Signals & Trading Plan for Friday 5/24/19

NOTE
We updated a good portion of this trading plan, including revised charts to show more refined S/R levels.  Please review.

What happened today
First of all, apologies for not being able to post much intraday - family matter to take care of.  Alas, the timing was not great as today was a heck of a day for the market.

We wrote in our trading plan last night:
"Keep in mind though that $SPX $NDX $RUT can spend more trading sessions anchoring themselves in the support zones still.  And they may still drop all the way down to the green lines on their charts."

Drop they did!  Way down and gave many of us heartburn along the way.

We've been writing since Tuesday about the bullish divergence our system has  detected between fear levels and prices for $SPX $NDX $RUT.  Here's a chart to show what we're talking about. 

Observe how $VIX on this daily chart has been forming a lower high pattern since 5/9/19, indicating that fear is steadily dropping.  $VXN has been forming the same lower high pattern, further confirming the declining fear level.

We do not always get bot $VIX and $VXN diverging simultaneously against price at an important price bottom.  This is a rare condition.  We also have oversold condition for $SPX $NDX $RUT.  We have price reaching key support levels.  Finally we still have healthy market internals.  

Combine them together, and we have a strong underpinning for a new Up Segment that can go back to the high of early May.  That's the big picture for any bulls who may have jumped in early to consider.  Another way to look at this is in a few weeks, $SPX $NDX $RUT are far more likely to be higher than where they are today.

However, $SPX $NDX $RUT may do the one quick last low move before the bullish reversal can take place for real.  Let's take a look at these levels on their hourly charts.

Our trading plan
There is a high probability at this point that $SPX $NDX $RUT will have a snapback rally tomorrow and rise back up.  They are likely to run into resistance at the red lines and will turn downward to re-test the lows of today (yellow lines).

$SPX $NDX $RUT may drop further to strong support at the green lines on their respective charts, perhaps early next week.  The odds are high that they will then turn upward into a new Up Segment.

A lot of Elliot Wave practitioners are calling for this last drop.  We think though that there is a strong possibility that $SPX $NDX $RUT may find support right at the yellow zone, and we may see some serious buying resumes next week.

Here are our open positions and the entry prices.
Note that each purchase is 10% of the final position (10% of TQQQ, 10% of TNA)

TQQQ (40% purchased):     56.32;    57.1;     57.52;   54.54
TNA (30% purchased):        60.43;    59.46;   59.53

Earlier this evening, we wrote about selling some of these positions at break even and buy back in lower.  But at this point, we don't think that's a wise move.  Instead, we will monitor for support at the yellow zone tomorrow and add some more shares of TQQQ there.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.