Stocks may "cut loose" after supports are passed
Stock-Markets / Stock Markets 2016 May 04, 2016 - 06:09 PM GMT
SPX took all morning to successfully decline through the 4.5-year trendline and retest it. There are two probable paths it may take from here. First, it may complete an impulse at the 50-day Moving Average at 2037.73 and retest the trendline again. Or it may break the 50-day support and 2-hour cycle Bottom at 2026.17 while continuing its decline, as the Wave structure in the chart implies.
Thus far, the decline has taken 9 market days. It has met with a lot of “push back.” However, each retracement is progressively smaller, implying the downtrend is strengthening. Note the narrowing trading bands. This implies a large move is in the offing.
SPX is now om a confirmed sell with final acknowledgement beneath the 50-day Moving Average.
VIX is now above its 2-hour Cycle Top support. You can also see these trading bands narrowing. VIX is now on a confirmed buy with final confirmation above 17.09.
The NYSE Hi-Lo index is still challenging its 50-day Moving Average. A solid close beneath it may confirm the sell signal here, as well. However, until then there is no signal from the Hi-Lo. This is a lagging indicator and often leaves part of the cycle turns on the table. However, it adds reliability when it signals after the turn.
TNX appears to have corrected its decline this morning. It may be capable of a large decline from here.
It also implies that equities may “cut loose” from here as well. Narrowing trading bands here, as well…
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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