SPX has bounced off the 2-year trendline (not shown) yesterday. Overnight futures have only made a half-hearted rally, so we may see SPX remain under the mid-Cycle resistance at 2722.23. The 38.2% retracement level is at 2720.30. Should that be the case, the decline may resume after a brief probe to that level.

ZeroHedge reports, “After yesterday's violent selloff which was sparked by a series of negative tech stories including Facebook’s escalating data scandal and a fatal accident involving an Uber self-driving car, Tuesday trading has so far been relatively calm and muted with Europe bourses paring early gains and Asian stocks trading slightly lower...

while S&P futures were hugging the unchanged line as Nasdaq futures pointed to more tech declines.”

NDX bounced from the combined 50-day and mid-Cycle support at 6817.60. NDX futures are flat this morning.

ZeroHedge observes, “Former Lehman trader and current Bloomberg commentator Mark Cudmore can take a bow: just hours after his latest Macro View forecast predicted more turbulence for stocks and "another swoon", the S&P tumbled to just about 2,700 yesterday.

So after that quick elevator ride down, is it time to take the escalator back up? Not just yet.

In fact, in his latest macro view released overnight, Cudmore remains decidedly bearish, and notes that after yesterday "triple-whammy" of blows to the tech sector - Uber, FaceBook and crypto regulations - "those diverse stories will all converge to a similar, very negative outcome for the tech space: tighter regulation and oversight, plus an increase in compliance and legal costs and a significant blow to sentiment."

VIX futures are lower this morning. It’s odd that VIX appears to be suppressed without driving the price of stocks higher.

Bloomberg reports, “The burgeoning bludgeoning of large-cap U.S. technology stocks Monday -- largely driven by the Facebook data-misuse controversy -- has traders acutely anxious about the near-term outlook for the S&P 500 Index.

The VIX futures curve, whose contracts track the implied volatility of the benchmark U.S. stock index over time, is in backwardation. That is, March’s contract is more expensive than the second-month contract, and so on out to September.”

TNX is moving higher, but hasn’t broken out above prior highs. All of the moves since February appear to be corrective so it is difficult to ascertain the true direction from the patterns alone. The Cycles Model suggests a decline may start that would last through early April that is likely to complete Wave 4.

Regards,

Tony

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