The VIX dipped down yet another week to its Cycle Support at 22.82. This may be the last stop before moving higher in its uptrend. VIX is having its own upsurge in volatility as it makes a 50% retracement of its cyclical price range. The Broadening Formation allows for that as a prelude to an upside breakout.
The VIX dipped down yet another week to its Cycle Support at 22.82. This may be the last stop before moving higher in its uptrend. VIX is having its own upsurge in volatility as it makes a 50% retracement of its cyclical price range. The Broadening Formation allows for that as a prelude to an upside breakout.
The SPX closed at the 50% Fibonacci resistance, the 10-week moving average and trendline resistance this week. It is interesting to see how the wave 1 decline and its retracement fell within the Fib retracements of the larger bear market.
The NDX closed slightly above its 50% Fibonacci retracement at 1906.00 this week. The Broadening Formation calls for such a move (not 61.8%) for the trap door to swing open. What traders have been used to are the right-translated cycles of the rally, which last much longer. The fact is, we must now get used to the left-translated cycles that are typical of the bear market.
Gold now appears to have completed most or all of the requirements of wave (v) of 5, its final surge before its collapse. Now we must examine the limitations of this rally. The Broadening Wedge target is still in progress and has an 81% probability of success. The upper trendline of the larger bearish wedge is at 1300, so it appears that it may be final resistance.
$WTIC extended its bounce inside its Broadening Formation and has stopped short of its 61.8% Fibonacci Retracement. This is a little higher than what is normally expected in the Orthodox Broadening Top formation. Now we can finally say that the retracement may be finished, since it closed at its 10-week moving average.
The Shanghai Index has come very close to a new low, but until it does, I am treating this move as part of a reversal pattern to the upside. The pivot low of May 21st appears to be still in play. Shanghai still has some work to do, but it is still interesting to observe the divergences between the U.S. equities markets and China’s markets.
$USD has made a two week correction and may be ready to meet or exceed its Head and Shoulders target at 89.75 as early as next week. Should it reverse on its pivot on Monday, it is poised for a major breakout to higher ground in a third degree third wave. Unlike the long bond, however, the trend will remain up for a much longer time period.
Anthony M. Cherniawski, President and CIO
http://www.thepracticalinvestor.com
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