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Click here for our Signal Trades. Below is a time-delayed excerpt from our live updates for members. Updates 2:25 PM EST - Thursday 9/3/20 Short Term We took partial profits with UVXY Position1 in our Signal Trades and raised the sell limit order for UVXY Position2. The bet on volatility strategy that we wrote about since Wednesday has paid off nicely so far. We also lowered the buy limit orders for TQQQ (2 positions). Why?
There's a fair amount of profit taking happening for $SPX $NDX. And there's a sense of mild panic in the air from the novice traders not used to a sudden steep market drop. Selling begets selling. When the market surges on a couple of key stocks such as AAPL and TSLA, it will dive on a couple of key stocks such as AAPL and TSLA too. So we might as well try to take advantage of the situation and buy low. In the Signal Trades spreadsheet:
Updates 10:21 AM EST - Thursday 9/3/20 Short Term $SPX $NDX IWM are trying to find support from the morning gap down. First level of support for $SPX $NDX IWM is the zone around the high of August 27. If $SPX $NDX IWM bounce from this level, their first level of resistance is this morning's high. If $SPX $NDX IWM fail to bounce from here, they may be on their way to drop sharply down to their green support zones. This most likely won't happen today, but the mood has changed in the short term from super bullish to profit taking mode. This is the down swing in the channel that we were talking about. In the Signal Trades spreadsheet:
Updates 9:17 AM EST - Thursday 9/3/20 Pre-market
There is a chance that in the morning fluctuation, $VIX will drop a bit and therefore UVXY will drop a bit too. If you are looking to enter UVXY or add to your positions, see our Signal Trades setup. You will need to monitor $VIX $VXN UVXY closely. The opportunity may be fleeting. In the Signal Trades spreadsheet:
Updates 12:59 AM EST - Thursday 9/3/20 Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime.
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Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 12:59 PM EST - Wednesday 9/2/20 Short Term What a morning! Full of whipsaw and head fake. You are on a roller coaster ride whether you are long or short $NDX QQQ TQQQ. The fact that $SPX $NDX are detached from market internals and the volatility indices makes it very hard to gauge whether $SPX $NDX are done with the current up swing within their channels, or whether there's still room to go higher. In general, letting FOMO decide our trades usually leads to poor results. No one says we have to trade every move in the market. Meanwhile $VIX $VXN UVXY keep grinding upward. So we are going to stick with UVXY for now and wait for $NDX to drop lower in its channel before entering long. Please note that the up channels for $SPX $NDX IWM are all still intact from a big picture perspective. We are simply waiting for $NDX to drop lower inside its channel to give us a better short-term entry price. See our Signal Trades for the trade setups. Updates 9:15 AM EST - Wednesday 9/2/20 Pre-market $VIX dropped a small amount, but is forming a pattern pre-market indicating it is ready to rise higher than 26.5. Meanwhile $SPX $NDX are going to gap up big, and most likely will drop some amount. They are not necessarily done with their up swings within the their channels just yet. In other words, after some morning pullback, they may rise up sharply again. See our Signal Trades for entries so far. Keep in mind we are now entering an environment where $SPX $NDX IWM can rise while $VIX $VXN UVXY can rise too. See our detail explanations from last night. This is a tough environment to trade. So please trade small, take profit frequently, don't get married to your positions, and certainly don't bet on what you think the market should do or should not do. Let the signals guide your trades. Updates 12:55 AM EST - Wednesday 9/2/20 $VIX $VXN $VVIX $SPX $NDX IWM are rising sharply, but they are rising against a backdrop of persistently rising volatility. We have been sharing this bearish divergence with you since mid August, as shown by $VIX $VXN and $VVIX daily charts below. For those of you who may not be familiar with these indices, they are:
We couldn't give you the reasons why $VIX $VXN have all been rising for multiple weeks now. But our trading system has been designed to monitor volatility closely. It picked up these patterns pretty quickly. And now we have more explanations behind this persistent rise in volatility. Apparently very strong demand for call options on the biggest tech names has spurred derivative dealers to bid up both stocks and their implied volatility indexes. This is because dealers need to hedge their long positions using bets on volatility. This can cause the actual stocks and their implied volatility to rise together. Dealers are also using $VIX $VXN for additional hedging. Now when these very popular stocks start to drop, dealers may unwind their hedges at very fast speed. This unwinding can add fuel to the drop in price and the sharp rise in volatility. Please read this article and this for more details. Here is how we interpret this information. Whether stocks continue to rise, or start to fall, a bet on rising volatility actually seems like a low-risk strategy.
So in theory, we should see $VIX $VXN UVXY continuing to rise. But we have to track the charts closely for actual confirmations before placing the trades. Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 3:02 PM EST - Friday 8/28/20 $SPX may rise a bit higher short-term Of all the indices, $SPX is the most bullish right now. It looks poised to rise a bit higher, most likely to tag the the top of its orange resistance zone at 3520 (see S/R table below). This may happen on Monday. Personally we like to buy on pullbacks for everything. "Buy low" or "Buy relatively lower" enables us to maximize our profit and minimize our risk. So we are not going to chase price up in the Signal Trades, especially not before the weekend. There will be plenty of opportunities to trade next week. $VIX $VXN are no longer dead. As they swing back and forth between (1) and (2), there will be opportunities to make money. This morning quick ride upward with UVXY in Signal Trades demonstrated this. In fact, there most likely won't be setups to buy and hold for a few days, to enjoy a ride that lasts multiple days. As long as $VIX $VXN are swinging between (1) and (2), market will be choppy. So to capture profit, we have to be nimble with our entries and exits. Updates 9:18 AM EST - Friday 8/28/20 $VIX $VXN may rise a bit more this morning The (1) (2) moves that we discussed at 1:35 AM EST are unfolding. $VIX pre-market signals show it's likely to rise up to retest its Thursday high this morning, rising possibly to 28. This means $SPX $NDX IWM are likely to pull back as $VIX rises. They will most likely retest their Thursday lows. So the low-risk entry point for $SPX $NDX short-term long positions are near their Thursday lows. You can enter UVXY for a quick ride up along with $VIX at the start. Keep in mind it most likely will reverse quickly. Signal Trades:
Updates 1:35 AM EST - Friday 8/28/20 $VIX is transitioning $VIX daily chart below shows how $VIX has formed a solid support zone above 20.5. This is similar to the $VIX support zone formed in late 2019 early 2020. Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 12:50 PM EST - Thursday 8/27/20 Selling is accelerating Well well well! Our prediction is coming sooner than we expected. What we wrote at 12:04 PM EST is coming true. ...we are expecting $SPX $NDX IWM to drop lower in their channels soon, possibly to their green support zones before they find enough buyers to resume the rise. So it was a wise move not to be fooled by $SPX $NDX morning head fake. Alas UVXY reversed too fast for us to re-enter. At this point, we have clear confirmation that $SPX $NDX IWM are going to continue the short-term selling process. We will monitor for pullbacks in $VIX $VXN to enter UVXY. By the way, we prefer UVXY right now rather than the inverse ETF such as SQQQ TZA SPXS. This is because $VIX $VXN movements are more reliable than $SPX $NDX IWM right now. You can't trust stock prices, but you can trust volatility any day. Updates 12:04 PM EST - Thursday 8/27/20 $SPX $NDX IWM: short-term upside is limited As you know our trading system is based primarily on the messages sent out by $VIX $VXN. When both of these indices send out the same message, it's usually a big signal for a directional change in $SPX $NDX IWM. This morning $VIX $VXN have been sending out fluctuating mixed messages. However, they do have one underlying theme. VIX $VXN are transitioning to climb higher. But before they can do so with strong momentum, they must anchor themselves in their own short-term support zones. So $VIX $VXN are spending today probing for these support zones. While $VIX $VXN are doing this, we get a lot of short-term fluctuation in $SPX $NDX IWM as well. There is a good chance that $SPX $NDX will try to climb higher today and Friday. They have been rising despite the bearish divergence from market breadth and volatility. So they may very well continue to do so. In our experience, this is a high-risk low-reward setup. So we are choosing not to chase $SPX $NDX up at this point. Our Signal Trades have generated some handsome profit this week, and we prefer to keep it rather than give it back to the market by overtrading. By the way, please note that we are not saying there will be a huge sell-off. We are not saying Dive2 is here. We are not saying $SPX $NDX IWM up channels are coming to an end. But we are expecting $SPX $NDX IWM to drop lower in their channels soon, possibly to their green support zones before they find enough buyers to resume the rise. Updates 10:09 AM EST - Thursday 8/27/20 Get out of short-term long positions The sell-off is accelerating for $SPX $NDX IWM. We are scaling into UVXY. Updates 10:01 AM EST - Thursday 8/27/20 Conflicting $VIX and $VXN
This mixed message results in rising $SPX IWM and a more bearish $NDX right now. We are not comfortable entering into long or short positions when $VIX $VXN are not sending out the same message. We are not seeing any low-risk setups right now for long or short entries. So we are staying in cash this morning and continuing to monitor for setups. We will post updates if the setups start to form. Updates 9:39 AM EST - Thursday 8/27/20 Stimulus is here to stay From WSJ: “While the Fed didn’t change its inflation target, it made an important and widely anticipated shift by stating that if inflation runs below 2% following economic downturns, it will seek to hold longer-term inflation expectations steady by seeking periods of inflation above 2% when the economy is stronger.” In other words, no pre-emptive move by the Fed to withdraw stimulus if inflation starts to rise and gets close to 2%. Fed will let inflation run higher than 2% to juice the much needed extra growth. Market's response:
We are monitoring for the other scenario where $VIX $VXN will form a spiky top and start to drop back down into their channels. This would be a bullish setup for $SPX $NDX. It would provide us with a short-term pullback to re-enter $SPX $NDX long positions, and to continue capturing the short-term up swing that started on 8/20. However, the setup is not here yet. Proceed with caution. It is not necessary to trade constantly. We are looking for low-risk setups as always. Updates 9:10 AM EST - Thursday 8/27/20 Waiting for Powell $SPX $NDX IWM are not gapping up this morning. Instead they are stuck pretty much where they left off. The same is true with $VIX. This tells us that market participants are awaiting Powell's speech at 9:15 AM EST. Similar to FOMC announcement, this speech has a way of moving prices sharply. Monitor for this scenario during or post speech:
When this combination happens, it is a setup for $VIX $VXN to rise up higher. We will be looking for low-risk setup to enter UVXY for a short-term up swing. Updates 1:05 AM EST - Thursday 8/27/20 High Probability of Selling On Thursday We discussed in our post late Wednesday the fact that $SPX $NDX were breaking out against growing bearish divergence. There is a high probability that $SPX $NDX will gap up at open on Thursday. At the same time, if $VIX $VXN continue to rise sharply above their 200-hour EMA lines on Thursday, it's a lot of bearish headwinds for $SPX $NDX IWM. So there is a high probability that $SPX $NDX will do an intraday reversal on Thursday and start to drop. Expect to see some selling on Thursday, not enough to drop $SPX $NDX down to their green zones yet. But the selling process is likely to start. Table of Support & Resistance Zones This table has been updated with new orange and green zones. ... Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 2:00 PM EST - Wednesday 8/26/20 Available for members. Updates 9:23 AM EST - Wednesday 8/26/20 Short Term Up Swings To Continue On Wednesday Pre-market reading of $VIX indicates that it's very likely going to drop a good chunk today. This means bullish tailwinds helping $SPX $NDX IWM to rise today. There may be a minor pullback in price for $SPX $NDX IWM to start the day. This will correspond to a minor rise in $VIX $VXN to start the day. Note that the short-term up swing for $SPX $NDX IWM may end by end of day today. We will monitor and report later. Click here for our Signal Trades. Updates 12:30 AM EST - Wednesday 8/26/20 Short Term Up Swings To Continue On Wednesday $SPX $NDX IWM had a minor pullback early morning as we anticipated pre-market. This provided a low-risk set up to enter short-term swing positions. $VIX $VXN charts at this point show that they are likely to drop on Wednesday. This means that we should expect to see $SPX $NDX IWM rise some more for most of Wednesday. Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 9:23 AM EST - Tuesday 8/25/20 Pre-market Signals $VIX is likely to rise up and do a quick retest of the zone between 22.5 and 23. This means $SPX $NDX IWM will pull back a bit this morning, before resuming their rise. The key is to monitor for how high $VIX $VXN rise up in the channels. If they rise up but stay within their channels, it is a bullish setup for $SPX $NDX IWM. Signal Trades:
Updates 1:30 AM EST - Tuesday 8/25/20 Members get full access to in-depth nightly analysis. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. You can cancel anytime. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 3:50 PM EST - Friday 8/21/20 ... Updates 2:18 PM EST - Friday 8/21/20 ... Updates 10:02 AM EST - Friday 8/21/20 Short Term Both $VIX $VXN appear to have finished their morning tests of their upper channel edges. They are likely to drop down into the lower zones of their channels now. This means $SPX $NDX are likely to climb higher from here. Updates 9:43 AM EST - Friday 8/21/20 Short Term Both $VIX $VXN are likely to retest the upper edge of their channels again this morning.
If $VIX $VXN don't exceed these upper edges, those are low-risk places to enter long positions based on $SPX $NDX. Updates 9:19 AM EST - Friday 8/21/20 Short Term Overnight $VIX tagged its upper channel edge. As we discussed, that's a bullish setup for $SPX $NDX. IWM is likely to rise a bit today too, but it is continuing a steady march down. This bearish divergence is an advanced bearish warning, consistent with the advanced bearish warnings issued by market internals. Again, keep this in mind for the big picture, but focus on trading the short-term swings. It looks like for $SPX $NDX, their up swings aren't quite done yet for today. They are likely to climb a bit higher. Updates 12:00 AM EST - Friday 8/21/20 ... SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and live signals. Take advantage of our introductory low rate of just $39/month. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 3:20 PM EST - Thursday 8/20/20 Short Term $VIX is still dropping sharply, but $VXN has started to go sideway from the initial drop this morning. Our recommendation is to tighten stops on your $SPX $NDX IWM short-term bullish positions and think about taking partial profits. There is no guarantee that $VIX $VXN won't start climbing again tomorrow, and cause $SPX $NDX IWM to drop again. Updates 9:46 AM EST - Thursday 8/20/20 Short Term $VIX formed a top at the top edge of its channel. If you look at $VIX hourly chart that we showed you at 12:55 AM today, this means that $VIX is likely to drop back lower in the channel. This is a short term bullish setup for $SPX $NDX IWM. It does not necessarily mean that $SPX $NDX IWM are ready to surge much higher. But there is a bullish respite. $SPX $NDX IWM are likely to retest their recent highs, but understand that the underlying mood for the bigger picture is transitioning to bearish. Updates 9:22 AM EST - Thursday 8/20/20 Short Term $VIX gapped up overnight and tagged the top of its yellow channel briefly. It pulled back a bit but is climbing back up towards this top edge again. $SPX $NDX IWM are all gapping down. There is a high probability of $VIX surging out of the channel by a small amount. Then it may still drop back into the channel, but overall this action will lift $VIX EMA lines upward, preparing for its eventual rise out of the channel. What this means is some amount of selling will start today. $SPX $NDX IWM are likely to get down to their green support zones to search for new buyers. This is the first line of defense for $SPX $NDX IWM. We expect that $SPX $NDX IWM will find some support here at least initially. Updates 12:55 AM EST - Thursday 8/20/20 ... SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and signals. Take advantage of our introductory low rate of just $39/month. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 1:21 PM EST - Friday 8/7/20 Short Term Where you choose to place your stops, or manually exit your positions will depend on your trading style. We've been sharing with you the major $VIX $VXN signals as well as the minor ones to help you make this decision.
$VXN (Nasdaq volatility) is still grinding upward, and it may go as high as 31.25. This is no longer a minor signal, but it is a major signal that is complex and will take time to build. The best take away for now is do not enter $NDX QQQ TQQQ yet. But don't make bearish bets against them ahead of the weekend either. We will discuss the $NDX $VXN situation in more details in the weekend analysis. $VIX is forming .... Updates 12:19 PM EST - Friday 8/7/20 Short Term Per our alert at 10:46 AM, $VXN (Nasdaq volatility) is now grinding upward gradually as $NDX drops sharply. ... Updates 10:46 AM EST - Friday 8/7/20 Short Term $VXN (Nasdaq volatility) is grinding sideway in an attempt to form a support base, from which $VXN will anchor and then rise. $VXN may rise as high as 30.5 while it does this. $VXN may not succeed in forming this base, but it is best to wait for $VXN to finish this base, show signs of breaking out or breaking down, before entering $NDX QQQ TQQQ. In addition to rising $VXN, $NDX is suffering from FAANG++ stocks taking a break (FB AAPL AMZN NFLX GOOG MSFT TSLA BABA). The only one that rose this morning is FB. Updates 9:12 AM EST - Friday 8/7/20 Short Term
Overall conditions continue to be bullish for $SPX $NDX IWM. $VIX is not going to create major headwinds for stocks. However to start the day, $VIX will most likely rise a small amount. It may reach as high as 25. This will result in $SPX $NDX IWM dropping in a minor pullback to support. The highs of August 5 is first minor level of support. If $SPX $NDX IWM find enough buyers here, and with $VIX running into resistance at 25, $SPX $NDX IWM will resume the rise. Updates 12:40 AM EST - Friday 8/7/20 Short Term: $VIX $VXN Short Term: $SPX $NDX IWM Short Term Support & Resistance Zones Subscribe for full analysis Short-term Trade Setup Right now, the charts of $VIX $VXN are not showing the formations that typically precede an eruption in volatility. Therefore, despite some minor bearish headwinds here and there, the last major signal from $VIX was on 7/30 and it was bullish for $SPX $NDX IWM. This bullish signal is still intact as of end of Thursday, and is confirmed by $VXN. Until we observe a major signal from $VIX that is bearish, and confirmed by $VXN, we treat all pullbacks in $SPX $NDX IWM as minor, and as opportunities to add to long positions. Tonight's sell-off in futures market will create some pullbacks at the start of Friday for $SPX $NDX IWM. We will confirm with $VIX signal premarket. Click here for our Signal Trades. See FAQ for more explanations on terms, labels and abbreviations that we use. Below is a time-delayed excerpt from our live updates for members. Updates 9:09 AM EST - Thursday 8/6/20 Short Term
Updates 12:50 AM EST - Thursday 8/6/20 Short Term: $VIX $VXN Short Term: $SPX $NDX IWM Short Term Support & Resistance Zones Subscribe for full analysis Short-term Trade Setup The last significant signal from $VIX was the bullish reversal for $SPX $NDX $RUT on 7/30. Since then, despite issuing minor bearish signals every morning, $VIX has not issued a major bearish signal to end the current short-term bullish mood. We don't expect to see this major bearish signal on Thursday based on the message from $VIX $VXN. But there is a probability of $VIX showing a minor bearish signal to start the day, similar to Wednesday. For $SPX $NDX $RUT, this means a possible minor pullback to start, followed by bullish reversal. SUBSCRIBE now to read the rest of this post and gain full access to all our analysis and signals. Take advantage of our introductory low rate of just $39/month.
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