Updates 1:53 PM ET - Tuesday 11/15/22 Stopped out of TNA runner position Per explanation at 10:01 AM below, we tightened the stop on our TNA runner position and got stopped out. We locked in close to 12% profit in 4 trading days (since last Thursday). We are in cash 100% right now and waiting for $VIX and market breadth to reveal the next major move. This next major move is unlikely to happen until this OpEx Friday or Monday.  Updates 10:01 AM ET - Tuesday 11/15/22 $VIX EMAs are starting to go sideway This morning's Producer Price Index report (PPI) was cooler than expected. This confirms the direction of the CPI report from November 10. ES NQ RTY all spiked up sharply, but not as enthusiastically as they did post CPI. $VIX hourly chart shows the start of a sideway pattern, the bearish one that we discussed further below. $VIX 20-hour and 50-hour EMA lines are starting to go sideway. This is cause for concern, so we tightened the stop on our TNA runner position. We sent out alert for this right after open. Our position has been stopped out for now. We are going to continue monitoring for further development in $VIX patterns, but no jumping in right now. Updates 12 AM ET - Tuesday 11/15/22 Market breadth Market breadth is still on the high side, but their chart patterns suggest that a pullback is possible this week for ES NQ RTY. $VIX In $VIX hourly chart below we have explained the 2 sets of patterns we are looking for that provide either a bullish setup, or a bearish setup (for stocks) to trade with. You've seen these explanations before. Here they are again because they are very important. We have observed that these patterns do have a tendency to show up during the week of OpEx.
Right now, we don't have either pattern forming just yet. So we plan to just wait and let $VIX chart reveals where market is going next.  Key S/R Levels The S/R levels are still the same as Monday. ES NQ RTY are in consolidation mode, hovering at the bottom of their R1-R2 resistance zone. Again, whether they will successfully rise up to R2 or not will depend on how $VIX pattern evolves as explained above.  Trade Plan It is still our goal to re-enter TNA swing position, but we will wait for the bullish quick $VIX spike described above as the low-risk setup to trade with. Note that if we start observing the bearish sideway pattern described above, we will manually exit TNA runner. Subscribe to get our latest analysis, daily 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 trades.
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Updates 1:53 PM ET - Thursday 11/10/22 Entered TNA post CPI Last night we showed you specifically what to look for on $VIX chart immediately post CPI to know if it's a real bullish move or a head fake in ES NQ RTY prices. Specifically, we were looking for $VIX 20 EMA blue line to drop below its 200 EMA green line (30-minute chart). That's exactly what we got immediately post CPI. So we were confident in scaling into our bull targets (TNA runner and TNA swing positions), and we alerted you to do so. We tightened the stop on our TNA swing position to lock in partial profit. ES NQ RTY are overbought right now and the probability of a pullback is high. So we want to ensure that we get some profit out of this trade attempt. The runner position is still intact and may achieve the target profit of close to 26%. We do plan on re-entering TNA swing or possibly TQQQ swing, depending on the setup tomorrow. We will discuss the setups that we are looking for in tonight's post.  Updates 12:45 AM ET - Thursday 11/10/22 Market breadth Market breadth charts are not helpful right now as they are forming short-term tops. These short-term tops are not super reliable as signal for a bearish pivot in stocks. They are simply indicating a pullback is coming, not necessarily a change in trend. Furthermore, we will not be able to get intraday breadth data immediately post CPI because it's released pre-market at 8:30 AM ET. Watch out for traps Keep in mind that post CPI, price actions on ES NQ RTY charts can easily become head fakes. Recall the big price drop and big reversal immediately post CPI on Oct 13. That was such a big bear trap that we would have fallen into if we simply had focused on price actions alone. Focus on volatility Instead we had good results on Oct 13 because we focused closely on volatility charts. $VVIX: While it may be concerning to look at $VVIX sharp spikes from Tuesday and Wednesday, it is actually not as scary as it looks. The time to worry is when $VVIX candles contract, and most importantly when its 20-day EMA blue line gets very close to and is about to cross over its 50-day EMA red line. (See red arrows below). When $VVIX candles rise sharply for a few days in a row, they typically peter out to form a top, especially and they tag or cross above the 200-day EMA green line. (See green arrows below.) This is why we say $VVIX chart is actually not super scary or bearish looking right now. It is simply saying $VIX volatility has risen. This is to be expected, as traders buy protective puts ahead of CPI.  $VIX While we are leaning a bit bullish with $VVIX chart, we are waiting for $VIX chart actions post CPI to decide which way to go. Take a careful look at $VIX chart annotations below. (This is $VIX 30-minute chart.)  Understanding what's behind the $VIX patterns Ahead of CPI report, traders have loaded up on protective puts. This is among the reasons for the spike in $VIX and $VVIX. If traders choose to cash out these puts right after the report, $VIX will quickly drop. And as these puts are closed, dealers will need to cover their own short positions (usually in equity futures) to keep their books non-directional. The result is likely to be a short squeeze which is bullish for stocks. On the other hand, if traders panic, they will add more puts which will raise volatility very quickly, as reflected in $VIX. At the same time, dealers who just sold puts will have to short equity futures to balance their holdings. The result is likely to be a long squeeze which is bearish for stocks. Key S/R levels The S/R table below is the same as yesterday. We think that S2 is going to be retested post CPI. If $VIX drops, S2 may hold. If $VIX rises, S2 will fail.  Trade Plan We had a buy order for TNA at 32.7 on Wednesday in our shared spreadsheet. TNA tagged 32.7 by end of Wednesday and we could have placed the buy order as price approached that level. But it was simply too late in the day to enter any position. Our strategy is to wait. Rather than placing our bets based on price levels alone, we are going to wait for signals from $VIX to confirm as described above. So the actual entry price may be different than the price in the spreadsheet, but that is the level we are targeting. Subscribe to get our latest analysis, daily 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 trades.
Updates 2:11 PM ET - Monday 10/31/22 Summary
Market breadth is still positive, but NYSE Nasdaq A/D lines are forming short-term tops on their hourly charts. $VIX gapped up and rose to 27 in the early morning hours today. It has since dropped but we expect to see $VIX stays above 25.7, and starts rising back up again towards 28-29. Conditions are consistent with a setup for a retracement before ES NQ RTY can resume their rally as we explained last night. There is a high probability that ES NQ RTY will retest S1. Updates 12:30 AM ET - Monday 10/31/22 Upcoming key events The biggest event this week is FOMC rate announcement on Wednesday. Job report on Friday will also be very exciting. Read here for more information on economic news this coming week.  Earnings releases this week Chart courtesy of Earnings Whispers.  What to expect from FOMC this week The Fed is likely to raise its benchmark rate by another 0.75% as it attempts to cool the economy and bring down high inflation. The Fed's job is extra complicated due to rising wage and cash-rich consumers. Read more here. Market breadth is still supportive of stocks The bear market rally that started on Oct 13 has been going strong. There have been lots of explanations offered for this rally. We don't really know for sure all the reasons behind the rally. But we have confidence that since our system was able to identify the seed of the rally on Oct 3, it can identify the end of the rally. For now, market breadth is still very supportive of stocks as shown in the charts below.   $VIX is dropping and has room to drop more $VIX 20 EMA blue line in its 2-hour chart below has been dropping straight down since Oct 13. This has been very bullish for ES NQ RTY. We did mention on Friday that $VIX is at its pivot zone which is 25-26, right at its 200-day EMA line. There is a high probability that $VIX will rise a bit from here to tag its 200 EMA green line, which is around 28 - 29. Then it is likely to drop down from there, possibly to 20 eventually.  Key S/R levels With $VIX having a lot of room to drop, ES NQ RTY can potentially rise up to R2 or higher before this rally ends. However, while $VIX spikes up to 28-29, we may see ES NQ RTY retest support at S1.  Trade Plan Last week, we locked in 20% profit with TNA runner, and 6% profit with TNA swing. Both positions did what they were supposed to do. Now we are aiming to scale back into TNA runner and swing during the pullback. We don't know if the pullback will happen before or after FOMC, but we'll be monitoring for the target entry level. Subscribe to get our latest analysis, daily 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 trades.
Updates 3:20 PM ET - Wednesday 10/26/22 Bear market rally is still intact
Price actions this morning set up a bull trap, and we are likely to see sharp selling. We are still projecting ES NQ RTY to drop and tag S1 as $VIX rises and tags 30. This type of swing is to be expected in this market. But again, volatility and breadth support the bear market rally continuing. We continue to hold TNA runner position as is, and wait for RTY to retest S1 to scale back into TNA swing position.  Updates 11:40 PM ET - Tuesday Summary
Against this bullish backdrop, Microsoft and Alphabet earnings resulted in sharp drops after hours. S/R levels So expect some pullback on Wednesday, or at least choppy market conditions. Below are updated S/R levels. We may see ES NQ RTY1 tag S1 before resuming the bullish rise.  Is the rally over? Not according to volatility and market breadth.
Trade plan The TNA runner position is still intact and we will continue to leave the stops at breakeven for now. We will be monitoring for pullback overnight and at open to re-enter TNA swing position. Subscribe to get our latest analysis, daily 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 trades
Updates 2:12 PM ET - Monday 10/24/22 Bullish but $VIX needs to stay below 31 Conditions are still bullish in the short term, but $VIX needs to stay below 31 an start to head down below 29 soon. If $VIX starts to base between 29 and 30 and inches up from there, then it may make a serious attempt to climb up to 33 - 34. This climb would trigger bigger drops in ES NQ RTY, where we may see ES tests 3600 again. In that bearish scenario, TNA would drop back down to 28 or lower. Therefore, we will aggressively tighten stop on our TNA runner position if $VIX starts to base in the 29 - 30 zone. There is no low-risk bullish setup right now to re-enter TNA swing position, so we're holding that capital in cash for now. Updates 12:30 AM ET - Monday 10/24/22 Upcoming key events Thursday GDP and Friday PCE reports will add fresh data to the state of inflation and economic growth, ahead of FOMC rate announcement next Wednesday 11/2.  Earnings releases this week Chart courtesy of Earnings Whispers. This is a big week for tech earnings: Microsoft and Alphabet on Tuesday, Meta on Wednesday, Amazon and Intel on Thursday.  Why did stocks rise on Friday? Global macro economic conditions are still very bleak, yet ES NQ RTY sharply rose last week. Why? One theory says the bullish rise was due to dovish comments by a couple Fed officials, and a WSJ article that many traders are guessing to be trial balloon by the Fed: One possible solution would be for Fed officials to approve a half-point increase in December, while using their new economic projections to show they might lift rates somewhat higher in 2023 than they projected last month. Another theory is that it's just the result of large number of puts expiring on OpEx Friday. As the previously sold puts expire, dealers who hedged these sold puts by shorting stock futures had to cover their shorts as price started to rise. All of this happened at a very large scale, and resulted in a massive short squeeze. We suspect that both of these events functioned as catalysts. They were the match that lit the pile of dried wood on Friday. But this bullish pile of dried wood has been building for some time if you recall. The evidence has been showing up in the rising market breadth (since 9/30) and declining volatility (since 10/12). So by tracking breadth and volatility in addition to price actions, we were able to anticipate the growing bullish setup that took off on Friday. And now we need to examine them again. Market breadth is still very supportive of stocks
  Volatility is still declining $VIX 200-hour EMA green line in the hourly chart below has been going sideway all of last week. Meanwhile, $VIX 20-hour blue line and 50-hour red line have been steadily marching down. They are now both below the green line. As long as this condition remains true, $VIX is very supportive of stocks. Keep in mind though that $VIX may pop back up quickly to retest the zone 31- 32 one more time before it continues the march downward. $VIX may get down to 25 before this rally is over.  RTY has formed W bottom similar to mid June  Key S/R levels On Monday, we may see ES NQ RTY dip back into the zone between S1 and S2 while $VIX pops up possibly to retest 31-32.  Trade plan Right after open on Friday, we sent out a series of alert as soon as we noticed that $VIX was continuing to drop and ES NQ RTY were turning bullish at opening. We manually scaled into TNA runner and swing positions. When ES NQ RTY opened on Sunday (6 PM ET), they all rose straight up. ES tagged 3813 before dropping rather sharply. We suspect that ES NQ RTY are going to tag these price levels again near open on Monday (9:30 AM ET).
Then we may see an intraday pullback before the climb resumes. We plan to tighten the stop on TNA swing position to lock in some partial profit. But we'll leave the stop at breakeven for TNA runner and give that position a chance to grow. Note that we plan to re-enter TNA swing position during the pullback. Buy orders for this will be posted as we get more data. Subscribe to get our latest analysis, daily 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 trades
Updates 12:47 PM ET - Friday 10/21/22 Volatility and Breadth are supportive of stocks
RTY has formed W bottom ES NQ RTY all rose this morning from the opening lows. RTY hourly chart continues to show a complex rising W bottom similar to the one formed between May and June. We sent out a series of alert as soon as we noticed that $VIX was continuing to drop and ES NQ RTY were turning bullish at opening. They didn't dip into the support zones that we cited last night. That is the nature of trading. It's very difficult to predict the pivot points. But we have been prepping you to visualize a bullish W bottom being formed. We showed you what to look for with $VIX and market breadth to confirm the thesis. And we said OpEx Friday is likely to be the major pivot day. So it should come as no surprise that ES NQ RTY headed up today. Here are the entries that we scaled into. Keep in mind that there will be wild intraday swings as $VIX is still yearning to rise up and tag 30 one more time. Also as long as ES is still below 3800, the way market makers have to hedge their books result in wild price swings as they need to sell into weakness and buy into strength. Once ES rises above 3800 (R1), price should calm down and start to grind up more steadily.  Updates 12:15 AM ET - Friday 10/21/22 Summary Big picture signal is bearish based on macro conditions. But short-term signal is still bullish. ES NQ RTY are building W bottom to rise post OpEx. Market breadth continues to improve, but... The daily charts of NYSE and Nasdaq A/D net issues are still forming rising bottoms. However, the weekly charts of NYSE and Nasdaq percentage of stocks above 200-day MA suggest they are capable of dipping a bit more before rising more substantially. Nasdaq weekly chart below shows a topping pattern so far for this week, while the percentage hovers at 13%. It could dip back to below 10% before rising again.  Volatility of $VIX shows a quick rise in volatility likely $VVIX formed a hammer on its daily chart below on Thursday. It is the type of pattern typically seen before $VVIX rises a bit, possibly back up to 95 before dropping again.  $VIX may not retest that high Despite these cautions, we don't think will rise back up to 34 at this point. On $VIX 30-minute chart below all of its EMA lines have been trending down. $VIX is likely to tag 32 again before dropping more substantially.  Key S/R levels
 Trade plan Our buy orders placed yesterday are still the same. Subscribe to get our latest analysis, daily 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 trades
Updates 4 PM ET - Thursday 10/13/22 Trade results  Updates 9:46 AM ET - Thursday 10/13/22 Re-entered TNA We have re-entered TNA. (Sorry but Stocktwits messaging is not working right now). Updates 8:53 AM ET - Thursday 10/13/22 $VIX is struggling $VIX is struggling to rise above 33.5. This is NOT supportive of a massive market crash. Updates 8:46 AM ET - Thursday 10/13/22 CPI hot From CNBC: "Consumer price index rose 0.4% in September, above the 0.3% expected by economists according to Dow Jones. Core CPI, which strips out food and energy, was up 0.6% month over month, also higher than expected." ES NQ RTY dropped sharply with ES getting close to 3500. However, UVXY is not rising above October 11 high just yet. We're monitoring for now, but if UVXY forms a top above its 200 EMA (5-min chart), we may scale into TNA. Remaining flexible because market is very news driven right now. Updates 8:15 AM ET - Thursday 10/13/22 Squeeze alert CNBC headlines said futures are jumping because of the British pound. ES NQ RTY as well as SVXY have spiked up. We may have a setup for a squeeze. So we're looking at either SQQQ or TNA depending on the post CPI reaction. Don't feel compelled to jump in immediately. Updates 12:15 AM ET - Thursday 10/13/22 Market breadth is supportive
$VIX is stalling or transitioning $VIX hourly chart below shows that it has been stuck in the 33-34 range for multiple days. After a hot PPI report that exceeded projection, $VIX barely moved. So we have to ask ourselves if the market is about to undergo a short squeeze. That is certainly possible given the large amount of puts purchased for CPI hedging. They function as potential fuel for short squeeze. But the truth is no one really knows. So rather than speculating, we are going to focus on two patterns that have been reliable, and they both share one common characteristic. Bullish: If $VIX forms a true 2nd top (relative to 9/30), then conditions are supportive of a rally. But to do so $VIX 20-hr EMA blue line has to weave around its 50-day EMA red line for a few days before dropping. This means $VIX has to have a sharp dip to start, perhaps down to 31-32 (see pink arrows below). From this sharp dip, $VIX then can rise up to test 34 again before forming a top. Bearish: In order for $VIX current trend to resume with vigor and longevity, $VIX also needs to dip a bit. Again, we want to see $VIX dips to 31-21 zone to gain fuel for the next surge up.  Trade plan So we want to catch $VIX dip as described above, whether it's a setup for a $VIX top, or a setup for $VIX trend resumption. We plan to do so by looking for comparable dip in SQQQ. By the way, small caps RTY IWM TNA look promising in terms of a possible W bottom. But we need SVXY to confirm first, and SVXY is quite lethargic right now. So we will continue to monitor SVXY RTY, but not jump in just yet. Incidentally, if $VIX does form the complex top, SVXY will form a W bottom and that will be a very bullish setup for RTY. Subscribe to get our latest analysis, daily 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 trades.
Updates 10:30 PM ET - Sunday Upcoming key events Thursday and Friday this week are major market moving days.  Summary: big-picture is very bearish but a short-term bounce is possible Stocks continue to be in a very bearish trend in the big picture context, from both fundamental and technical perspective. But market may not gap down on Monday, and instead may spend the first half of this week building a short-term bottom ahead of GDP Thursday. Fundamentals are very bearish
Volatility: $VIX has taken off $VIX weekly chart below shows its 20-week EMA blue line starting to head up this past week, after going sideway for multiple weeks. This is significant as it's the type of pattern that can persist, rising higher and higher. We may see $VIX rise as high as 38 by early October.  Market breadth is bearish but may be approaching short-term bottom Below is the daily chart for NYSE Advance-Decline Net Issues. Its 20-day EMA line is in bold blue, and you can see how it's looking mightily bleak, dropping sharply since mid September. However, observe the pattern formed by this same 20-day EMA blue line back in March 2020. The current 20-day EMA blue line suggests that we may be approaching the start of a bottoming process, which supports the possibility of a short-term bounce.  Additionally, here are the percentages of stocks above their 200-day MA:
Clues that will foretell the next market move For the early part of this week, there are three scenarios to anticipate. Scenario 1: Market has an immediate crash that takes ES NQ RTY sharply below 6/16 lows. The clue to look for here is heavy and steady selling from Asia and Europe during the late Sunday into early Monday (Eastern Time zone). Scenario 2: ES NQ RTY take a little pause and then resume the selling, dropping to below 6/16 lows. The clue to look for here is ES NQ RTY rising from Friday's low (S1) to tag 1st resistance level (R1), and then drop, and keep dropping past 6/16 lows. Scenario 3: ES NQ RTY start to form short-term bottom for a minor to moderate bounce. The clue to look for here is ES NQ RTY rising from Friday's low (S1) to tag 1st resistance level (R1), and then drop, and find support to bounce at 6/16 lows. Note that in order for the bullish scenario 3 to take place, ES NQ RTY have to form bottoming patterns like these shown below. The pattern can be seen most clearly with the 20 EMA blue lines on the 2-hour charts.  Key S/R levels  Trade plan Click here for live trades. Subscribe to get our latest analysis, daily 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 trades.
Updates 6:15 PM ET - Monday Upcoming key events Powell's speech on Thursday no doubt will move the market. But a major market pivot is more likely to show up around the quarterly OpEx (9/16), and FOMC plus VIXEx on the same day (9/21).  The big picture: bearish Both stock and bond markets seemed to have gotten the very hawkish message from Powell on 8/26 at Jackson Hole: We are serious about fighting inflation and don't try to second guess us. Getting credit and leverage will not be cheap anymore. This means reduced economic activities which leads to reduced corporate earnings. It is increasingly likely that stock valuation needs to come down to the point where S&P P/E is much lower. The numbers suggested by various analysts are all over the map: $SPX 3600, 3200, 3000. The famous Michael Burry ("The Big Short") has sold all of his stocks based on his anticipation of $SPX bottoming at 1900 over the next few years. The truth is no one knows, because no one has the crystal ball that will see all the future events that will affect the economy. There is no doubt the bears are back in charge for now. The current trend is down. The big-picture signal is bearish. However, in the short term, technical conditions are still set up for a bounce. Market breadth supports short-term bounce NYSE and Nasdaq market breadth charts have been very negative since mid August. But as Nasdaq A/D chart below shows, the bottom is rising. In other words, the negative number is getting less negative. This suggests a bounce is likely to come. Note that NYSE and Nasdaq percentages of stocks above their 200-day MA are now back at 25% and 21% respectively. They have dropped a lot since 8/16 (from close to 50%). And they can still drop more. They potentially can spend multiple weeks below 5%. So breadth data is not suggesting that the bear market is done. It is simply saying maybe a bounce is coming this week due to oversold condition.  $VIX supports short-term bounce $VIX 2-hour chart below shows that $VIX spent 3 days last week forming a top. Then it formed a lower high pattern on Friday. This pattern suggests that volatility is likely to drop some more before it resumes rising. We may see $VIX retests the zone between 21.7 and 23.2 again.  Key short-term price levels ES 4-hour chart below shows the range 3905 - 4020 as a key support zone back in May and July. ES is likely to bounce inside this zone this week. It may even clear 4020 and rises up to 4070. That level 4070 is pretty strong resistance. It's ES 20-week EMA, and where its 20 and 50-day EMA lines are converging. So ES is unlikely to rise above it.   Trade plan Click here for live trades. Subscribe to get our latest analysis, daily 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 trades.
Updates 10:30 PM ET - Sunday Upcoming key events  The big picture: bearish The big rally from 6/16 to 8/19 seemed to have been built on two premises: inflation has peaked, and the Fed will soon pivot to dovish. Powell's speech on Friday put to rest that false assumption. It is interesting to read the following WSJ article, which offers an opinion on why the Fed's tough talk may be temporary. However are some additional data points to keep in mind.
July PCE may have shown price softening a bit, but looking at the latest charts for key items from above, we think that inflation is likely to rise a bit more again. Hard to keep price down when copper and corn are rising, and oil may soon join the party. Market breadth is dropping sharply >> bearish
Rising volatility >> bearish In $VIX 30-minute chart below, $VIX 200 EMA green line is rising sharply. This turns our big-picture signal to bearish. $VIX is certainly capable of reaching 31-32 at this point. In fact, it may go as high as 35 before the big-picture signal turns bullish again.  How low will price go? $SPX has formed a very bearish shooting star candle on its monthly chart for August as shown below. Nasdaq and small-cap charts show the same pattern. Market is now in a bearish regime. So how low can price go? We think there is a good chance that $SPX and the rest of the indices will retest the lows of mid-June in September, or at the latest in October. Where price goes after that depends on the success of this critical retest.  Trade plan Click here for live trades. Subscribe to get our latest analysis, daily 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 trades. |
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