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Updates 12:33 PM EST -  Friday 12/11/20

​How deep is the dip?
As we posted at 2:22 AM, there is not enough fear and panic for the current spike in volatility to qualify as a VMajor signal.   A VMajor signal is what we saw between 8/26 and 9/4, and between 10/23 and 10/30.    

But there is definitely fretting and worrying and hand wringing and profit taking.   So there is enough to cause a pullback in price.   The key question now is "how deep is the dip?"

The green support zones from the S/R table (posted at 2:22 AM) are key support levels.   $SPX $NDX IWM are very likely to find enough buyers to resume the rise from their green support zones.   

But $SPX $NDX IWM may not dip that low.   Don't forget that FOMC meeting starts on Tuesday next week.   And market typically does not have a huge sell-off prior to FOMC meeting.   Maybe after, but not before.

Still this kind of sell-off can cause discomfort for the bulls.   This is why we urged you to think about position management on Monday.   If you book partial profit, you will have the fortitude to hold through a draw down.   

In a strong up trend like what we are in right now, it's very difficult to precisely time the dips.   Lots of bears get burned by that.   But the dips can cause enough discomfort to make the bulls get out too early.   So position management is the key, and position management is a highly individual thing as it depends on how you trade.   

We've been sharing with you our position management strategy in Signal Trades.   We hope that has been helpful.

Get our highly accurate VIX-based trading signals for SPY QQQ TQQQ TNA here.

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​
Updates 1:56 AM EST -  Wednesday 12/9/20

Today’s rise in $VIX is not a surprise.  On Monday we shared this $VIX chart with our members to explain that $VIX may be rising soon. 

Last night and earlier today, we discussed how to determine if the current $VIX rise will become a major spike or a head fake.   Access full analysis and our trading strategies for SPY QQQ TQQQ TNA here.

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Below is a time-delayed excerpt from our live updates for members.

Updates 12:24 AM EST -  Monday 12/7/20

Summary
Short Term:   $NDX $SPX IWM are all likely to continue rising this week as conditions are very bullish right now.

Big Picture:   $VIX $VXN are providing bullish tailwinds for stocks.   But they may get a substantial spike in volatility (VMajor signal)  later next week. 

...​
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Below is a time-delayed excerpt from our live updates for members.

Updates 12:55 AM EST -  Wednesday 12/2/20

Summary
Big Picture:  No VCrash signal on the horizon from $VIX $VXN, but we are monitoring for a possible formation of a VMajor signal.   (A major spike in fear.)

Short Term:   $NDX $SPX are likely to continue rising a bit more.  IWM is now starting to head down short term.
​
Market Internals
Market internals indicate the current bullishness may be waning a bit.
Subscribe to get full access to table of market internal data.

Table of Support & Resistance Zones
Subscribe to get full access to table.

Terminology
We have come up with some labels for different types of $VIX $VXN signals.  We plan to use these labels going forward so you will get a better idea of what we are referring to.

There are 3 types of rise in volatility.

1. VCrash:  an eruption in $VIX $VXN that accompanies a crash.
2. VMajor:  a major spike in $VIX $VXN that reflects serious growing fear.
3. VMinor:  a minor rise in $VIX $VXN that reflects everyday benign worries.

$VXN
As we mentioned above, we are monitoring for a possible formation of a VMajor signal.   A VMajor signal is simply a major spike in fear, similar to the spike levels $VIX $VXN showed from 8/26 to 9/2, and 10/23 to 10/30.

$VXN 2-hour chart below explains what to look for that would confirm a VMajor signal.   If a VMajor signal shows up, $VXN is likely to rise up to its green zone shown below.  Subscribe to get full access to $VXN chart.

$VIX
$VIX 2-hour chart below explains what to look for that would confirm a VMajor signal.  If a VMajor signal shows up, $VIX is likely to rise up to its green zone shown below.  Subscribe to get full access to $VIX chart.

$VVIX
$VVIX is the volatility of $VIX.   When $VIX is dropping, $VVIX does not offer much helpful info for trading.   However, when $VIX starts to rise steadily, $VVIX will pick up on this and starts to show certain patterns.

$VVIX 2-hour chart below explains what to look for that would confirm a VMajor signal.  Subscribe to get full access to $VVIX chart.

$NDX 
We want to make it clear that what $VIX $VXN are forming are just possibly bigger spikes in fear.   They are not forming a crash signal (VCrash).  

So it's really a question of a minor pullback in price due to a VMinor signal, or a bigger pullback in price due to a VMajor signal.   

​$NDX daily chart below shows where we can expect to see price pulls back to.  Subscribe to get full access to $NDX chart.

$SPX
​$SPX daily chart below shows where we can expect to see price pulls back to.  Note that this is the bigger pullback due to a VMajor signal.  Subscribe to get full access to $SPX chart.   

IWM 
IWM 2-hour chart below shows where we can expect to see price pulls back to.  Subscribe to get full access to IWM chart.  

Signal Trades
In an ideal scenario, when the VMajor signal shows up, $NDX $SPX IWM drop correspondingly.   This is ideal because it's predictable.   We can project the timing and scale of the drop based on this ideal scenario.

However, there is a good chance that we won't see this kind of ideal predictability.   There is a chance that when the VMajor signal shows up, $NDX and $SPX may ignore the serious spike in fear, and blithely continue to march up.

This is a bearish divergence, and it happened between 8/26 and 9/3 for $NDX and $SPX.   Afterwards, $NDX $SPX switched to a bullish divergence, ignored the dropping $VIX $VXN signals, and continued their own drop for almost all of September before rising up in price.

Bullish or bearish divergence are simply lag in response time to the signals.  It happens a lot, and it is rather annoying as it makes it hard to time your trades.  

In any event, this is just a heads-up.   $VIX $VXN $VVIX all have to confirm the VMajor signal first.

In Signal Trades:

• If VMajor shows up, we will exit our bullish Big Swing positions, and enter UVXY for the short term.
• When VMajor ends, we will exit UVXY and re-enter bullish Big Swing and Quick Swing positions.

• If VMinor shows up instead, we will hold Big Swing, wait for VMinor to finish to re-enter bullish Quick Swing positions.

Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

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