Please join me with Michael Yorba Streaming Live @ http://www.yorbamedia.com at 3:05 pm (eastern) today.
– The VIX is always a good place to start. Risk awareness is starting to elevate, but from a very low level. Technically, the VIX has overcome two of four important support/resistance areas. Both Short-term and Intermediate-term resistances have now become supports, while the 50-day at 19.71 and daily mid-Cycle resistance at 20.50 have yet to be conquered. Cyclically, the VIX turns bullish above 20.50, although traders may see a bullish breakout at 21.00.
– SPY is challenging Short-term support at 136.18 and appears to be below it. There are three other supports between 135.00 and 132.00. As each support is taken out, the bearish case is strengthened. The most likely support for a bounce appears to be 132.15. Traders should be out of their long positions and adding to shorts at this time.
(ZeroHedge) (This morning)…an anomalously large volume rip went through S&P 500 e-mini futures (ES). 72,000 contracts traded very suddenly dragging ES down 8pts as it crossed the almighty VWAP line. 65,000 down volume or around $4.4bn notional equivalent wanted out very rapidly.
There’s more. On July 31, 2012, starting about 3 seconds before the close (15:59:57 EDT), our monitoring software alerted us to an unusually large trade of over 60,000 eMini (ES September 2012) contracts that were sold at once. In addition, another $1.5 billion ETFs were sold, as well.
– FXE has fallen through the lip of its Cup with Handle formation, elevating the prospects of an even deeper drop below parity to 80% (Source: Encyclopedia of Chart Patterns, by Thomas N. Bulkowski, page 135). The Cup with Handle is an intermediate-term pattern that may see its target later this fall, while the Head & Shoulders target of 99.00 -102.50 may be realized in the next month.
Spanish sovereign bond spreads blew almost 60bps wider today – that is the single-largest absolute move in spreads on record. Almost the entire gain in bonds post-Draghi ‘Believe’ speech from last week has been retraced in a mere few hours and while the front-end of the Italian and Spanish curves has outperformed, the sad fact is that in promising to maintain that end, then the entire rest of the curve becomes subordinated and therefore is sold as hope fades.
– GLD plunged through all supports this morning, including the infamous 50-day moving average at 154.59. It is now on a confirmed sell signal and only 5.5 points away from its Head & Shoulders neckline with a minimum target of 123.03. GLD also has a Cup with (triangle) Handle, which fits the cycles very nicely. This calls for an approximate 40% decline within wave  of c within a Supercyle wave (IV) decline. Wave c appears to be an ending diagonal.
–DBA topped out last last Friday along with many other commodities that appear to be joining or have already joined the Liquidity Cycle. It has reached the top of its daily Cyclical Trading Band, which should be a warning to traders who are long Agricultural commodities. The deflationary forces will do more to agricultural prices than the drought. This will put a double whammy on our farmers, as well as traders.
Good luck and good trading!
Anthony M. Cherniawski
The Practical Investor, LLC
P.O. Box 129, Holt, MI 48842
Office: (517) 699.1554
Fax: (517) 699.1558
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