Extremes marked the day and week in all financial markets

Best of times, worst of times?! This week's volatility can either mark a significant low along with the US dollar hitting targets above 80 $USD (dollar index), with higher equities and other market levels (gold, oil, commodities) ahead. Or a temporary respite, with a vicious 3rd wave down leg of some proportion that can take the SPX down around 1030 next week. But don't worry now, it's Friday!! Seriously, if this is a small-level wave 2 in the SPX, it can stall out around 1066 (where it closed), 1074 (50% retrace) or 1081-1082 (61.8% retrace and level of 34-hour MA and 8-day MA). Moving well above those levels early next week would suggest a different "count". But there are reasons to expect the SPX falls from resistance and goes down to test around that 1030 area.

Treasury 10-year notes and bonds pushed higher, with $UST getting closer to a gap fill. We still like adding to TBT or readying to buy it on a good trigger that indicates the 10-year and the bonds are ready to roll down. It may well be that will happen when the SPX starts on a more serious bounce. There's already negative divergence in the $UST daily chart, and positive divergence in the SPX daily chart, so that time may be here or soon.

During the afternoon, Bill Luby of VIXandMore tweeted he was going long at SPX 1047 or 1048. That was also as the SPX got support at Tony Caldaro's 1041 pivot, and at Andre Gratian's projections. I don't know if it was a short-term swing (probably), but when the "VIX meister" speaks I pay attention. The VIX spike was awesome but hit resistance as the SPX got support. You can see the reaction on the hourly charts below. Some are also thinking the SPX touched a lower trendline that parallels the upper trendline from the March 2009 lows on a log scale chart - dunno, but will look forward seeing how Andre Gratian charts it this weekend.

Of course, it all makes a great intro for another weekend of interesting analysis and review. Happy Friday evening!