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Note the aggressive selling on the SPX when the SPX:VIX ratio gets up to the 180 level. A drop and hold below the 100 major support level could spell big trouble for the SPX and the other Major U.S. Indices.
With the Momentum indicator in a downtrend on this timeframe, I wouldn’t be surprised to see a larger pullback occur in the equity markets. Watch the 2038 level on the SPX, as mentioned in my post of August 14th, for confirmation.
As a long term non believer in the equity market’s ability to relentlessly drive higher, even in the face of dubious fundamentals. In other words, an abject loser. Finally seeing this supernatural stock market’s true character revealed last week, in delectable descending destruction, was especially satisfying for the suspect Savant. Yet, this idiot simply can not shake off the debilitating embarrassment of having completely missed the downtown A train express to Broadway & Wall, left standing naked on the silent subway platform, utterly exposed with his head up his ass.
The word “hero” is sickeningly misused, often bandied about by politicians to describe anyone who happens to serve in the military, or dies in a fire, or otherwise gets killed either through misfortune or, sometimes, their own stupidity. Since it’s used so often to pander to an audience, it has been diluted to near meaninglessness.
The S&P 500 (SPX) price structure has plunged from the confines of its Dec-Aug top formation, and through its Oct 2011 support line in the vicinity of 1992.00.
Although my near-term work might argue for the emergence of a two-way trade, my intermediate-term work suggests strongly that the SPX has unfinished business on the downside — to 1900 at a minimum in the hours and days ahead.
Such a scenario would amount to a 10%-11% correction off of the May-July highs.
That said, however, if a garden-variety, 10% correction does not include a major capitulation, then we should be aware that a test of the Oct 2014 low will represent a 15% correction, while a test of the Feb 2013 low will amount to a 19% correction off of the highs.