Updates for Tuesday 5/24/22

Click here for Signal Trades spreadsheet.

Updates 1:50 PM ET - Tuesday 5/24/22

Bulls haven't won the short-term battle yet
Bulls and bears have been battling it out in the bottom zone between ES 3800 and 3900 since May 12.   While it looked like the bulls managed to gain control this morning, $VIX is now sending out a message that it may rise again, possibly back to 36.

So the short-term volatility signal may switch from "Fully Bullish" back to "Transition" again.   There is not enough data to forecast that yet.

But for now, we have tightened our stops and lowered our exit targets to harvest whatever gain we can from this morning entry into SPXL and SVIX.   

It's time to TMAR (Take Money And Run).

Updates 12:30 AM ET - Tuesday 5/24/22

The struggle to rise
Although volatility signal has turned "Fully Bullish", all stock indices are going to have to endure another battle between the bulls and the bears.   

Some data to keep in mind:

• Market breadth is still improving, albeit by a tiny bit.
• Bonds are still building a base 
• Bond volatility has formed a top short term
• Oil has formed a top short term

The world is not falling apart entirely, but there is no doubt we are going to enter into a recession of some duration.   However, the stock market is a giant discounting mechanism.   So it may be that stock prices have already baked in all this bad news.

Short-term volatility signal : "Fully Bullish"
$VIX and $VVIX charts are still assuring us that the signal is "Fully Bullish".

All stock indices need to retest the low zone
In ES hourly chart below, we've shown the key support zone at 3855.   If ES retests this zone and successfully finds support, then ES along with the other indices can really climb up.   ES can climb up to 4100 in a few days.

If that test fails, then a retest of 3800 is likely.   If that fails, all indices will dive in another major leg down.

Trade plan
We are preparing to go long again with SPXL and SVIX, but at a lower entry price, and a tight stop in case we are wrong.

(NOTE: We trade SVIX because it has better leverage than SVXY.   But we track SVXY chart because it has more data.)

​Click here for Signal Trades spreadsheet.

​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.