Updates for Friday 1/27/23

Click here for Signal Trades spreadsheet.

​Updates 2:45 PM ET - Friday 1/27/23
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Multi-week signal:  bullish
Multi-day signal:  quick $VIX spike likely

ES NQ RTY price action are highly bullish today.   Our multi-week composite signal is bullish.  ES NQ RTY are in the process of breaking out above their 200-day EMA, and the breakout may last multiple weeks.

But today is not a good setup to enter long for the following reasons.

$VVIX chart is showing the "squeeze up" pattern.  $VVIX 20-day EMA blue line about to cross over 50-day EMA red line.   When it does, there is a good chance that $VIX will spike.  Maybe not much, but enough to give us a better entry to go long ES NQ RTY.

Market breadth is waning.  These charts are not suggesting a crash or even a major sell-off.   But they confirm that a quick dip in price for ES NQ RTY is likely to happen soon.

How soon?  We do have a pretty big week next week starting on Wednesday.  Market participants have been buying calls rather than loading up on puts.  This makes them more vulnerable to any bearish news. 

Traders are still likely to buy the dip, but first there will be dips.  Therefore we should wait for these news-driven dips to show up before scaling into long positions.

For us, we are going to monitor $VVIX closely.  A quick $VVIX spike up to 90-91 is a good setup to scale into our bull positions TQQQ and SOXL.

​Updates 2:30 AM ET - Friday 1/27/23
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Big week next week
In addition to FOMC announcement, we have earnings announcements from some of the biggest tech names.  Wednesday through Friday next week will be filled with huge market news.  This means that the tight coiling moves this week will lay the groundwork for the potential breakout (or breakdown).

Dips are getting bought
Our system's signals have been projecting a bullish market breakout since Jan 5.  But it has also been suggesting a multi-day big dip happening right about now.   However, this dip has not materialized.   

Why?  Because market participants are aggressively buying dips.  This buying preference has resulted in strong multiple close levels of support for ES NQ RTY. 

Key S/R levels
Below is the updated S/R table. Note the 3 support levels. They are close together.  ES NQ RTY are capable of breaking out from any of these levels.  Furthermore, S3 has become a very strong support level at this point.  

ES daily chart below shows its 20-day EMA blue line very close to crossing over its 200-day EMA green line.  This is very bullish for stocks.   

Volatility and market breadth
All market breadth charts continue to show strong multi-week support for stocks.   $VIX EMA lines in the 4-hour chart below have been dropping steadily.  Again, this is very strong support for stocks rising.

Our Personal Trade Plan
We are going to unwind our tiny TZA position and get ready to buy the dip in TQQQ.   We plan to scale into one TQQQ and one SOXL position.

Click here for Signal Trades spreadsheet.
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Questions?
For new members who may not be familiar with the information we post in this blog, please check the glossary for more information.  You can also email us with questions directly.

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.