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— The VIX has spent two weeks above its 10-week moving average at 16.80. It appears to be building a base from which to rally, strikingly similar to July 2011, just before it went parabolic. It is due for a Primary Cycle high between April 27 and May 3.

SPX closed below its 10-week moving average.

 

— The SPX closed beneath the 10-week moving average at 1382.41, which leaves the door open for further declines in the coming weeks. The appearance of the Orthodox Broadening Top at hourly, daily and weekly degrees is a harbinger of a Flash Crash as early as next week.

 

ZeroHedge(http://www.zerohedge.com/news/volume-explodes-sp-loses-50dma-again)– (Friday’s) NYSE volume was 20% above yesterday’s and S&P 500 e-mini futures (ES) volume surged to its 2nd highest of the year as the last 30 minutes saw heavy volume and large average trade size very active as it pushed up towards VWAP and oscillated around its 50DMA. ES closed below its 50DMA for the first time since Monday…

NDX makes a weekly reversal signal.

 

— The NDX closed beneath its weekly Cycle Top resistance at 2719.00, completing a weekly reversal top. It also closed beneath its 10-week moving average at 2681.10 confirming a weekly sell signal as well The Broadening Wedge (red) indicates that once NDX drops below Cycle Top resistance at 2670.00, 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.

 

Heavy volume and incessant selling pressure pushed AAPL(http://www.zerohedge.com/news/nasdappl-crumbles-amid-sideways-volatile-week) to its biggest 10-day loss in over 8 months as it closed at 5-week lows just shy of filling the gap from 3/13 and very close to testing its 50DMA for the first time in 4 months. It closed only 3 points above its 50-dma on Friday.

Is the Euro ready for a collapse?

— The Euro continues to consolidate within its Broadening Wedge formation since its January 13 high. It closed on Friday just above its 10-week moving average at 132.07. A decline below its trendline at 130.00 will confirm the resumption of the downtrend. There is a Head & Shoulders neckline at 126.24 with a minimum target near parity for the Euro. This combination of formations prestages a crash in the Euro with an average target near 100.00.

ZeroHedge(http://www.zerohedge.com/news/europe-now-red-year) – A sea of red is flowing from European equity markets and it seems they are unable to stem the flow as IBEX (the Spanish equity index) nears March 2009 lows (down 18% YTD) but dispersion across European indices is very high from the DAX +14% YTD to Italy, Greece, and Spain very much in the red YTD. However, for the second week in a row, European equity markets (as tracked by the narrow Dow-equivalent Euro Stoxx 50) close with a negative return year-to-date -0.3%.

The US Dollar is stepping up the triangle trendline.

— The US Dollar continues to stair-step along its triangle trendline in a consolidation pattern. It closed below 10-week resistance at 79.44, but just above weekly mid-cycle support at 78.74, which now appears to be support. It appears to be gearing up for a Trading Cycle high this Friday or early the following week. Generally the first Trading Cycle out of a Master Cycle low ends in a high. The question is, just how high will it go?

Gold continues to weaken below its 10-week resistance.

 

 

— Gold has continued to dwell beneath its 10-week moving average, currently at 1685.40, since March 12. Many investors don’t see it, but the big players seem to sense that a breakdown from this level may be catastrophic. The evidence is a massive Head & Shoulders pattern seen in the chart. This could trigger yet another cataclysmic decline toward the Cycle Bottom shown in the chart. What conspiracy theorists call “price suppression” may, in fact, be judicious selling at the top of a cycle.

 

ZeroHedge(http://www.zerohedge.com/news/other-side-gold-and-silver-coin) – What we found interesting was this week we have seen a number of quite bearish articles on the precious metals – most notably Bloomberg’s chart-of-the-day has had two notes citing inventory build for Silver’s imminent demise and lagging futures open interest as a sign of investor’s losing conviction in gold.

U.S. Bonds ready to break above its triangle pattern.

 

— The USB gapped up to its 10-week moving average at 139.57 two weeks ago and has remained above it since. USB appears ready to launch above its triangle formation to its Cycle Top resistance at 147.25. It may go much higher, if a panic in equities causes a parabolic blow-off in treasuries. HFT computers may get in the game…see below.

 

ZeroHedge(http://www.zerohedge.com/news/fasten-your-seatbelts-high-frequency-trading-coming-treasury-market) – In what may be the gray swan that all hell is about to break loose, we read that one of the world’s largest hedge funds, British Man Group with $58 billion in AUM,(http://www.mangroupplc.com/index.jsf) is about to launch High Frequency Trading – the same high volume churning, sub-pennying, liquidity extracting, stub quoting and quote stuffing parasitic algorithms that frequently crash the equity, and as of recently the FX and commodity markets, into that most sacred of markets: US Treasurys.

Crude closed below 10-week support.

 

— West Texas Crude fell below its 10-week moving average at 105.43 this week after trading in a narrow range. This sets up West Texas Crude is destined to fall as far as Cycle Bottom support at 68.46possibly in a flash crash in the coming Master Cycle low. This may well trigger the Head & Shoulders pattern near 79.00. Observe the Slow Stochastic at the bottom of the chart. Good things don’t happen to markets when they are below 50.

 

ZeroHedge(http://www.zerohedge.com/news/jpm-hikes-crude-price-forecast-sees-120-wti-election-time) – In a just revised crude forecast, JPM commodity analyst Larry Eagles, has hiked both his Crude and Brent expectations across the board, and now sees WTI going from $105 currently to a $120 by the end of the year, $4 higher than his prior forecast. Can we trust this forecast?

Are China stocks ready to take the plunge?

–The Shanghai index bounced above its 10-week moving average at 2378.66 this week in what appears to be a 69.5% retracement rally. A reversal below Cycle Bottom support at 2178.72 would also send it through 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 be approaching this week. It appears that the Shanghai Index may be leading world equities in their decline.

 

 

Bloomberg(http://www.bloomberg.com/news/2012-04-20/china-may-cut-ratio-without-altering-monetary-stance.html) – Economists are betting China(http://topics.bloomberg.com/china/) will cut banks’ reserve requirements(http://www.bloomberg.com/quote/CHRRDEP:IND) in the coming weeks even as limited loosening over the past four months indicates leaders want to maintain a clampdown on inflation and property prices.

The India Nifty is consolidating above mid-cycle support.

The India Nifty continues to consolidate above mid-cycle support at 5141.84 but below its 10-week moving average at 5339.94. It seems as if the entire world has been on hold for the past two months. A drop below mid-cycle support would certainly test the Head & Shoulders neckline and may bring downside acceleration to the India 50 index. Normally when the right shoulder of a Head & Shoulders pattern is complete, it doesn’t pause very long at the neckline.

The Bank Index is barely resting on triple support.

— BKX declined two weeks ago to its Bearish Wedge trendline and mid-cycle support at 46.90, where it bounced. Last week, it consolidated closing above those levels and its 10-week moving average at 47.42. A reversal beneath the Bearish Wedge formation strongly suggests that, when the reversal happens, it will be likely 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 the end of April. Once the 10-week moving average has been crossed, the risk of a flash crash also rises in the BKX.

Regards,

Tony

Anthony M. Cherniawski

The Practical Investor, LLC

P.O. Box 129, Holt, MI 48842

www.thepracticalinvestor.com

Office: (517) 699.1554

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Disclaimer: Nothing in this email should be construed as a personal recommendation to buy, hold or sell short any security. The Practical Investor, LLC (TPI) may provide a status report of certain indexes or their proxies using a proprietary model. At no time shall a reader be justified in inferring that personal investment advice is intended. Investing carries certain risks of losses and leveraged products and futures may be especially volatile. Information provided by TPI is expressed in good faith, but is not guaranteed. A perfect market service does not exist. Long-term success in the market demands recognition that error and uncertainty are a part of any effort to assess the probable outcome of any given investment. Please consult your financial advisor to explain all risks before making any investment decision. It is not possible to invest in any index.

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