USD spiked higher overnight, but lost all of its gains after 3:00 am in the Premarket. It hasn’t made a new low yet but, by all appearances, may do so very soon. We will be watching the 98.70 to 99.00 support to see if it is broken.

SPX futures are also easing down from their overnight highs. There is an option to retest 2355.00 in an attempt to stall the decline prior to the weekend. This is called an expanded flat correction. It delays the potential crash until Monday.

The other probability is that SPX may continue its decline (after a brief correction) to the 50-day Moving Average at 2327.97 with a bounce into the close (a typical Friday outcome).

Of course, there is always the third option, which isn’t evident yet that can surprise everyone.

ZeroHedge reports the largest equity outflows since Brexit. If investors “sell the rally,” it may not get very far.

VIX futures have pulled back to the Lip of the Cup with Handle formation as I write. Although the Lip may be permeable, the Cycle Top at 12.71 may hold the decline in a more bearish scenario.

There is some indication that the retracement may be over. If so, the next decline may be to the expected Master Cycle low sometime next week. The potential minimum target for that low appears to be the 2-hour Cycle Bottom at 23.10.

An interesting note is, should there be a panic, TNX may drop all the way to 21.00!

Take a look at the next chart.

A look at the daily chart suggests something larger is at work.

There is a probability of a panic decline to 21 in an expanded Wave C. The declining Broadening Wedge may provide the “ultimate” support for Wave (4).

More on this later.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals.

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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