#VIXIndicator This is pretty tough to explain, but I’ll try anyway…
We are currently in a Downside Warning, but this particular pattern has only happened once before, at least since 1/1/2000, where my tracking begins. The warning was canceled on 2/23, and then, before an Upside Warning fired, it was reinstated on 2/28. When THAT has happened before, the SPX made a new low in all occurrences but 2. In those 2 times, only one time, in 2006, did the second downside correction have a lower 78.6% line.
This time, we did NOT make a new low, and the 78.6% line is down at 12.61. It was at 17.76 from the first warning, so quite a lot lower now. Provided we close decently today, it would be three closes at or below 17.76, which would be an Upside Warning from the FIRST downside warning. In the 2006 occurrence, this did turn out to be an effective Upside Warning, because SPX took off and did not wait for the official upside warning.
If you’re lost, no worries. Here’s all you need to know: There’s not enough precedent to call it one way or the other, but a close today below 17.76 COULD signal a rally back toward all-time highs.