Updates 12:20 PM EST - Monday 7/6/20
Short Term Trades
TZA turned out to be a terrific trade this morning.   It retested 20.17 right after our 9:41 AM alert.   TZA rose all the way to 21.2.  

This was a highly profitable move for members who day traded.   But it is also part of a bigger-picture move for those who trade short-term swings.   

​Updates 9:41 AM EST - Monday 7/6/20
Short Term Trades
Our signal predicted the bearish reversal, and it is happening for $RUT IWM.

• TZA is on the move upward.   

• A retest of TZA near 20 is a low-risk high-reward setup to enter TZA.

Updates 9:18 AM EST - Monday 7/6/20
​Short Term Trades
In yesterday's weekend analysis, we share with you this key information below.   We are repeating it here for emphasis, because the signals are happening.

Here is the bearish combination of signals that we are monitoring for.   

• $NDX finishes forming a higher high Thrust 4. 
• IWM runs into resistance at the top of its pennant, which is also its orange resistance zone. ​
• $VIX gaps down and either reverses sharply upward, or spends the day in a tight range.  

And yes, we just observed this bearish combination of signals pre-market.

• $NDX is gapping up.
• IWM has gapped up into its orange zone.   Waiting for additional signs of failure to rise.
• ​$VIX is gapping down and starting to sharply reverse back up.

This is an indication to tighten stop or take profit with your Bounce8 $SPX $NDX positions.

This is also a low-risk setup to test TZA near 18.8 if you use a tight stop.

Updates 2:34 PM EST - Sunday 7/5/20

​Long Term Portfolio and Medium Term Trades
The main message from $SPX $NDX IWM is this.   

• Buy-the-dip buyers are buying mostly $NDX stocks.   
• Of those $NDX stocks, they are limiting their buying to a narrow list.   
• The enthusiasm for $SPX and IWM is low.  $SPX and IWM have formed a lethargic Bounce8.  Any time they manage to rise up a bit, they are met with sellers.

This does not bode well for the continued strength of the bear market rally.   But it will take some transition time before Dive2 arrives.   The key date to monitor for the near future is FOMC announcement on July 31. 

Let's drill down into the signals.

Market Internals
The overall message from market internals is that there is a bearish divergence brewing for multiple indicators.

Market breadth:
Bounce8 started on 6/29, and between 6/29 and 7/2, NYSE and Nasdaq stocks have been having mostly net advancing days.   However, even though this is the case, the cumulative readings for NYSE and Nasdaq A/D are down.  This is a bearish divergence.

Additionally, Nasdaq stocks are exhibiting the bearish divergence patterns that showed up before between August and October 2018, and January and February this year.

Percentage of stocks above their 200-day MA:

• During the week of 6/8, Nasdaq percentage got up to a very high 86%.  This past week, it registered a high of 74%.  Still bullish but not as bullish.

 

• During the week of 6/8, NYSE percentage got up to 49%.  This past week, it registered a high of 30%.   This is a worrisome number given how high $SPX IWM have climbed back up since the March low.

Equity put/call ratio:
This ratio is in neutral territory right now, so it is hard to call.

Volume:

• Volumes have been dropping for both $SPX and $NDX.   The only the days when they pick up substantially are sell days.   
• The last time buyers were enthusiastic about IWM was 6/11.  Since then volume has been dropping steadily. 

The rest of this post covers 
Volatility
Short Term Support & Resistance Zones
5-minute Chart Thrust Counts​
Important Hourly Chart Patterns
Short Term Trade Setups

Our observations and comments on Stocktwits don’t always reflect our short-term trading calls, published in the members section daily.   So we thought we would share with you our calls since 6/1.

6/1:  "still a moderate net advancing day….setup not "ripe" enough yet for entering short."  
6/2:  "IWM and RTY  show an upward coiling pattern.   This supports the general rise in price for $SPX $NDX IWM."
6/3:  "Overall, market internals and price actions still favor the bulls on Wednesday."
6/4:  "Minor Dip scenario… going from Support1/2 back up to Resistance1/2." 
6/5:  "The buying momentum is quite strong….Note that we do not think prices will revisit the support zone today."   
​
As one of our members pointed out, an entry into IWM on 6/2 per our call would result in over 8.5% gain by today.   An entry into TNA would result in almost 27% gain.

In our weekend analysis posted Sunday 5/31/20, we showed our readers $SPX $NDX IWM red zones to watch out for as the place for potential short term bearish reversal.
​
As soon as $SPX $NDX entered their red zones today (6/1), they got stuck like flies to a fly trap.

See FAQ for more explanations on terms, labels and abbreviations that we use.

We called this bearish reversal with our post pre-market at 1:46 AM on Thursday 5/28/20.   We shared the following hourly charts of $SPX $NDX IWM with red circles drawn to show the areas where Bounce5 was likely to end. 

During trading hours on Thursday, $SPX $NDX IWM reached the red circles and promptly reversed downward as we projected.   This marked the end of Bounce5.

Even though this setup did not meet our more stringent criteria for a multi-day ST trade, it was plenty of advance warnings for day traders and very ST swing traders to put on a profitable trade.   

For example, entering into TZA at open when IWM gapped up into the red circle on the chart, and selling during the first hour of Friday would have resulted in a 16.5% gain.