Updates for Wednesday 7/6/22

• We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.   
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Updates 9:22 AM ET - Wednesday 7/6/22

ISM Service Report and FOMC Minutes

• Not a whole lot of price actions last night in the futures market as ES NQ RTY oscillated in a tight range.   
• $VIX contracted tightly to 27.7 as we write this.
• ISM service report at 10 AM ET will be closely monitored for confirmation of recession.
• FOMC minutes at 2 PM ET will be closely monitored as well, but that information may be stale now that the market has swung into the "rate cut please?" mode.

Updates 11:30 PM ET - Tuesday

Short-term volatility signal:  "Transition"
When we last posted at  2 PM on Tuesday, stock indices were still not fully revealing their directions yet.   But by end of day Tuesday, price actions and chart patterns swung in the bullish direction.   So how real is this?

$VIX daily chart below shows that it has been forming a lower high pattern relative to the highs of mid-June.   Tuesday pattern confirms that volatility continues to ebb.   This provides bullish tailwinds for stocks.

SVXY chart also gave us a substantial clue.   Observe the sideway 20 and 50 EMA blue and red lines on SVXY 2-hour chart below.   The last time SVXY formed this pattern was 5/24, right before it broke out.

Nasdaq is the most bullish index right now (who knew)
Nasdaq Advance-Decline net issues are climbing back up. NQ $NDX price actions were much more bullish on Tuesday than S&P or small caps. This happened despite the major sell-off in semiconductor stocks (SOXL).   

So what can we expect to see from NQ chart?   NQ 4-hour chart below shows that it is forming a potential W bottom.   As long as NQ stays above the support level of 11350 on Wednesday, it turns the signal to "Fully Bullish".

Once NQ starts rising, the first level of resistance is at the 200 EMA green line, around 12007.   If NQ can vault over this line, it has a chance to get back up to 12900.    ​

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​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.