x
Breaking News
0

Weekend Update: VIX Now Ready For A Breakout

By Anthony M. CherniawskiMarket OverviewMay 06, 2012 05:29AM ET
www.investing.com/analysis/weekend-update:-vix-now-ready-for-a-breakout-122325
Weekend Update: VIX Now Ready For A Breakout
By Anthony M. Cherniawski   |  May 06, 2012 05:29AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
VIX
VIX

After three weeks of testing the 10-week moving average at 16.84, the VIX is now ready for a breakout, not just above weekly Mid-Cycle resistance at 22.46, but Cycle Top resistance at 35.84 as well. The powerful rally that I have been predicting is ready to begin. The VIX may be above its Cycle Top resistance (35.84) by May 15.

SPX closed below its 10-week moving average

SPX
SPX

The SPX closed below the 10-week moving average at 1386.96. The back-and-forth testing of the 10-week line indicates the loss of support at that area. The appearance of the Orthodox Broadening Top at hourly, daily and weekly degrees is a harbinger of a Flash Crash that could take the SPX to its Cycle Bottom at 1044.40 in very short order. There are some indications that the large, blue Orthodox Broadening top may get involved with this decline with further bearish implications.

(ZeroHedge) Months of hope that the economy could finally start a 'virtuous cycle' were once dashed in a puff of smoke, after the jobs report came and cemented that the economy is now rolling over and picking up speed to the downside. Only this time, in a very ominous

development for the permabulls, the MORE QE IS COMING, BUY ON DIPS crowd was nowhere to be seen. Why?

NDX is at a “mini crash trigger.”
NDX
NDX

The NDX closed right at its “crash trigger,” the lower trendline of a small Broadening Top formation. The Broadening Wedge (red) indicates that once NDX drops below it, the initial decline may quickly decline an average of 20% with a target near 2100.00. This Master Cycle may be in overtime, as it was last July. Most cycle practitioners believe that a right-translated cycle may offer only a mild decline. Last year’s Broadening Top says differently. This year the cycle is stretched again. The cycle profiles in virtually all assets suggest something dramatic is about to happen.

The Euro is approaching its “crash Trigger.”
XEU
XEU

The Euro consolidation is taking the form of a small Head & Shoulders pattern sharing the trendline of its Broadening Wedge formation. It closed on Friday below its 10-week moving average at 131.81. A decline below its trendline at 130.00 will confirm the resumption of the downtrend by triggering both patterns. This will be enough to trigger the larger Head & Shoulders neckline at 126.24 with a minimum target near parity for the Euro. This combination of formations presages a crash in the Euro with an average target near 100.00.
 
(ZeroHedge)… as Barclays notes, if European banks follow the same trajectory as Japanese banks did from their peak in 1993 (as Europe has been since their peak in 2006), then Europe's banks market cap as a percentage of the total market is likely to drop from the current 11% to around 6% within the next year.
 
The US Dollar may be ready to leap higher.
USD
USD

The US Dollar spent four weeks consolidating above its triangle trendline and has finally found support at weekly mid-cycle support at 78.63. It closed above 10-week support at 79.49, as well. There have been several cycle inversions, but the latest inversion sets up $USD for a Primary Cycle high near May 15. Primary Cycles often build on the strength of the previous Trading Cycle, so this one may be a barn burner.
 
Gold is pressing down at a minor Head & Shoulders neckline.
GOLD
GOLD

Gold has continued to dwell beneath its 10-week moving average, currently at 1665.11, which appears to be pushing it into a mini-Head & Shoulders pattern at 1620.00. It has a minimum target of 1447.00, which would violate the massive Head & Shoulders pattern seen in the chart. This could trigger yet another cataclysmic decline toward the Cycle Bottom show in the chart.
 
(ZeroHedge) While Becky Quick's CNBC interview with the Charlie Munger has a little for everyone to love and hate (from Keynesian-doctrine to easy-living-Greeks and Bad-trading-robots), Buffett's right-hand was particularly eloquent in his views (at around 9:08) on Einhorn's distrust of the Fed and buying Gold: "gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold - they invest in productive businesses." End quote.
 
U.S. Bonds have broken above its triangle pattern.
USB
USB

The USB continued its rise above its 10-week moving average at 139.83. USB has started its launch above the triangle formation to its Cycle Top resistance at 147.78. It may go much higher, if a panic in equities causes a parabolic blow-off in treasuries. Let it be known, however, that this will be the final rally to a 30-year top.
 
(ZeroHedge) …the Treasury Borrowing Advisory Committee (basically Goldman Sachs and JP Morgan, and the rest of the buy and sell side) did indeed come out with a unanimous decision, having decided to recommend FRNs (Floating Rate Notes). This simply means that Wall Street is either desperate to telegraph a surge in short-term rates, or, even worse, if actually anticipating a surge in short-term rates and is doing all it can to hedge before it happens.
 
Crude begins its decline.
WTIC
WTIC

West Texas Crude broke down out of its narrow trading range. This may be the beginning of a fall as far as Cycle Bottom support at 68.75 and possibly in a flash crash in the coming Master Cycle low. This may also trigger the Head & Shoulders pattern near 79.00.
 
(Bloomberg) Crude oil for June delivery tumbled $4.05 to $98.49 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 7. It was the biggest one-day drop since Dec. 14 and capped a 6.1 percent decline for the week, the most since September.
 
China stocks are finishing their retracement.
SSEC
SSEC

--The Shanghai index remained above its 10-week moving average at 2383.81 this week and appears to be extending its retracement to form a flat top by early next week. A reversal below its 10-week line would trigger a new sell signal. The next level of support is the Cycle Bottom support at 2172.90, which would give way to the Head & Shoulders neckline at 2125.00.
 
This may put the Shanghai in the position of losing about half of its value in the next decline, which may start next week and may last another two months. It appears that the Shanghai Index may be leading world equities in their decline. Michael Pettis revisits 12 predictions on China. .
 
The India Nifty has broken all support.
CNXN
CNXN

The India Nifty has begun to decline below mid-cycle support at 5179.80 and its 10-week moving average at 5268.32. The sideways consolidation is over. The next objective is a test of the Head & Shoulders neckline and may bring downside acceleration to the India 50 index. The Cycles Model suggests that the Head & Shoulders neckline may be broken by May 15.
 
The Bank Index breaks below its Bearish Wedge.
BKX
BKX

BKX tested mid-cycle support at 46.88, but hasn’t yet declined beneath it. It has declined below its 10-week m.a. at 47.99 and is now on a confirmed sell signal. The Bearish Wedge formation is now violated andmay cause a plunge beneath the neckline very quickly. Bearish Wedges are always completely retraced. Right beneath the Bearish Wedge formation is an enormous Head & Shoulders pattern. The intial decline to or beneath the Head & Shoulders neckline may take place no later than mid-May.

(ZeroHedge) There is hardly any more long-suffering investor in this market than anyone who has held the stock of that worst of breed American bank: Bank of Countrywide Lynch (BAC), which following the worst M&A transaction in history, namely its purchase of Countrywide, has found out that one does not pay billions for hundreds of billions in contingent liabilities, which will manifest themselves in tens of billions in putback claims against the underreserved bank over time.
Weekend Update: VIX Now Ready For A Breakout
 

Related Articles

Weekend Update: VIX Now Ready For A Breakout

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email