Updates for Thursday July 11, 2024

Click here for Signal Trades spreadsheet.

Updates 4 PM ET - Thursday

​Entered into SOXS bear position right after CPI
Ahead of CPI report, we wrote: Look for the scenario where VIX dips right after CPI to get close to 12 once again. After this last anchoring process, VIX may then start to spike. This scenario means NQ SOXL will likely rise some amount post CPI. 

That is pretty much what happened post CPI.  After NQ SOXL both spiked up sharply, and VIX dropped sharply, we observed a dramatic reversal.   So we entered 1/2 position SOXS as planned.   We decided not to add to this position because SOXS was taking off too fast, and this is just a Level 2 dip which means the dip won't be that big or lasts for that long.

​Updates 2:15 AM ET - Thursday
Upcoming key events

​VIX VVIX UVXY:  Patterns building up towards a Level 2 dip setup
By end of day Wednesday:

• On its 30-min chart, VVIX has gapped up above its 200 EMA green line.  Its 20 EMA blue line is steadily rising.
• On its 30-min chart, VIX 200 EMA green line continues to go sideway (basing).  Its 20 EMA blue line has crossed above its 200 EMA green line.
• On its 30-min chart, UVXY has formed an intraday V bottom, may be starting to base as well.

You can see these patterns in the charts below.

Does this mean Level 2 dip is officially starting?
These charts above suggest that VIX VVIX UVXY are now starting to generate bearish conditions for equity, conditions that typically lead to a dip, a Level 2 in this case.  

But bearish conditions do not mean that NQ SOXL will drop instantly into a dip.  Bearish conditions mean bulls should think about protecting your profits.  Bears can monitor for setups to short. But the setups have to be really "ripe", and the short positions probably will not last any more than 3-4 days.

NQ

• ​NQ peaked at 20917 on Wednesday afternoon, just 2 points below our projected 20919 R1 resistance level.
• Based on NQ 4-hour chart below, it has reached the top of its channel and is likely to drop.  This coincides with VIX VVIX UVXY L2 dip message. 
• Still bears need to monitor for a clearer setup to short.  It is possible that after CPI report, NQ will spike up and form a quick top that functions as a bull trap.  Ideally UVXY should also form a sideway base or higher low pattern on its 30-minute chart.
• NQ L2 dip most likely will bottom out near the bottom of the channel around 20235.  NQ will then resume the climb up the channel.

SOXL

• ​SOXL peaked at 69 on Wednesday afternoon, 1 point above our projected 68 R1 resistance level.
• This coincides with VIX VVIX UVXY L2 dip message.  Still bears need to monitor for a clearer setup to short. 
• It is possible that after CPI report, SOXL will spike up and form a quick top that functions as a bull trap.  This then may be a setup to short.  Ideally UVXY should also form a sideway base or higher low pattern on its 30-minute chart.
• SOXL L2 dip most likely will bottom out in the same support zone 52.5 as before.  SOXL will then resume the climb up again to try to push through to a new all time high.

Until we see a clear short setup on SOXS charts, we are not entering anything yet.  But in the spreadsheet, we have shown a possible buy order for SOXS trade setup just to give you an idea of what to look for.  Click here for Signal Trades spreadsheet.

​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.