SPX appears to have begun its decline. However, it may bounce at the two trendlines intersecting with Short-term support at 2644.74. Relief may be coming for those who have remained short the past two weeks.

While I will be discussing the signals from the VIX and Hi-Lo, I wish to point out that the best short entries are often at a bounce. Aggressive short entries will be subject to whipsaw. Thus, smaller portions are recommended until fully confirmed.

In the meantime a confirmed sell signal from the chart would be beneath the Diagonal trendline near mid-Cycle support at 2609.02.

Once NDX is in gear, it is likely to decline quickly and forcefully. Nonetheless, I suggest waiting until it hs declined beneath Short-term support at 6349.56 or the trendline/mid-Cycle support at 6325.51.

The Head & Shoulders neckline provides a minute Wave [iii] target, while the Orthodox Broadening Top may provide an Minor Wave 3 target. The double top also makes a Cup with Handle with a Wave 5 target near 3800.00.

VIX has broken out above the 50-day Moving Average, giving an aggressive signal. That doesn’t mean it won’t pull b ack beneath the 50-day. However, it suggests that aggressive positions may be taken at the pullback.

The NYSE Hi-Lo is also on an aggressive sell signal, pending a close beneath mid-Cycle resistance at 98.97. It has broken out beneath the trendline. The best indicator will be a close beneath the trendline and perhaps in negative territory.

USD/JPY is on a sell signal, making a low of 112.08 today. That is due more from the Yen making a strong reversal than the USD taking a nosedive. This currency pair has the most influence on liquidity in the markets. The Yen is overdue for a very strong rally that may influence its relationship with the USD.

Stay alert. Things are beginning to change.

Regards,

Tony

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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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