Signals & Trading Plan for Wednesday 12/4/19

Market context
This headline from WSJ "Trump Says Trade War Could Drag On, Stokes France Spat" and others are the reasons for the sharp drop this morning.

We went through this back in May and August.  Most of us now know that both threats and promises like these are empty.  But they do jerk the markets around because there are lots of algos out there trading on headlines.  And algos haven’t been taught the art of taking everything with a grain of salt yet.

Starting in late November, we had been writing about how market internals were sending out messages suggesting that the rise of stocks were weakening under the hood.  All stocks needed was a catalyst to start the selling. All the trade war threats since Monday 12/2 have functioned as major catalysts.  

As a matter of fact, they function so well, they swung $VIX and $VXN from mega complacency into a state of real fear.  We projected in our weekend analysis that $VIX would reach 16 and $VXN would reach 19 when Pullback4 is done. Today $VIX surged up to 18 at its intraday high, and $VXN surged up to over 21.

So does this mean Pullback4 is done yet?  Or will it turn into Major Pullback4?

We have some scenarios and probabilities for you to consider in your trading preparation for tomorrow.

Table of support & resistance levels
We have updated the S/R table to reflect the latest price actions.  
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The rest of this article covers:
Table of Support & Resistance Levels (more)
Market Internal Indicators
Market Directions: Short, Intermediate and Long Term
Trading with Model Portfolio

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