How Bad Could It Get?

[Jeff Clark's Market Minute]( How Bad Could It Get? A sell signal is now unavoidable. The [Volatility Index (VIX)]( has closed below its lower [Bollinger Band]( for two straight days. When it closes back inside the bands, it will generate a broad stock market sell signal. And as I mentioned on Monday, [this signal could be a big one](. Monday’s essay prompted two common questions from concerned readers… When will it happen? And, how bad could it get? The “when” is easy to answer… Soon. Recommended Link [TONIGHT at 8PM ET: FREE CRYPTOCURRENCY Q&A with CRYPTO EXPERT TEEKA TIWARI]( Could Teeka Tiwari's new cryptocurrency recommendations for 2018 make you rich? To find out, come along to his free Q&A session tonight. [Click here to register before 8pm ET.]( - The VIX has been below its lower Bollinger Band (BB) for two days in a row. It’s rare for the VIX to close below the band for three straight days – though I have seen it happen. And I can only recall one time when the VIX spent four days below its lower BB. I’ve never seen it stay there for five straight days. So, unless we’re going to make history, the VIX should generate a sell signal today or tomorrow. As for “how bad can it get”… well… let’s look at the chart of the S&P 500… This chart is tracing out a bearish rising wedge pattern. This happens when a chart makes higher highs and higher lows, but the distance between the highs and lows gets smaller. Most of the time, this pattern breaks to the downside in a quick, sharp move. The S&P 500 closed yesterday right on the resistance line of the wedge. There is room for the S&P to work slightly higher inside the wedge before reaching the apex – where it will have to break out of the pattern one way or the other. So, the index could chop back and forth for a couple of sessions before we get a larger move. But, we should see a breakout – either up or down – by Friday at the latest. And since the VIX is on the verge of generating a sell signal, I think the odds favor a move to the downside. If and when that happens, the first downside target is near 2780. That would be a “healthy,” 3% correction from current levels. While that might shake up some of the recently converted bulls who have chased stock prices higher this week, it wouldn’t do too much damage. A more significant decline is possible, though. If the S&P 500 doesn’t hold support in the 2775-2780 area, then the next support level is all the way down near 2700. A decline to that level would be more than a 5% correction. It would wipe out all of the gains from July. And it would shake the confidence of most investors. For the moment, I think we’re more likely to see a smaller correction play out. Many of the daily technical indicators are overbought. But, they’re not at extreme enough levels to fuel a 5% decline from here. So, traders who choose to bet on some downside action might look at the 2780 level as a good target for the impending VIX sell signal. Best regards and good trading, Jeff Clark Reader Mailbag Today, readers respond to yesterday’s Market Minute, “[A Biblical Trading Lesson]( That’s an awesome truth! – Jeff I want to thank you for today’s Market Minute, although I am not a subscriber of your paid service. This a piece of information that should be put in the "Ten Commandments" of the investing or trading world. Keep up the good work and maybe somewhere in the future I will have the means and the understanding of options to join the ranks of your service. – Dan Thank you for such a beautiful story. As traders, we all have experienced these emotions. Also, in life, it is always good to look forward. Not to cry over spilled milk. Thank you. – Pramila Jeff, you could not be more correct in the analysis of trading options! I have been doing this since the mid ‘90s. Have made small fortunes and lost small fortunes. There is too much work to be done getting on with the next trade to look back. As a woman trader jumping onto this crazy merry-go-round, I was fortunate in the beginning to have a few remarkable male mentors who told me to never, "woulda-shoulda-coulda" an option trade; ever. And salt is truly the worst poison. Thank you for all the wise guidance; it is much appreciated. – Leslie Thank you, as always, for your kind and thoughtful letters. Keep them coming [right here](mailto:feedback@jeffclarktrader.com). Tonight’s Crypto Q&A Last month, Teeka Tiwari received more than 16,000 questions from viewers worldwide during his live broadcast from Glenn Beck’s Dallas studios. The interest was so overwhelming, Teeka’s decided to hold a special live Q&A session tonight at 8 p.m. ET. He can’t give you personalized advice. But he’ll be happy to cover any cryptocurrency questions, from how to open an account… to his investing strategy… to the “Cryptocurrency Conspiracy”… and anything else that’s on your mind… [You can register for this free event right here.]( This email was sent to {EMAIL} as part of your free subscription to Jeff Clark's Market Minute. [Click Here]( to change your delivery preferences or unsubscribe. © 2018 Jeff Clark Trader, 455 NE 5th Ave, Suite D286, Delray Beach, FL 33483, USA. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation – we are not financial advisors nor do we give personalized advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated and there is no obligation to update any such information. Recommendations in Jeff Clark Trader publications should be made only after consulting with your advisor and only after reviewing the prospectus or financial statements of the company in question. You shouldn't make any decision based solely on what you read here. Jeff Clark Trader writers and publications do not take compensation in any form for covering those securities or commodities. Jeff Clark Trader expressly forbids its writers from owning or having an interest in any security that they recommend to their readers. Furthermore, all other employees and agents of Jeff Clark Trader and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed publication is mailed.