Updates for Monday 11/30/20

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Below is a time-delayed excerpt from our live updates for members.

Updates 12:54 AM EST -  Monday 11/30/20

Current rise in $VIX $VXN is a VMinor signal
$VIX $VXN rose this morning as we anticipated.   However, they only formed a VMinor signal.   They have already topped out after a brief spike.

$VXN daily chart currently shows a small spike forming.   This is considered a VMinor signal.   $VIX $VXN VMajor signal would be a much bigger spike, one that pushes them at least to their 200-day EMA level.    

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In order for $VXN to form a VMajor signal that accompanies a big sell-off in stocks, $VIX and $VXN first must form a much more definitive V or W bottom on their intraday charts.  They have not formed that yet.   

What $VIX $VXN did this morning was a quick pop and drop.   In fact, the bulls should root for $VIX $VXN to do another quick pop and drop tomorrow, one that is high enough to anchor $VIX $VXN at their 20-day EMA blue lines.   This would be an "anchor to drop" pattern, which would bring back a lot more bullish tailwinds for stocks.

In Signal Trades, we booked some profit earlier by exiting our Quick Swing TQQQ position.   If $VIX $VXN form another "anchor to drop" pattern tomorrow, we will re-enter TQQQ Quick Swing.

Updates 9:55 AM EST -  Monday 11/30/20

Minor rise in volatility
$VIX $VXN are not showing the formation of a VMajor signal yet, but they are rising somewhat.   We consider this a VMinor signal.   

As a result, there's some amount of profit-taking selling in $NDX $SPX IWM.  In Signal Trades, we exited QuickSwing TQQQ, but are holding onto the Big Swing TQQQ and FNGU.

The current rise in $VIX $VXN is likely to be brief as most VMinor signals are.   So it's not a good idea to try to trade UVXY right now.

Updates 11:35 PM EST -  Sunday (for Monday 11/30/20)

Summary
Big Picture:  Conditions are highly bullish for stocks as $VIX $VXN continue to drop.  There are no signs of a potential crash, and while a major spike in fear may come soon, it is not here yet. 

Short Term:   $NDX $SPX are likely to continue rising a bit more.  IWM is now in overbought territory.

The Week Ahead
Tuesday:  Powell speaks starting at 10 AM EST
Friday:   Job report 8:30 AM EST

Next week is FOMC meeting December 15-16.

Market Internals
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Table of Support & Resistance Zones
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Terminology
We have come up with some labels for different types of $VIX $VXN signals.  We plan to use these labels going forward so you will get a better idea of what we are referring to.

There are 3 types of rise in volatility.

1. VCrash:  an eruption in $VIX $VXN that accompanies a crash.
2. VMajor:  a major spike in $VIX $VXN that reflects serious growing fear.
3. VMinor:  a minor rise in $VIX $VXN that reflects everyday benign worries.

$VXN
So are there any signs of VCrash right now?   NO.

$VXN weekly chart is a reliable source for VCrash signal.   $VXN weekly chart below shows some yellow highlights.   Those are the VCrash signals since 2016.   We don't have any such VCrash signal right now.   See the chart annotations  below for why $VXN is showing more bullishness.

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$VIX
$VIX futures contango is at 9:33% right now.   This is a high number, which implies that there are a lot of tailwinds for $SPX $NDX IWM to rise higher.
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Still are there any signs of a VMajor signal at least?   Not yet.   A VMajor signal will probably come soon, but it is not here yet.

So what should we look for that would warn us of a VMajor rise?   See the explanations on $VIX 2-hour chart below.

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$NDX $SPX
$NDX $SPX charts in different time frames below show how $NDX and $SPX are both in rising channels.   If they follow the boundaries and directions of their channels,  $NDX and $SPX can go quite far by end of the year as shown below.

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IWM 
IWM is in a rising channel too, but it is too steep in the short term.   It is misleading to use this slope for IWM rising channel.   It is more prudent to let IWM drop down a bit, at least to its green support zone, before  buying IWM.

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Signal Trades
The way to approach trading the current market is to continue riding the bullish momentum, but don't assume that it will last forever.   $SPX $NDX IWM are vulnerable to a quick but major rise in fear (VMajor) soon.   The trick is to stay patient, keep monitoring, and make a plan for your bullish positions for when VMajor shows up.

Our strategy for VMajor signal is to take partial profit by exiting our Quick Swing position at that time.   We will also tighten stops on Big Swing positions.   We may also enter a small Quick Swing UVXY to capture the VMajor rise itself.

Please check Signal Trades for updated stops and sell targets.   Keep in mind that the sell targets are simply projections for now.   We will exit per our strategy above, and the exact exits will depend on when VMajor shows up.
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Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation ​

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