VIX appears to be on a stop hunt this morning to take out all the protection buyers that put stops on their hedges while the SPX weakened this morning. This move could also be an effort to stabilize stocks at the first trendline (see SPX below).

ZeroHedge observes, “The ubiquitous VIXtermination algo at the open did manage a modest jump in stocks, but that is fading fast now even as they push protection costs ever lower...”

This is a perfect setup for a slingshot move that may not only exceed the 50-day Moving Average, but possibly close above the Head 7 Shoulders neckline.

By the way, I am having difficulties with putting up the call-out boxes on the charts. I will attempt to remedy this later today.

The fight to hold the trendline has been lost…

…and the NYSE Hi-Lo finally gives a sell signal as it breaks down beneath prior lows.

It appears that it may be time to go all-out short on these signals, even though the VIX is below its 50-day. We would like to see the Hi-Lo close at these levels, or at least beneath its combined mid-Cycle and 50-day levels.

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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