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Monday, February 14, 2011
The VIX has been diverging from the major indexes ever since it made its low back on 2/8. Currently resistance for the VIX comes from the 20 day MA at $17.01, support is the previous low at $14.86.
TNX, which tracks the yield on the 10 year Treasury bonds, has recaptured the trendline, possibly signaling a top has been put in. The indicators also support this, with the RSI diverging and not making a higher high, as TNX did back in mid-December, and the STO rolling over to a sell from extreme over-bought territory. TNX still does have support of the blue trendline, but a break below this would would just be another bearish sign.
The Dollar is up on the day, making another higher high at 78.795, and the strength of the Trendfinder is increasing, odds are good that the Dollar has entered into a new uptrend. Critical support for this uptrend is now at the low of 77.58 made on 2/2
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The SPX continues to work on the final 5th wave with two main options for the squiggle count, a 1-2, 1-2, up, or an Ending Diagonal. Odds are still favoring the ED pattern because of the lack of momentum that is producing over-lapping waves as the SPX tries to move higher. Support has now moved up to 1316.08, the SPX has no business below this level until a top has been in.