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VXX: APR 15 2016 20C
Long Term: Bear Market, targeting SPX <666 by 2022
$NYAD was +19.04% and $NYUD was +6.36% today.
Even though the market slid lower through the day, it was really an up day looking at the internals. Since today is Friday I am including Crude Oil and the Weekly SPX chart.
Crude oil was the story of the day, ending the day up 5.68% settling at 39.66. But instead of this one day performance being the story, the real story should have been told since the recent high in mid March, as you can see above which was more than 14%! Such a huge upward day is only really seen as a bear market counter rally. So has crude oil and SPX really decoupled? Well, maybe. But my money is on no. Yes in the last few weeks they have gone their seperate ways. However, there is a possibility that crude and SPX are now perfectly aligned to start a nasty downturn, both now poentially ending wave 2’s higher of different degrees.
On this new site I will be presenting the Weekly chart on Friday’s and the monthly chart at the end of each month. If I forget, remind me! It’s really not valid to look at these charts in between, similar to avoiding looking at the daily chart during the middle of the trading day. The red MACD signal line is back postitive, but the dark blue histogram tick highlights that this week’s histogram is lower than last week. A big warning sign in the mid term is how the red signal line was significantly lower with the late winter SPX low compared to the late summer 2015 SPX low. So no positive divergence there. The histogram recently was slightly higher low than late last summer. This could be viewed as positive divergence. But remember, divergences are only valid at similar wave degrees. My big picture count has the 2016 low as a 2 of a nested degree of the one that took place in late 2015.
The blue 10-week ma is below the orange 20-week ma. Price remains above the red 50-week ma and the purple 100-week ma. The moving averages look in worse shape compared to 2011. The market ATH took place 46 weeks ago, or 322 days ago. Uh-oh!
For the second day in a row, price dipped below the blue 20dma for a time, then ended the day right at the ma at 2043. The body of the candle was almost entirely below the 20 dma compared to above yesterday. Also note the long wick atop the green candle, not a good sign for the bulls. The upper band is curving lower so without a significant move higher it will continue to do so. Blue 20dma is still well above the orange 50 dma and we remain above the 100 (red) and 200 (purple) dma.
The descending trend in volume since mid Feb is another warning sign for bulls (the black crosses are the 20 dma of volume). Meanwhile you can see the BB tightening up now, in fact they are the tightest since 20 August (!!!!!). This all lines up with the big picture count of a 3 of 3 lower coming!
Another bounce off the 2043 pivot. I am wondering if this is the last bounce off that pivot higher?
Yesterday I said “Once 1 of 3 finishes we expect 2 of 3 higher to unfold. If 1 of 3 is complete or nearly so, I expect 2 of 3 to retrace between 0.382 (2046.9) and 0.618 (2055.5) with a shot of seeing 0.764 (2060.8) again.” The bounce ended at 2061.4 at 1415 UTC.
Today I placed a lower degree 1 and 2 label, though green 2 may extend a bit longer in terms of time and price, we’ll see Sunday evening.
VIX lost some ground today just like the internals were strong. We remain above the middle of the 140-hr BB and well above the descending yellow trendline. I still expect to clear the top of the BB (was 17.92 now 17.28) next week, if not higher.
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