Updates for Tuesday 10/5/21

​Click here for Signal Trades spreadsheet.

Updates 1:54 PM EST - Tuesday 10/5/21

Turnaround Tuesday?  YES, but...
We got the Turnaround Tuesday projected at 1 AM today.   Stocks bounced hard as expected.

If $VIX $VXN $RVX continue to coil down, there is a chance that the lows of Monday will become bottoms for $SPX $NDX IWM.   But even if that is true, market is still currently subjected to big swings due to negative gamma.  (This article provides a better explanation of negative gamma.)

We want to see the following bullish setups fall in place in order to commit to entering Big Bull positions.

• $VIX $VXN $RVX continue to form lower highs.
• On the 5-minute charts, the 200 EMA lines continue to rise steadily for $SPX $NDX IWM.
• $SPX and $NDX successfully retest support at the 200 EMA (5-min chart) at least one more time.
• IWM successfully retest support at L4.​

We will provide updated trade plan when these setups emerge. 

Updates 1:00 AM EST - Tuesday 10/5/21

Turnaround Tuesday?
Since early September, the stock market has sold off plenty but in a level-to-level fashion, rather than in big dives.   It is now overdue for a multi-level bounce.

Keep in mind that this is still a "sell the bounce" market.   But as we write this, futures (ES NQ RTY) are retesting Monday's low and appear to be finding support at that level.   So there is a chance that Tuesday may be turnaround day for stocks.

However, there are 2 charts that we are monitoring closely because their message is bearish.

$VVIX:  volatility of $VIX
Monitor $VVIX 20-day EMA blue line and 50-day EMA red line, as shown in its daily chart below.   If these two lines continue to stay above $VVIX 200-day EMA green line, and if they start rising, volatility can really surge, similar to the pattern seen back in January.

Equity Put/Call Ratio
Same deal here.   Monitor the 20-day EMA blue line and 50-day EMA red line, as shown in the daily chart below.   If these two lines keep rising up, volatility can really surge.

Short-term Key Levels
$NDX QQQ TQQQ have been updated.   All others remain the same for now, as their L1 levels have not been tagged yet.   

$NDX
$NDX dropped sharply down to its L1 level (from Monday's table) as anticipated.   It seemingly found support in the afternoon, and Nasdaq future (NQ) has found support overnight so far.  

We have moved L1 down further for $NDX QQQ TQQQ, in case there is more selling.

On Tuesday, if $NDX may retest support found so far at L2.   It may rise as high as L4 where it can run into a lot of resistance.

$SPX
On Tuesday, $SPX may retest support found so far at L2.   It may rise as high as L4 where it can run into a lot of resistance.

IWM
IWM may retest support found so far at L3.   It may rise as high as L5 where it can run into a lot of resistance.

Click here for Signal Trades spreadsheet.

To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

Disclaimer
The information presented here is our own personal opinion.  Consider it as food for thought.  We are not offering financial advice.  We are not promoting any financial products.   We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our suggestions.​​​​​​​​​

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