Updates for Wednesday 8/19/20

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Updates 3:30 PM EST - Wednesday 8/19/20

Short Term
The late day profit taking in $SPX $NDX is similar to what happened between 8/13 and 8/14.   We are likely to see a consolidation day tomorrow, followed by resumption of buying.

However, the current up swing in the channel that started on 8/11 is like to end by this Monday.   It's not an assured end until we get confirmation from $VIX and $VXN of course,  but we are not projecting huge upsides at this point.

Updates 9:21 AM EST - Wednesday 8/19/20

Short Term
$VIX is rising slightly this morning.   This type of actions indicates that there may be some moderate profit taking today, but we are unlikely to see a bigger sell-off.  

Both $SPX and $NDX may get down close to the lows of yesterday and retest support at these levels.   They are likely to find enough buyers here to resume their climb.   

IWM is the most bearish index, and it may drop closer to its green support zone.   Overall, IWM is still likely to continue its coiling pattern downward, rather than a straight drop.

Updates 2:15 AM EST - Wednesday 8/19/20

Table of Support & Resistance Zones
This table has been updated to reflect the latest price actions.

Short Term:  $VIX $SPX IWM 
We continue to monitor for $VIX to drop sharply down and get close to the bottom edge of its yellow channel, shown on $VIX hourly chart below.   

Until $VIX gets down to near its bottom edge, conditions are overall bullish for $SPX and IWM.    We may see minor pullbacks, but we should see $SPX IWM coil their ways upward in their channels, while $VIX coils its way downward in its channel.

However, when $VIX drops sharply down to this bottom edge, it will likely reverse sharply upward, thereby creating bearish headwinds for $SPX IWM.   They will most likely start dropping down towards towards their green zones at that point. 

Again, this is not the start of Dive2.   This is bigger pullback to find new buyers in the green support zones.

​Short Term:  $VXN $NDX
It will be interesting to see what happens when $VXN reaches its lower channel edge at 25.5, as shown in $VXN hourly chart below.    Most likely $VXN will start to rise upward in the channel.   

However, there is a good chance that $NDX will ignore this rise in $VXN, until $VIX starts rising as well.    This is because $NDX is currently quite bullish again, and its momentum may overcome $VXN bearish headwinds for a few days.

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 up 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.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

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