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Upcoming Key Events Note the week of March 18 is going to be intense.  NQ very like heading into a bear market In my last post from January 20, I wrote: "The bull trend started in late 2022 for NQ. Chart data tells us that we've been through the following bull cycles. 12/27/22: NQ Weekly Chart Bull Trend started. 12/27/22 -7/19/23: 1st Bull Cycle within Bull Trend. 10/27/23 - 3/4/24: 2nd Bull Cycle within Bull Trend. 4/22/24 - 7/1/24: 3rd Bull Cycle within bull Trend. 8/5/24 - 12/18/24: 4th Bull Cycle within Bull Trend. Stock cycles typically peak between 4th and 5th bull cycle in the bull trend. NQ is now in that transition period." NQ transition period is still happening and is now leaning more bearish.  VIX and VVIX are confirming bearish transition Keep an eye on VIX 200-day EMA green line. It is starting to go up just a tad. If it starts to rise steadily, the bear market is officially on.  Recall I also wrote about VVIX CTC pattern (Coiling Towards Catastrophe). This is where VVIX 20-day EMA blue line coils tightly around a slightly rising 200-day EMA green line, setting up for a big VIX surge. Note how VVIX EMAs are currently forming this pattern in its daily chart below, similar to previous surges.  However, a bear market BOUNCE is coming VIX daily chart is forming a short term top. This is confirmed by its daily MACD signal, showing VIX is likely to drop a bit this coming week.  NQ short-term S/R levels NQ 4-hour chart below shows it is starting to form a base for a quick bounce. Its MACD signal is basing to rise, confirming this short-term bullish setup.
 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. Upcoming Key Events Note the last week of January. It's full of market moving events so buckle up.  Apologies for the fact that I don't have enough time to prepare charts for you. But stocks are entering a pivot period and I want to alert you to this fact. From the technical signal perspective, the indicators are looking mightily bearish. None of these patterns discussed below is new. What is intriguing is that they have been persistent in their messages, and they are getting louder. So we really should pay attention to this information. Bearish technical setup: Volatility is setting to rise VVIX weekly chart: its 20-week EMA blue line is coiling sideway above its 200 EMA green line. This is the dreaded CTC (Coiling Towards Catastrophe) pattern that I have shared with you before. It will take some time for volatility patterns to fully form.
Bearish technical setup: Market breadth continues to get worse Nasdaq percent of stocks above 200-day MA is dropping steadily. On $NDXA200R (Stockcharts.com) weekly chart, its 20-week EMA blue line has dropped below its 200 EMA green line. As I have discussed before, this is a very bearish setup for Nasdaq stocks. S&P stocks ($SPXA200R) weekly chart shows it following in Nasdaq's footsteps down also. Keep in mind though that the bearish divergence between breadth and price can last for quite a while before its bearish impact will be felt. Bearish technical setup: End of 4th Bull Cycle The bull trend started in late 2022 for NQ. Chart data tells us that we've been through the following bull cycles. 12/27/22: NQ Weekly Chart Bull Trend started. 12/27/22 -7/19/23: 1st Bull Cycle within Bull Trend. 10/27/23 - 3/4/24: 2nd Bull Cycle within Bull Trend. 4/22/24 - 7/1/24: 3rd Bull Cycle within bull Trend. 8/5/24 - 12/18/24: 4th Bull Cycle within Bull Trend. Stock cycles typically peak between 4th and 5th bull cycle in the bull trend. NQ is now in that transition period. It is very likely to retest December high of 22449, and may even go all the way to 23000. This is somewhat similar to NQ topping pattern in late 2021. Under the hood, know that the bears are waking up. What can launch the bear market? The Carry Trade Unwind and FOMC The bearish setups above together form a pile of dry wood, waiting for a spark to start the fire. The spark in this case may come from the Bank of Japan and FOMC. BOJ raised their rate in early August 2024. This launched phase 1 of the Carry Trade Unwind, and the resulting sell-off was painful as volatility surged super high. If BOJ raises rate again this Friday January 24, the unwind can start up all over again. The Fed may also end up adding fuel to the fire based on their actions on January 29. However, macro factors are complex and this is just one simplified explanation of what might happen with BOJ rate raise and FOMC rate announcement. Several MAG7 stocks are reporting Wednesday and Thursday next week, and PCE is next Friday. So be nimble and prepared for a possible rollercoaster ride. How can there be a bear market when stocks are rallying like this? As I write this, NQ ES RTY are marching up steadily, while VIX VX UVXY are dropping. So at first glance, it's hard to contemplate a bear market emerging. But allow for this possibility in your trade and investment strategy. Trade bull positions for short term profit, and be nimble and ready to pivot if necessary. 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. Click here for Signal Trades spreadsheet. Updates 12 PM ET - Wednesday Sell order got filled for SOXS We may have been too conservative in estimating today's sell-off, but pocketing partial profit is still a good thing. For info on how this SOXS position was entered, click here.  Updates 11:31 AM ET - Wednesday Key support zones coming up Things got bearish faster and deeper than we expected, but we did expect the selling to happen.
This Level 2 dip is not technically done yet. We need a clearer top on VIX VVIX UVXY charts. Also in terms of timing, we may see choppy bottom starting to form for the remainder of this week. NQ SOXL may not start to rise back up the channel until Monday. Our sell order for SOXS position got filled. If you are still holding SOXS, it may go as high as 21.75 - 22. Updates 12:55 AM ET - Wednesday Upcoming key events  VIX UVXY still suggesting Level 2 dip is in progress VIX 30-min chart below shows a rising 200 EMA green line. As well VIX 20 EMA blue line and 50 EMA red line have crossed above the 200 EMA green line. This implies that the dip is still in progress.  Instead of looking at UVXY chart, sometimes it's more helpful to analyze the inverse SVIX chart. Observe that SVIX has formed a top since July 12, and is about to drop out of the bottom of its purple channel. The last 2 times this happened, the Level 2 dip accelerated into a climax. We may very well see that between now and early next week.  VVIX 30-minute chart pattern is currently unclear. So we cannot draw a conclusive message from its chart right now. NQ
 SOXL
We entered into half position of SOXS after CPI Thursday morning. We plan to exit at the bottom of SOXL choppy range and wait for SOXL setup. 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. 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:
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
 SOXL
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.
Updates 4 PM ET - Monday Tight stops protected our profit Bull Runner SOXL: On Wednesday Feb 7, we entered a half position of SOXL when NQ started breaking out. We have been holding this as a runner to capture NQ rising to 18200. (Today NQ reached 18122 and then dropped.) Bull Runner TNA: On Thursday Feb 8 , we re-entered a half position of TNA when RTY formed a big W bottom on its hourly chart. We held this as a runner to capture RTY rising to 2060. (Today RTY reached 2061 and then dropped.) Today VIX started rising sharply so per our discussion below, we tightened the stop and got stopped out of both TNA and SOXL for good profit when the afternoon selling kicked in.  Updates 12:20 PM ET - Monday VIX is rising >> Choppy Bull emerging We posted earlier (see below) that we need to monitor for rising VIX and UVXY. VIX gapped up overnight and now they are both steadily rising this morning. This means the Strong Bull mode may be transitioning to Choppy Bull mode, with moderate dip as a possibility for ES NQ RTY. It won't happen right away but now is the time be cautious with our bull positions. We have been tightening stops on both our SOXL and TNA runner positions. SOXL got stopped out for a good sized profit. TNA is still intact and rising. Click here for Signal Trades spreadsheet. Updates 1:10 PM ET - Sunday Upcoming key events If you are into excitement, this is the week for you with plenty of economic news, along with VIXEx and OpEx. Market is sure to have some big moves. The question is what will they be. Read more economic analysis here, and read on.  Strong Bull market mode continues Technically ES NQ RTY are back in Strong Bull mode, and this may continue until OpEx on Friday Feb 16. McClellan Oscillator for both NYSE and Nasdaq (Stockcharts.com $NYMO $NAMO) are showing higher low rising bottoms. This is very good news as it indicates that equity is coming out negative phase into the positive one. Once the positive phase start for $NYMO $NAMO, it can last 4-8 weeks. This strengthens the case for Strong Bull mode to continue.  Volatility supports this Strong Bull mode as long as VIX keeps dropping. But if VIX forms a same low base around 11.8, then it's a signal that equity may be entering Weak Bull mode. In this mode, VIX is likely to climb back up to 15.2, possibly reaching 16.5 eventually. Weak Bull mode can lead to a big dip for ES NQ RTY. So keep an eye on what VIX does at this level. Keep an eye on UVXY also. If UVXY does not drop below 6.94 and instead starts to base early this week, then equity may be switching to Choppy Bull mode. Choppy Bull mode can may result in a moderate dip for ES NQ RTY. After the dip, we should see enough buyers coming back to turn the market into Strong Bull mode again. There is no setup for a Strong Bear market on the horizon right now.  Key S/R levels NQ:
ES
RTY
Our personal trade plan 1. Bull Quick Profit SOXL: We will be looking for a shallow intraday dip to re-enter SOXL for a QP (Quick Profit) trade. 2. Bull Runner SOXL: On Feb 7, we entered a half position of SOXL when NQ started breaking out. As long as NQ remains in Strong Bull mode, we plan to hold this as a runner to capture NQ rising to 18300. 3. Bull Runner TNA: On Feb 8, we re-entered a half position of TNA when RTY formed a big W bottom on its hourly chart. As long as RTY remains in Strong Bull mode, we plan to hold this as a runner to capture RTY rising to 2097. Note that if we see the VIX W bottom or UVXY basing as discussed above, we'll manually exit all bull positions because the dip will knock out our positions. 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.
Updates 9:11 AM ET - Monday Strong Bull mode continued overnight ES NQ RTY all shot up overnight, with ES tagging 5040 as projected. We plan to continue holding the two runner positions TNA and SOXL and will monitor for intraday pullback to enter SOXL for the Quick Profit trade. It may or may not come, but it has certainly been a decent week for the bulls.   Big picture: bull market; short-term: strong buying momentum returns Technically ES NQ RTY are back in Strong Bull mode, and this may continue until OpEx on Friday Feb 16. So what could go wrong to wreck this party? VIX. We will be monitoring for these patterns that shows when volatility is most likely going to rise.
If VIX starts to rise from here, then the signal for the Strong Bull mode has failed. And a failed signal will send the market in the opposite direction quickly. In other words, instead of a Strong Bull, we'll get a very Weak Bull with lots of selling that can lead to a substantial dip. But until these patterns show up, the Strong Bull is in charge. Key S/R levels NQ levels and pattern have not changed. NQ has broken out above resistance at 17775. While it may quickly dip to retest 17725 on Friday, NQ will march up and will reach 18000 soon. NQ may even reach 18200 by OpEx. Short-term support lies at 17475. ES levels and pattern have not changed. ES has broken out above resistance at 5000. While it may quickly dip to retest 5000 on Thursday, ES will march up and will reach 5040 soon. ES may even reach 5075 by OpEx. Short-term support lies at 4980. RTY has formed a beautiful W bottom between Monday and Thursday this week to retest 1925 again. We can see this clearly on RTY hourly chart. RTY broke out of this bottom on Thursday morning, and is likely to rise up to 2060 possibly by OpEx. Our personal trade plan 1. Bull Quick Profit SOXL: On Thursday Feb 8, we did an intraday tactical trade and collected a small profit on half position of SOXL. We plan to repeat this on Friday if we get a bullish setup to re-enter SOXL. 2. Bull Runner SOXL: On Wednesday Feb 7, we entered a half position of SOXLwhen NQ started breaking out. We plan to hold this as a runner to capture NQ rising to 18200. 3. Bull Runner TNA: On Thursday Feb 8, we re-entered a half position of TNA when RTY formed a big W bottom on its hourly chart. We plan to hold this as a runner to capture RTY rising to 2060. Note that if we see any of the VIX or UVXY pattern discussed above, we'll manually exit all bull positions. 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.
Updates 7:25 PM ET - Thursday Traded SOXL and TNA 1. Bull Quick Profit SOXL: Today we did an intraday tactical trade and collected a small profit on half position of SOXL. 2. Bull Runner SOXL: On Wednesday Feb 7, we entered a half position of SOXL when NQ started breaking out. We continue to hold this as a runner to capture NQ rising to 18200. 3. Bull Runner TNA: Today we re-entered a half position of TNA when RTY formed a big W bottom on its hourly chart. We plan to hold this as a runner to capture RTY rising to 2060.   Big picture: bull market; short-term: strong buying momentum returns On its 4-hour chart, VIX 20 EMA blue line just crossed below its 200 EMA green line. This is bullish for equity, even if it's just short term. On their hourly charts S&P and Nasdaq Advance-Decline Percents (Stockcharts $SPXADP $NDXADP) continue to form W bottom. This implies at least a short-term rise for ES and NQ. McClellan Oscillator for both NYSE and Nasdaq (Stockcharts $NYMO $NAMO) both are forming W bottom on their daily charts via their 20-day EMA lines. This implies at least a short-term rise for ES and NQ. 10-year yield (US10Y) is basing. It may rise from here, but the basing process is going to take some time and meanwhile yield is likely to drop short term. Key S/R levels NQ has broken out above resistance at 17775. While it may quickly dip to retest 17725 on Thursday, NQ will march up and will reach 18000 soon. NQ may even reach 18200 by OpEx. Short-term support lies at 17475. ES has broken out above resistance at 5000. While it may quickly dip to retest 5000 on Thursday, ES will march up and will reach 5040 soon. NQ may even reach 5075 by OpEx. Short-term support lies at 4980. RTY is likely to retest 1925 again. If it finds enough support here, it will form a W bottom for a big rise up to 2060 eventually. However, if RTY drops below 1905, then selling will accelerate and can drop RTY down to key support at 1835. Our personal trade plan Bull position 1: We entered a half position of SOXL when NQ started breaking out. We look to add the remaining half SOXL on Thursday. Bull position 2: We tested the bullish rise in TNA when RTY found support at the morning low. However, after hour price actions showed RTY likely to test 1925 again. This means TNA is likely to retest 32.7. So we exited TNA to possibly re-enter at a lower price on Thursday. 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.
Updates 7:25 PM ET - Wednesday Scaling into SOXL   Big picture: bull market; indicators are signaling bullish turn On its 4-hour chart, VIX 20 EMA blue line just crossed below its 200 EMA green line. This is bullish for equity, even if it's just short term. On their hourly charts S&P and Nasdaq Advance-Decline Percents (Stockcharts $SPXADP $NDXADP) are forming W bottom. This implies at least a short-term rise for ES and NQ. McClellan Oscillator for both NYSE and Nasdaq (Stockcharts $NYMO $NAMO) both are forming W bottom on their daily charts via their 20-day EMA lines. This implies at least a short-term rise for ES and NQ. 10-year yield (US10Y) is basing. It may rise from here, but the basing process is going to take some time and meanwhile yield is likely to drop short term. Key S/R levels ES is coiling up and likely to surpass 4997 to reach 5040 given the more bullish messages from the indicators. NQ meanwhile appears to run into resistance at 17775. Failure to rise above 17775 will lead NQ to grind its way downward, eventually down to 17000 for key support post CPI next week. Look for RTY to retest the zone from 1925 - 1935. If it finds enough support here, it will form a W bottom for a big rise up to 2050 eventually. Here's a view of RTY weekly chart which shows bullish hammers at same support level for multiple weeks.  Our personal trade plan We are now positioning to scale into TNA if RTY successfully retests support. 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.
Updates 4 PM ET - Monday Exited SOXL We manually took profit on half of our SOXL position ahead of the weekend, and got stopped out of the remaining half today for a gain of 4.5% total. See the original entry here.  Updates 2:45 PM ET - Sunday Upcoming key events This week is much lighter in news and announcements so traders can take a break to get ready for next week's excitement. Read more economic analysis here.  Big picture: bull market; short term: dip possible The bull trend continues, but the indicators also continue to suggest that there's bearishness building up under the hood. This is likely to lead to a dip (not a bear market). The question is how big and how long will this dip be. The indicators cannot tell us that right now, so we simply have to monitor price behaviors at key S/R levels for ES NQ RTY. Volatility rising VIX 4-hour chart below shows a flat sideway 200 EMA green line, and a coiling and rising 20 EMA blue line. This combination resulted in VIX surge back in March and August through October last year (see red arrows below). There is a good chance that this surge will happen again so bulls should protect profits here.  Breadth declining S&P and Nasdaq Advance-Decline Percents (Stockcharts $SPXADP $NDXADP) continue to show lower high topping patterns on their daily charts. They support the possibility of ES NQ RTY dipping to test key support levels. McClellan Oscillator for both NYSE and Nasdaq (Stockcharts $NYMO $NAMO) are back in negative territory. They confirm the above bearish messages. Rates rising After the hot job report on Friday, yields all rose sharply (US10Y; US20Y; US02Y). Junk bonds (JNK HYG) have been signaling bond selling by forming same high multi-tops since December 28. Key S/R levels NQ: Despite the messages from VIX and market breadth, NQ failed to drop to key support at 17000 after FOMC announcement. The failed signal gave it a strong push back up, and by Friday NQ is back up near the key resistance level of 17794. This level has generated three short term tops at this point, so don't be surprised if NQ spends multiple days this week chopping in this zone between 17475 and 17794. CPI report on February 13 will likely be the catalyst to either pop NQ up from this chop zone, or drop NQ down from this chop zone. Note that we are not anticipating fresh multi-week breakout or breakdown. Rather, if NQ rises out of this zone, it is likely to run into short-term top at 18000 ahead of OpEx. If NQ drops from this zone, it is likely to find buyer support at 17000 to resume the bullish climb.  ES: Like NQ, ES failed to drop to key support at 4840 after FOMC announcement. The failed signal gave ES a strong push back up. ES is likely to spend this week digesting the gain. Look for ES to spend multiple days this week chopping in the zone between 4930 and 4997. CPI report on February 13 may be the catalyst to push ES up to short-term top at 5040 ahead of OpEx. If CPI results in bearish response instead, ES may drop from the chop zone down to 4840 before resuming the bullish climb. RTY: RTY has been dropping and is likely to continue doing so for the early part of this week. Its chop zone is 1940 - 1987. CPI report on February 13 may be the catalyst to push RTY up to short-term top at 2050 ahead of OpEx. If CPI results in bearish response instead, RTY may drop from the chop zone down to 1890. Our personal trade plan We bought SOXL on Thursday after seeing the failure to drop signal. We collected profit on 1/2 position on Friday because the bearish messages from the indicators made us nervous. We are still holding the other half of SOXL to reach sell target. 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. |
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