SPX opened beneath its Cycle Top support at 2748.11 and stayed beneath it. Thus far the bounces have been weak and new lows are being made. This may be a good place for an aggressive short position. A partial position is recommended until the decline develops further. Usually you want to take a short position on a bounce, but since the decline isn’t yet fully developed, be prepared for a pullback.

VIX crossed above the mid-Cycle resistance already. This is strengthening the buys signal for VIX and sell signal for SPX. This is still an aggressive signal.

The NYSE Hi-Lo broke the trendline near 40.00 and has bounced back above it. This is also an aggressive sell signal that may be confirmed at the close. A close beneath the mid-Cycle resistance is still aggressive, while a close beneath the trendline would be a confirmed sell signal.

NDX declined beneath both the Cycle Top support and the upper trendline of the Broadening Wedge. Statistically, you have a 70-80% probability of a continuation of the decline. The odds become 100% beneath the Ending Diagonal trendline at 6450.00.

We are using the SPX signals for NDX, as well.

Regards,

Tony

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Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

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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