Source: The Practical Investor, LLC
The VIX completed a 47% retracement of its impulse off its Master Cycle low at 24.44. It now has the ability to rally through the end of December, according to the predominant cycle patterns. It is probable the VIX may put in its 13-year cycle high in December, or possibly early next year. This is something that I have been saying for the better part of the last year.
The Broadening Bottom formation forecasts a panic high soon after the final breakout above its upper trendline at 55-60. The VIX has already broken above its intermediate-term Trend Support at 34.57. Today is appears to be retesting that support. A rally back above that level is a confirmed buy signal and should put us on high alert for a breakdown in the equities market.
The SPX has completed a 45% retracement of its decline from Thursday’s high. Today is a turn date, so it appears the turn will be to much lower lows. However, the SPX is also due for a Primary Cycle low, which I believe will be the target for the lesser Broadening Wedge formation in the hourly chart (968). The next probable turn will be on the ½ cycle, due on Monday, so I am anticipating the Primary Cycle low to occur in that time frame.
But I would also be on the alert for a flash crash starting immediately. The May 6, 2010 Flash Crash was at a ½ cycle turn, so there may be some similarities being re-created in this cycle as well. The Market top in 2010 was on April 26. The Flash Crash occurred on May 6, 11 calendar days later.
I would also like to point out that The top-to-bottom decline in the NDX ending on August 9, 11 trading days later. Additionally, 3 of the 4 major lows this year were on Primary Cycle dates.
Based on this information and more that I cannot divulge, the chances for a Flash Crash are elevated. The probability of the alert going to an extreme elevation would be at the point the SPX crosses its intermediate-term Trend Support at 1095.73
Regards,
Tony
Anthony M. Cherniawski
The Practical Investor, LLC
P.O. Box 129, Holt, MI 48842
Office: (517) 699.1554
Fax: (517) 699.1558
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