SPX is challenging the Cycle Bottom support at 2014.71 this morning. The bounce off this support may not last long at all, so there is no change in signal. There is a good probability that SPX may decline to 1960.00-1970.00 before a bounce, if any. It appears that we may see as many as 10 more market days of decline to the Intermediate Wave (1) low. It won’t be a pretty sight for the bulls.

ZeroHedge comments, “The carnage continues to roll around the world as Asia and Europe react to US weakness which reacted to China weakness and now US is retumbling on fresh China weakness as the global carry trade unwinds across every asset class... S&P continues it plunge...nearing 2,000!”

VIX popped above its Broadening Bottom formation. Today’s breakout matched the high put in on February 2. I recalibrated its target, since it calculated at the time the trendline is crossed. The old target was based on the July highs which are no longer valid. The Broadening Bottom target may be reached by September 4. However, Broadening formations often give targets for third waves. In other words, it may go higher if there are five full waves in this structure.

The next piece of good news for those who are already short is that the Hi-Lo Index has broken its 4-year trendline and broken below its last low as well.

Regards,

Tony

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