The formation we see here is most likely a Leading Diagonal Wave (i). At the 2-hour scale we see a complete trip from top to bottom of the Cycle. A normal retracement would take Wave (ii) to the mid-Cycle resistance at 2584.39, which is a 58% retracement. The Fibonacci 61.8%, retracement is above the mid-Cycle resistance at 2585.29. It may not make it.

The reason is that the daily Cycle Top resistance is at 2581.45. Cycle Tops and bottoms are somewhat resilient, but once they are crossed, the SPX may not be able to maintain that position. SPX should decline out of that range as it goes into the last half-hour of the day when the sellers come back.

VIX is retesting the 50-day Moving Average going into the final half hour. Today’s breakout is still valid, even if it closes beneath the 50-day. However, it would be ideal for a close above it.

The NYSE Hi-Lo Index made a deep decline at the open and stayed in the lower area of its consolidation. This gives a thumbs up for a confirmation of the sell signal from the Hi-Lo.

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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