have finally gotten a bit too complacent.

For the duration of this post-February stock rally, we have been consistent in noting the tepid, or even skeptical, sentiment readings being generated along the way. Along with strong breadth and momentum measures, this lack of belief in the rally has actually been one factor that has enabled its persistence. About 6 weeks in now, however, we are finally getting some preliminary signs of complacency toward the rally on the part of traders.”

TNX also remained flat overnight. It is poised for its largest decline yet, but may be waiting for a catalyst. Whatever it is may be big.

As I said yesterday, all of the Cycles are inverted (stocks, bonds, commodities, currencies). This appears to be the wind-up for a very large move.

Regards,

Tony

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