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We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Subscribe to get our latest analysis, trade plans and live intraday trades. Current trade record: 307% in 18 months. Updates 3 PM ET - Monday 1/17/22 Key Dates Here is the economic calendar for this week. The most important date is OPEX this Friday.  Price Projections The table of key price levels has been fully updated.  Earnings season has started last week. There is hope for a market boost. But based on our analysis of P/C ratio, volatility and market breadth (see discussions further below), we think the boost may be short-lived. Volatility is very likely to continue rising higher as we approach OPEX this Friday. There is a high probability that we will see price movements as follows this week:
After 1/21, volatility is likely to drop while stock indices start to rise again. But be careful here as there is a rising possibility of a real big volatility spike in the first half of 2022. We will report more on that as the data unfolds. Trade Plan In this environment, we prefer to trade quick positions, and/or intraday positions, until after OPEX. Our plan is a quick trade to capture the bounce, then a bigger quick trade to capture the drop. See updated plan in spreadsheet. Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. All volatility charts are showing "Fully Bearish" signal.  Hedging by Traders: Put/Call Ratio The signal from P/C ratio chart is now "Fully Bearish".  Hedging by Dealers Below are the updated volatility trigger levels. If price is above the trigger level, dealer hedging will change from "fueling volatility" (big price swings) to "dampening volatility" (calm price movements).
The Deep January Options Expiration On OPEX Friday 1/21, there are deep in the money calls worth over $125 billions set to expire. The magnitude of this expiration is likely a catalyst for volatility. Even if you don't trade options, this big wave is going to rock your boat. So we recommend that you read the full explanation of this important expiration here. Market Breadth: Advance-Decline Net Issues The 20-day EMA lines on A/D charts for NYSE, Nasdaq and small caps are heading down. The message here is "Fully Bearish".  Other Signals for Big Picture Consideration The Dark Pool Index shows silent money has eased up on buying $SPX. We are keeping this in mind, but not assigning a lot of weight to it yet. Bond volatility (MOVE index) continues to form lower high relative to late November. We interpret this to mean that the bond market is not in turbulent mode for now, and consider it a bullish divergence from bond prices. A calm bond market is necessary for a calm stock market to follow. Junk bonds (JNK HYG) is dropping to retest its 1/10 low. On the weekly chart, JNK HYG EMA lines are converging, setting up a vulnerable pattern for junk bonds. This is a bearish warning for stocks. Click here for Signal Trades spreadsheet. To Read We urge you to read this article about risk management and position sizing. 1% Risk Rule If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read: Why 3x ETFs like TQQQ lose money over the long term If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read: The risks of investing in inverse ETFs 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 suggestions.
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We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Subscribe to get our latest analysis, trade plans and live intraday trades. Current trade record here. Updates 12:45 AM ET - Monday 1/10/22 Key Dates Here is the economic calendar for this week. Jerome Powell's speech will undoubtedly be monitored closely for level of hawkishness. And the inflation data (CPI and PPI) can potentially move the market a lot too.  Looking further into January, we have two key dates. Fri 1/21: OPEX Wed 1/26: FOMC announcement Finally, all markets will be closed on Monday 1/17 for Martin Luther King holiday. Market Breadth: Advance-Decline Net Issues We start today with the indicator that has the clearest pattern. The signal from A/D line "Approaching Bearish". This is true for NYSE, Nasdaq and small cap charts.  Hedging by Traders: Put/Call Ratio The current signal from P/C ratio chart is "Approaching Bearish". From here, there are two possible scenarios for P/C ratio.
 Hedging by Dealers Below are volatility trigger levels. If price is above the trigger level, dealer hedging will change from "fueling volatility" (big price swings) to "dampening volatility" (calm price movements).
As of this writing, $SPX $NDX IWM are all below their trigger levels. Expect big price swings to continue. Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. By the end of last week, $VIX $VXN $RVX daily charts all show the possibility of a lower high topping formation. If this pattern persists, it certainly is a bullish divergence and eventually becomes bullish tailwind for $SPX $NDX IWM. However, when it comes to volatility, we can't ignore the monthly option expiration (OPEX) cycle. As January progresses, the chart that is the most reliable keeper of this cycle is $VVIX (volatility of $VIX). $VVIX 2-hour chart below shows that it may have formed the "Approaching Bearish" signal on 1/5. Assuming that this is true, we are now looking for a same-low or higher-low pattern to form which would make the signal "Fully Bearish". Then we would expect to see $VVIX rises above its 200 EMA green line, and keeps rising until it forms its monthly spike around OPEX. Of course, none of this is guaranteed. But there is a high probability that some pattern comparable to this will unfold.  Other Signals The Dark Pool Index brings some good news for the bulls. It is showing a moderate upturn in $SPX buying. There are a few possible implications:
Bond volatility (MOVE index) eased up again on Friday. Zooming out on this chart, we observe that over the next few weeks, bond volatility is likely to drop some amount. But over the next few months, there is a strong possibility that bond volatility will really spike up big. If this happens, it will have a big impact on the stock market. Junk bonds (JNK HYG) dropped steeply last week, and may be approaching a short-term bottom. Junk bonds tend to behave more like $SPX, so this may be welcoming for $SPX bulls. But in the big picture context, junk bonds chart continues to look vulnerable. Short-term Key Levels This table is all updated except for $SPX SPY.  Trade Plan At this point, the combined signal is "Approaching Bearish". So here is our personal short-term strategy for trading. We plan to wait for this signal to turn into "Fully Bearish", then:
See updated plan in spreadsheet. To Read We urge you to read this article about risk management and position sizing. 1% Risk Rule If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read: Why 3x ETFs like TQQQ lose money over the long term If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read: The risks of investing in inverse ETFs 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 suggestions. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Subscribe to get our latest analysis, trade plans and live intraday trades. Current trade record here. Updates 8:00 PM EST - Sunday Key Dates Here is the economic calendar for this week. Friday's job report will no doubt have a lot of impact on the market.  But the big ones will be these two key dates. Fri 1/21: OPEX Wed 1/26: FOMC announcement Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. Currently the signals from all volatility charts are still "Fully Bullish". There are three possible scenarios that may show up early this week. And each scenario has a different implication. We'll be monitoring for them closely.
 Hedging by Traders: Put/Call Ratio Currently the signal from P/C charts is still "Fully Bullish". What the P/C ratio is showing is that traders and fund managers are not loading up on puts to hedge their long portfolios. Not yet. Using the P/C ratio chart to visually guide us, we still need to wait for at least one W bottom to form (20-hour EMA blue line). This may happen some time early to mid January. When this pattern shows up, then the P/C ratio signal becomes “Approaching Bearish”.  Hedging by Dealers Dealer hedging right now has a "dampening volatility" effect on the market. This is bullish for stocks. Here are the updated key price levels. If $SPX $NDX IWM drop below these key levels, dealer hedging will swing from "dampening volatility" to "fueling volatility".
Market Breadth: Advance-Decline Net Issues Currently the signal from A/D line is still "Fully Bullish". NYSE, Nasdaq and S&P small caps have been forming big W bottoms (via their 20-day EMA blue lines) since 12/1. This bullish pattern is still technically intact for all three charts. Factoring in the possible upcoming changes in volatility and P/C ratio, we would say that if the 20-day EMA blue line turns down and crosses below the 50-day EMA red line, the signal from A/D line may become "Approaching Bearish".  Other Signals The Dark Pool Index shows that silent money has eased up on their buying of $SPX during the entire last week of 2021. This may be an early warning of bearish time to come, but we have to take this information with a grain of salt as it does not track as closely as the other indicators above. Bond volatility (MOVE index) continues to form another lower high on its chart relative to the level from late November. We consider this bullish for stocks. Junk bonds (JNK HYG) is forming a short-term top. Junk bonds tend to behave more like $SPX, so this is not bullish news for $SPX. This is some thing to continue monitoring. Short-term Key Levels and Trade Plan Subscribe to get our latest analysis, trade plans and live intraday trades. 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 suggestions. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Subscribe to get our latest analysis, trade plans and live intraday trades. Current trade record here. Updates 1:30 PM EST - Sunday Key Dates The stock market will be open this entire week, including Friday 12/31, the last trading day of the year. The economic reports are few this week.  Looking ahead into January, here are some key dates that will definitely move the market. As you can see the latter part of January may get turbulent. January 21: OPEX January 26: FOMC announcement Hedging by Traders: Put/Call Ratio Notice how the 20-hour EMA blue line is still dropping steadily below the 200-hour EMA green line in the P/C ratio chart below. The demand for puts is still declining. This leads to lower volatility, which leads to lesser demand for puts. Conditions remain "Fully Bullish" for now.  Hedging by Dealers Here are the updated key price levels below which dealer hedging swings from "dampening volatility" to "fueling volatility". Currently $SPX $NDX IWM are all above their key levels. Therefore, we should continue to see the "dampening volatility" effect of dealer hedging.
Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. As the demand for puts drop, volatility drops. This is most evident in $VIX 30-minute chart below. Observe how the 200 EMA green line has formed a top since 12/3, and has been declining nicely. $VVIX $VXN $RVX charts are all showing similar lower high patterns, confirming their "Full Bullish" signals as well. It would actually be even more bullish if $VIX spikes up early in the week to the zone of 22-23 one more time. That would result in another lower high spike, with the accompanying dips in $SPX $NDX IWM, and the arrival of more buy-the-dip buyers.  Market Breadth: Advance-Decline Net Issues NYSE, Nasdaq and S&P small caps have been forming big W bottoms (via their 20-day EMA blue lines) since 12/1. This bullish pattern is still intact for all three charts. Here it is shown for small caps.  Other Signals
The Dark Pool Index shows that silent money has been buying $SPX since 11/18. However, the buying appears to be ebbing last week, so we'll have to keep an eye on this. Bond volatility (MOVE index) formed another lower high on its chart relative to the level from late November. We consider this bullish for stocks. Junk bonds (JNK HYG) had a very bullish week last week. This indicates a risk-on mood, and bodes well for the stock market. Short-term Key Levels and Trade Plan Subscribe to get our latest analysis, trade plans and live intraday trades. 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 suggestions. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Subscribe to get our latest analysis, trade plan and live intraday trades. Current trade record here. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Subscribe to get our latest analysis, trade plan and live intraday trades. Current trade record here. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Updates 1:30 AM EST - Tuesday 12/21/21 Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. Recall our system's basic rule: same/lower high spike for all volatility charts simultaneously constitute a "Fully Bullish" signal. And that is what we still got as a pattern for $VVIX $VIX $VXN $RVX charts. Despite the fact that Monday's high is higher than the two previous days, it is technically lower than the key spike on 12/3.  Hedging by Traders: Put/Call Ratio The P/C ratio 20-hour EMA has dropped below its 200-hour EMA level, reflecting short-term drop in the demands for puts by traders and fund managers. Again, the P/C ratio pattern signals "Fully Bullish" for now.  Hedging by Dealers Here are the updated key price levels below which dealer hedging swings from "dampening volatility" to "fueling volatility". Currently $SPX $NDX are below the key levels, and IWM is just barely above it. So buckle up for some more big price swings, up and down.
Market Breadth: Advance-Decline Net Issues NYSE, Nasdaq and S&P small caps had been forming big W bottoms since 12/1. The bullish pattern is still intact, though barely.  Other Signals The Dark Pool Index shows that silent money has been buying $SPX since 11/18. But it dropped as of 12/20. This has been a long run, so let's see how this may affect the regular market. Short-term Key Levels and Trade Plan Subscribe to get our latest analysis, trade plan and live intraday trades. 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 suggestions. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Subscribe to get our latest analysis, trade plan and live intraday trades. Current trade record here. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Subscribe to get our latest analysis, trade plan and live intraday trades. Current trade record here. We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Subscribe to get our latest analysis, trade plan and live intraday trades. Current trade record here. Updates 12:30 AM EST - Thursday 12/16/21 Volatility: $VVIX $VIX $VXN $RVX Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here. We've been describing that we want to see all volatility charts form lower highs. That's a ”Fully Bullish” signal. And that's what we got post FOMC Wednesday.  Hedging by Traders: Put/Call Ratio We also wanted to see similar pattern on the Put/Call ratio chart. Such pattern is a ”Fully Bullish” signal. And that's what we got post FOMC Wednesday.  Hedging by Dealers Note that the P/C ratio 20-hour EMA blue line is still above the 200-hour EMA green line. This is bullish. It means there are still puts held by traders. This put inventory is going to expire this OPEX Friday. The subsequent covering of stock and futures hedges by dealers will continue to provide fuel for the Santa Claus rally. Key price levels to keep an eye on. Below these levels, dealer hedging can cause violent price swings. IWM is still in this category.
Market Breadth: Advance-Decline Net Issues NYSE, Nasdaq and S&P small caps had been forming big W bottoms since 12/1. The bullish pattern is still intact. Of all the indices, small caps breadth is actually the strongest in its pattern as shown below.  Other Signals
The Dark Pool Index shows that silent money has been buying $SPX since 11/18, and is still buying as of Wednesday 12/15. In addition, they are buying notable amount of QQQ and TNA. Junk bonds (JNK HYG), which tend to behave like $SPX, have been rallying since 12/2. The rally stalled for a bit last week, but has resumed post FOMC. This is bullish for $SPX. Short-term Key Levels and Trade Plan Subscribe to get our latest analysis, trade plan and live intraday trades. 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 suggestions. |
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