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SPX, NYA, US Dollar, and VIX: Inflection Point at the Edge of the Cliff


The bears have now pushed the market right to the edge. Whether we go over or not may come down to Washington.


Since many fractals mimic others, I often look at related markets in order to try and gain insight and clarity. I pay close attention to the currencies -- though the reality is that currencies are not always correlated to the equities markets, they are usually helpful clues. It's generally a decent bet that a falling dollar equals inflation, which typically means higher prices in dollar-denominated assets, such as equities.

The US dollar hasn't quite "locked in" a bearish fractal, but it's come awfully close... so no "definite answer" yet here either. The red wave 2 high is now key for dollar bulls to reclaim, while the red b/ii low is key for dollar bears.

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The Volatility Index (^VIX) suggests at least a near-term bottom may be near for equities. If the bull count still holds water over the intermediate term, bulls need to find a bottom quite soon.

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No positions in stocks mentioned.
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