Signals & Trading Plan for Tuesday 7/23/19

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Here is an excerpt from our trading plan.

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Dip6 is launched
We have a bearish divergence right now where $SPX $NDX are acting as though they may recover from being down since 7/15.  However, under the hood, market internals are collectively shouting “Dip6 is happening!”

Here are some specifics.

$VIX $VXN are forming a pattern indicating they will surge.  $VIX can surge up into the zone of 17 to 17.5.  $VXN can surge into the zone of 21 to 21.5.  When $VIX $VXN sharply surge, $SPX $NDX $RUT will sharply drop further.

Market breadth are no longer confirming the bullish scenario.  Both NYSE and Nasdaq A/D lines have been steadily marching down since 7/15.  The percentage of bullish Nasdaq stocks has been dropping steadily since 7/3, NYSE since 7/15.

CBOE Put/Call ratio has been forming a pattern indicating it is ready to rise into selling territory.  And it is nowhere near oversold yet.

Finally, $RUT has gone ahead with its steady march downward today.  $RUT is the canary in the coal mine.  It adds further confirmation that Dip6 is happening.

The rest of this article covers:
Support zones for $SPX $NDX $RUT at the end of Dip6
What to expect after Dip6
Our trading plan
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