Updates for Friday 3/25/22

Click here for Signal Trades spreadsheet.

Updates 11:58 AM ET - Friday 3/25/22

$VIX bottoming process
That was a tremendous intraday reversal by $VIX.   So now we have the first move that is most likely the start of $VIX bottom.   For a true bottom, we want to see $VIX 200 EMA green line go sideway a bit on its 5-minute chart below.

We got stopped out of TNA.   We will update spreadsheet shortly.​

Updates 12 AM ET - Friday 3/25/22

Still bullish...
As you know we've been tracking $VIX and $VVIX for leading clues on whether stocks are going to retrace to lower support levels.   On Thursday, $VIX and $VVIX briefly acted like they were going to rise.   Unfortunately for the bears, volatility dropped instead as $SPX $NDX IWM rose. 

Futures are quite bullish right now as we write this.   So $SPX $NDX certainly have enough momentum to reach L6 Friday or Monday.   ​

So what do the other indicators tell us?
​
Put/Call Ratio:   The chart of P/C ratio confirms the potential rise in stocks, and hints that this rise may last through next week.   P/C ratio has dropped a lot, and it's going to take some time and a lot of fear for traders to load up on puts again.

Market breadth:  A/D charts as well as "happy stock" charts confirm the bullishness with improving breadth.   They are not acting as leading indicators right now.   Just confirming the story. 

Trader and dealer hedging:   According to SpotGamma, the combination of hedging by traders and dealers is likely to result in $SPX $NDX IWM going sideway, where prices are pinned in a narrow range.

Dark Pool Index (DIX):   The enthusiastic buying in the dark pool is starting to cool off.   We have to see how long this lasts.

Bond:   Junk bonds (JNK HYG) are still confirming the move up in equities.  But bond volatility (MOVE) is rising again.   There are thoughts that big money is moving out of bonds into stocks because of TINA (There Is No Alternative).  We'll have to keep tracking this.

So overall, the indicators support the continued bullishness.   Keep in mind though this may mean sideway moves for a while.   

Key Price Levels
The table below is the same as yesterday.  L6 is likely to be tested very soon.​

​Trade plan
This market is very overbought right now. And despite $VIX $VVIX dropping, they are inching towards reversal rather than towards dropping a lot more.
​
We are not comfortable initiating bullish positions for multi-day holding right now.   But we will monitor $VIX ES NQ RTY 15-min charts pre-market to look for entry points.   We are open to going bullish or bearish depending on the setups.   

​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 trades.