· The Index broke down below the neckline of the bearish H&S pattern, the neckline stands at 2,080 and the target of the pattern is 2,025
· The Index also broke the path of higher lows established on the chart since October 2014, yesterday move below 2,067 negated this path and argues for a correction
· Given these developments selling rallies to 2,080 with a 2,025 target makes sense
· On a longer term perspective the monthly chart below highlights the time between the 2000 & the 2007 high compared to the 2007 & the 2015 high = they are both exactly the same. In 2000 & 2007 these tops were followed by an impulsive correction and the main question here is if history is about to repeat it-self. In this context it is worth noting that a monthly close below 2,087 would implement a monthly bearish engulfing candle and this would increase the odds for a move lower in the weeks/months ahead.
Strategy: Short 2 units from 2,119, target 2,025 & 1,885 with a stop loss on a close above 2,140
Daily chart
Monthly chart
Vix Index – buy dips to 14.91-15.82 (open gap zone)
· The VIX broke out yesterday from a bullish wedge pattern – based on the hieght of this pattern the targets is 24.80-25.20
· The fact that the breakout from this pattern was established in a gap gives further confirmation to this breakout and validility
· Furthermore, this breakout accurs parilel to the breakdown in the S&P (broke below 2,067)
Daily
S&P 500 Index – sell rallies to 2,067-2,080 (previous lows and bearish H&S neckline)