etfmsolutions: Back to 204 Support and the Ponzo Update....07.08.15

Wednesday, July 8, 2015

Back to 204 Support and the Ponzo Update....07.08.15

A truly ugly day with the VIX rising 22% and SPY plunging close to the 204 line in the sand. Yesterday's action turned into a Trap Door from today's open and there was no rebound to allow a gracious (net zero loss) exit. Both VXX and XIV were +/- 10% and the surprising thing was that despite the pervasive selling SPY did not penetrate the S2 pivot.
China was down another 7% and there may still be room to fall on that issue (FXI) before we see some stabilization. That, coupled with the situation on Greece (next deadline in this Sunday) kept the markets in upheaval. We saw some big names crater today (like Apple), illustrative of breakdown patterns that had not been evident before. Technically we are are the edge of a fall into the abyss (SPY 199) but are also extremely oversold once again.
Below is the latest SPY Ponzo update with the risk forecast for the next 18 weeks. One thing that is immediately apparent is the disparity of the forecast lines as well as the expanding range of those forecasts as compared with the previous few weeks. Not a good sign.

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