Signals & Trading Plan for Friday 6/28/19

Between the summer doldrums and waiting for G20 this Saturday, market appears to have gone into a suspended state.  With the exception of $RUT, $SPX and $NDX hardly moved.  

Market internals
Market internals are not any clearer than price actions.  

Volatility:  $VIX $VXN actions are muted.  They are not threatening to surge which would indicate that Dip4 is accelerating.  But $VIX $VXN don’t appear to be marching down steadily either. That scenario would have been more bullish for stocks.  The current message from volatility is wait and see.

Market breadth:   NYSE and Nasdaq cumulative advance/decline (A/D) line continued to turn up today.  Their message is bullish for stocks.

The percentage of bullish NYSE stocks (stocks that are above their 200-day MA) turned back up to 61.69% today, and Nasdaq percentage did a sharp reversal to rise back up to 74%.  The message from these percentages is certain bullish for stocks, indicating that Dip4 could possibly be done. 

Keep in mind that these percentages are not leading indicators.  They serve to confirm messages from other indicators and from price actions.  

Sentiments:   The equity put/call ratio yesterday spanned between a low of 0.54 to a high of 0.7.  We would have preferred to see this ratio surge up above 1.1 at least.  That would create an oversold condition, a perfect setup for the end of Dip4 and the arrival of Surge5.  Without the oversold condition, it may not be enough to stimulate demand for buying.

Trading plan
The G20 summit, especially the meeting between Trump and Xi on Saturday, is going to be the short-term catalyst to either turn small Dip4 into medium SellOff2, or let $SPX $NDX $RUT immediately jump into Surge5.   

Noone can really predict, but it is reasonable to expect some kind of drama this weekend.  

Our recommendation is not to start any new positions.  Just wait.  By Sunday we will have a much better idea, and by Sunday afternoon 4PM EST, futures will show how market participants feel about everything.  

So take a long weekend and enjoy the summer.  We’ll post an in-depth weekend analysis on Sunday 6/30.

If you find the information in this blog post helpful, consider registering to be a member of our site.  You will be able to access all content going forward.  And it's all free right now.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only. We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.
Note that we trade highly risky 3x leveraged ETFs.  They suit our portfolio, but they may not be appropriate for you. Please read more about them before trading them.