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Stock Market Reversal!

Stock-Markets / Stock Markets 2013 Aug 06, 2013 - 10:07 PM GMT

By: Anthony_Cherniawski


Today is day 258 in the VIX Master Cycle which started on November 21, five days after the SPX Master Cycle low on November 16. Since the November low, we saw a 75-month low on March 15, Marking s Super Cycle Wave (b) low. Since then, the pattern has been confusing, overlapping and somewhat irregular, leaning me in the direction of labeling it as corrective and leaving the door open for a possible lower low in the July-August time frame. Thankfully, this hasn’t happened. Instead, the VIX presents us with an expanding Leading Diagonal, an overlapping, irregular, but impulsive Intermediate Wave [1] which peaked on June 24. Intermediate Wave [2] shows an impulsive Wave (A) and an Ending Diagonal Wave (C).

This is exactly the kind of behavior that I want to see from the reversal… sharp and quick. The Ending Diagonal trendline is broken and VIX is wasting no time in its vault to the upside.

After peaking on Master Cycle day 259 (Friday), SPX has broken a minor support at 1705.00, the upper trendline of the larger Broadening Wedge and is now heading for the lower trendline of the Broadening Wedge at 1683.00. Any bounces at short-term support (red) or the hourly mid-Cycle support at 1688.29 should be brief and mild.

No one is paying attention to the decline yet. I suspect that they will sit up and take notice at the 50-day moving average at 1649.90, however. That would mean a month of gains may be gone in just a few days.

GLD had peaked on July 23, which is the same time I had targeted for the SPX. Since then it has been held off by the declining 50-day moving average and today it has broken through its Intermediate-Term support/resistance line at 124.66. Should it break below its prior low at 114. 68, there is a massive Head & Shoulders neckline that suggests a drop in Cycle Wave 3 to 60.00! The implications for gold are similar.

TLT is solidly beneath its Head & Shoulders neckline, indicating that it may decline to its target of 82.88, which is very near the Broadening Wedge average target of 86.40. This corresponds roughly with a Cycle Model target yield of 5.6% and a break of the long-term 32-year trendline in the long bond.



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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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