If we are to believe the Premarket, SPX is now approaching mid-Cycle resistance at 1995.04. Of course, this is all in very light volume in the futures, but the only wave that has this capability and position is a (rogue) Wave E.

This has caused me to re-assess the Wave structure yet again. Wave D has 11 waves, which is corrective.

Wave E has 9 hourly bars, but the first is only a partial. This suggests a pop at the open, but the futures are already retreating, so it may not last through 10:00 am.

This is a part of the global “risk on” euphoria that still lingers. However, investors that have pulled out of the market aren’t coming back and few enough have gone short that the bounce may wither at the light of day. The buyers just aren’t there anymore.

Another reason for this label is that typically we see an index challenging its Cycle Bottom from beneath in a Wave (2) position, with Wave (3) beginning at the end of the challenge. The lack of impulsiveness in Wave (A) and the Triangle (B) denotes a similar position. That is, the beginning of a very large Wave (C).

It also confirms that August 24 was very likely a Master Cycle low at 251 days. The next Master Cycle low is due within the first two weeks of October. Usually the guideline for separation between Master Cycles is at least 43 days.

A similar Wave structure seems to be visible in the VIX, but without the Triangle formation. The next move up appears to be a 5-wave (C).

VIX futures are down. It is hard to say whether they have exceeded the low at 23.45.

The Hi-Lo Index wave structure now makes more sense. I had commented earlier that I had not seen the Hi-Lo retrace as much as it has in this circumstance. A Wave (B) goes a long way in explaining the anomaly.

Treasury Notes and Bonds are being sold heavily. The rise in stocks doesn’t appear to explain the strength of the move in TNX. China may be selling Treasuries again through its Belgian hedge fund. Friday appears to be a strong Pivot day.

The strong decline in Treasuries may also exacerbate liquidity issues for stocks as well.

ZeroHedge reports, “30Y Treasury yields are up 40bps from the Black Monday flash-crash panic low yields, breaking back above 3.00% for the first time since the end of July. It appears China selling (and rate locks) is trumping Element Capital's buying (for now).”

This is also sending a strong signal that a rate hike is imminent.

Regards,

Tony

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

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.

Anthony M. Cherniawski Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.