The SPX Premarket is down over 30 points as I write. There is another hour left before the cash market opens, so the probability of a “limit down” at the open or during the trading session is rising. If such a circuit breaker is reached, the market is halted for 15 minutes. The triggers are set at 7%, 13% and 20%.

At the moment, the minimum decline is 1752.00, an 11% drop. Chances are good that this decline should take at least 30 hours from the Thursday high, suggesting the decline may last through the close on Wednesday. The August 24 decline was stopped at the open, so it took 27 hours instead of the 30 hours that I had expected.

The weekly chart gives us the “best perspective” on the potential decline. The Broadening Wedge target has not yet been met, so the range of the decline may be from 1752.00 (Flag target) to 1635.20 (Wedge/Diamond Target).

I expect to see a rally from one of those targets into the Quarter-end.

TNX is acting as it should. It is likely that this decline may be a Wave [iii], which may be very strong.

VIX futures appear to be challenging the Orthodox Broadening Bottom trendline, but hasn’t yet broken out. We should expect to ssee that happen as there may be a rush to hedge positions again.

It may be an exciting day.

Regards,

Tony

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