Signals & Trading Plan for Wednesday 1/15/20

Updated Tuesday 1/14/20 at 7:30 PM EST

Market Internal Indicators

The above table is now a mix of colors, but the predominant hue is still green.  The message from market internal indicators is still “bullish”.  

Despite today’s drop in the afternoon, we still have not seen the following bearish combination.

1. $VIX $VXN form “anchor-to-rise” pattern in the low zone of mid-December.
2. SVXY form a topping pattern.

This bearish combination is necessary before the first 3 rows of the above table will turn red.

Recall our explanations.

1. If the first 3 rows of the above table turn red, then then it is a reliable indicator that $SPX $NDX are forming a short-term top, potentially leading to a medium dip.   
2. If all rows in the above table turn red, and stay red for at least 1 day, then it is a reliable indicator of the end of Surge10, and the start of Major Pullback4.

We don’t have any of this right now, so we have to conclude that Surge10 is still intact.

Support & Resistance Levels

Market Projections 
Long-term projection:   Bullish.  The Up Trend that started on 12/26/18 should last at least until early March.

Intermediate and short-term projection:   Bullish.  Surge10 is still intact.

Trade Planning
Long-term investment portfolios:  As long as the Up Trend is projected to stay intact, these portfolios can stay in stocks and buy the dip.

Intermediate Portfolio:  If you have existing long positions based on $SPX $NDX $RUT designed to ride all of Surge10, you can continue to stay long for now since Surge10 is not ending just yet.

However, at this point we don’t recommend that you initiate any new intermediate-term position designed to hop on and ride the remainder of Surge10.  Wait until after the medium dip is done.  We intend to do this with TQQQ in the Model Portfolio.

By the way, today’s drop is not a medium dip suitable to initiate a new intermediate-term position.

Short Term Portfolio:   Today’s dip is a good entry point for day trade or very short-term trade of long positions based on $SPX $NDX. 

For the Model Portfolio, last Thu 1/9 we entered a small position of TNA at 71.6.  On Fri 1/10, the stop got activated at 71.18, and a sell limit order was automatically triggered to sell at breakeven.  

However, given the bullish nature of all indices yesterday, we’ve decided to hold the TNA position going into today.  Per the trading plan posted yesterday, we had a sell limit order at 73.8.  We actually manually exited when TNA reached 74 today as it topped out.

The Model Portfolio is 100% in cash for now.   Below are all our trades in January so far. 

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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.  

Note that we trade highly risky 3x leveraged ETFs.  You may end of losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.    Please read more about them before trading them.