Updates for Monday 4/4/22

We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.   
Current trade record here.

Updates 6:30 PM ET - Sunday 4/3/22

Upcoming key events
This week is light in economic reports, but there are few Fed speakers as well as the release of FOMC minutes to stir things up a bit.

​Key Price Levels
The table below has been fully updated.  These new price levels will be in focus this week.

​Table is available in members section.

Weekly index charts confirm "Approaching Bearish"
$VVIX has been warning us that volatility is about to rise some amount.   This means stock indices are about to pull back a certain amount.   

Stock conditions have changed to "Approaching Bearish".   This is confirmed by the topping candles formed on $SPX $NDX IWM charts.  

How much of a drop can we expect and how long?   

We don't think stock indices are starting a lower-low leg in a bear market.  Rather, they are building the 2nd leg of a really big W from which they can propel themselves higher, getting out of the bear market for real.   This potential path is shown on $SPX weekly chart below.   

Here are our projections:

• $SPX is likely to retest the zone around its 50-week EMA.  This means 4350-4400.   
• If $SPX successfully retests its 50-week EMA (4350), it can rise out of this pullback to climb up to 4800 or higher.
• Even if $SPX does not find support at 4350, it has strong support at Feb 24 low (4115).   
• $NDX IWM are likely to follow in the same path as $SPX.​

​"Happy stocks" charts confirm "Approaching Bearish"
The weekly chart of Nasdaq percentage of stocks above 200-day MA shows a big topping candle formed right at the 20-week EMA blue line.   The odds are high that this percentage will drop, possibly to retest 20% again. 

This confirms the "Approaching Bearish" condition for $NDX.  NYSE and small cap charts are showing similar patterns as well.

​Volatility confirms "Approaching Bearish"
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

Volatility of volatility ($VVIX) formed a complete W bottom by 4/1, setting the stage for a possible multi-day climb back up.  $VIX $VXN $RVX all confirm the "Approaching Bearish" conditions.

Supplemental Indicators
Equity Put/Call ratio:  This ratio has stopped dropping and started rising steadily since 3/25.  This means traders are starting to buy more puts for hedging and shorting purpose.   This confirms the "Approaching Bearish" conditions.

Dealer hedging:   If $SPX $NDX IWM drop and stay below Friday's lows, current state of dealer hedging will fuel volatility.  This is because dealers will be selling into weakness and buying into strength, thereby creating sharp price swings.

Bonds:   Bond volatility (MOVE) has been rising sharply for the last several weeks.   Junk bonds (JNK HYG) weekly charts show topping patterns.   Junk bonds tend to behave like equities.   This confirms the "Approaching Bearish" conditions.

Dark Pool Index:   This index is starting to show a topping pattern, confirming the "Approaching Bearish" conditions.

Trade Plan
After $VIX $VVIX form a W bottom, they will be ready to rise for multiple days. We plan to capture this rise volatility and drop in price via UVXY and SQQQ.

The charts below show the possible price paths for UVXY and SQQQ.   Note that we plan to scale into both positions at the lows of last week, and take partial profits along the way.

Click here for UVXY SQQQ charts and current buy/sell orders.

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Current trade record here.   

Disclaimer
The information presented here is our own personal opinion.  Consider it as food for thought.  We are not offering financial advice.  We are not promoting any financial products.   We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our trades.