Click here for our recent Signal Trades.
Below is a time-delayed excerpt from our live updates for members.
Updates 12:55 AM EST - Wednesday 12/2/20
Big Picture: No VCrash signal on the horizon from $VIX $VXN, but we are monitoring for a possible formation of a VMajor signal. (A major spike in fear.)
Short Term: $NDX $SPX are likely to continue rising a bit more. IWM is now starting to head down short term.
Market internals indicate the current bullishness may be waning a bit.
Subscribe to get full access to table of market internal data.
Table of Support & Resistance Zones
Subscribe to get full access to table.
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.
As we mentioned above, we are monitoring for a possible formation of a VMajor signal. A VMajor signal is simply a major spike in fear, similar to the spike levels $VIX $VXN showed from 8/26 to 9/2, and 10/23 to 10/30.
$VXN 2-hour chart below explains what to look for that would confirm a VMajor signal. If a VMajor signal shows up, $VXN is likely to rise up to its green zone shown below. Subscribe to get full access to $VXN chart.
$VIX 2-hour chart below explains what to look for that would confirm a VMajor signal. If a VMajor signal shows up, $VIX is likely to rise up to its green zone shown below. Subscribe to get full access to $VIX chart.
$VVIX is the volatility of $VIX. When $VIX is dropping, $VVIX does not offer much helpful info for trading. However, when $VIX starts to rise steadily, $VVIX will pick up on this and starts to show certain patterns.
$VVIX 2-hour chart below explains what to look for that would confirm a VMajor signal. Subscribe to get full access to $VVIX chart.
We want to make it clear that what $VIX $VXN are forming are just possibly bigger spikes in fear. They are not forming a crash signal (VCrash).
So it's really a question of a minor pullback in price due to a VMinor signal, or a bigger pullback in price due to a VMajor signal.
$NDX daily chart below shows where we can expect to see price pulls back to. Subscribe to get full access to $NDX chart.
$SPX daily chart below shows where we can expect to see price pulls back to. Note that this is the bigger pullback due to a VMajor signal. Subscribe to get full access to $SPX chart.
IWM 2-hour chart below shows where we can expect to see price pulls back to. Subscribe to get full access to IWM chart.
In an ideal scenario, when the VMajor signal shows up, $NDX $SPX IWM drop correspondingly. This is ideal because it's predictable. We can project the timing and scale of the drop based on this ideal scenario.
However, there is a good chance that we won't see this kind of ideal predictability. There is a chance that when the VMajor signal shows up, $NDX and $SPX may ignore the serious spike in fear, and blithely continue to march up.
This is a bearish divergence, and it happened between 8/26 and 9/3 for $NDX and $SPX. Afterwards, $NDX $SPX switched to a bullish divergence, ignored the dropping $VIX $VXN signals, and continued their own drop for almost all of September before rising up in price.
Bullish or bearish divergence are simply lag in response time to the signals. It happens a lot, and it is rather annoying as it makes it hard to time your trades.
In any event, this is just a heads-up. $VIX $VXN $VVIX all have to confirm the VMajor signal first.
In Signal Trades:
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