SPX broke through its Broadening Wedge trendline and may have activated it for the downside panic to come. However, it has not broken beneath Friday’s low of 1990.10, leaving it open for another retest at 2007.71. Confirmation of the reversal would be the breakdown beneath 1990.10. So far, it has declined to 1991.88.

Better yet, a plunge through the mid-Cycle support at 1987.01 would provide an even stronger confirmation the reversal.

If the trendline at 1995.60 provides resistance to another probe higher, then the reversal may be considered valid.

VIX broke above Intermediate-term resistance at 13.23 and its September 5 high of 13.18, making a high of 13.35. However, as with most breakouts, it has pulled back to retest support at the 50-day Moving Average at 12.79. Cycle Top resistance is coming down fast at 13.57 and may provide another resistance/breakout point.

Should SPX attempt another run at 2007.71, VIX may drop even further to Short-term support at 12.12 or its prior low at 11.96.

I suggest these alternatives, since the next Cycle Pivot day is Thursday, Sept. 10 and the next Cycle Pivot day for equities is September 11. I am not yet sure how this will play out, but we must be aware of the implications of that date.

Regards,

Tony

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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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