There’s an old saying: “live by the sword, die by the sword.” No one was complaining when algos, prompted by a soaring USDJPY and plunging VIX, nudged stocks ever higher. Now that they’ve exacerbated SPX’s drop — almost (shudder) 2.5% off the highs — will investors be as enamored?
SPX’s sharply rising channel broke down on Wednesday with a close at our initial downside target. Yesterday, SPX tagged our next downside target, bounced around for an hour, then proceeded to break below a larger channel dating back to Dec 30, 2016.
Needless to say, this was a more serious breach and leaves the door open for the downside targets we posted last week.
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