It appears that SPX is attempting a bounce at mid-cycle support at 1242.00. A normal bounce may go to 1257.00, its 50% retracement. But selling pressure is strong, so I wouldn’t count too heavily on it. This may be the last chance to sell long positions/go short. The subsequent decline may have the capability of taking out intermediate-term trend support at 1201.63 or hourly cycle support at 1196.04. Once below that area, the chance of a flash crash becomes extremely elevated.
The lesser Broadening Wedge formation has an approximate target of 968.00. This is an identical formation that precipitated the flash crash in 2010.
The VIX is now on an hourly buy signal. Remember, the weekly buy signal is at 27.23. The daily buy signal is at intermediate-term trend support/resistance at 34.31. Nuff said.
UUP has remained on a buy signal during this correction, having been supported by mid-cycle support/resistance. Today it gapped above its intermediate-term trend support at 21.86, which confirms the buy signal.
FXE has gapped down through mid-cycle support and intermediate-term trend support at 136.35. It has also broken below its prior low at 135.67, confirming the downtrend. There is nothing bullish about this chart.
GLD made its cycle turn yesterday, making a ½ Primary Cycle high. Although the trendline of the bearish wedge is not yet broken, the cycle model strongly suggests 6 weeks of decline from here. A drop below 172.50 confirms that the uptrend is over.
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TLT failed to better its retracement high of 119.49 today. A drop below 115.30 will confirm that the 30-year high in T-bonds is in and usher in a dramatic decline in bonds. If the Broadening Top formation is broken at 115.30, the average target for TLT will be 92.25.
XLF appears to be breaking down under its Broadening Wedge (Flag) formation and hourly mid-cycle support at 13.19. The Flag formation gives us an approximate target of 10.60. There appears to be a larger formation in the daily chart with an average target below 10.00. The sell signal gets additional confirmation below 12.62, its intermediate-term Trend Support.
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