Updates for Tuesday December 5, 2023

Click here for Signal Trades spreadsheet.

​Updates 1:40 AM ET - Tuesday

​Upcoming key events
Read more economic analysis here.

Key S/R levels
The updated levels are highlighted in bold below.​

Bearish hint:  VIX continues to base
Yesterday we discussed how VIX is starting to base, and Monday's VIX actions confirmed this thesis.  VIX basing process can take multiple weeks.  The end result of the basing process is for VIX 200-hour EMA green line to go sideway like how it did back in April-May and June-July.  We may not see VIX 200-hour EMA green line goes sideway until January. 

​Bearish hint:  Nasdaq breadth forming topping pattern
The daily chart of Nasdaq 100 Advance-Decline Percent below is forming a bearish topping pattern with its 20-day EMA blue line.   While there are bounces within this pattern, it has been the precusor for bearish sell-off in July, August and September this year.

Similar to how NQ behaved back in mid July, we may find NQ to be the first index to start grinding downward while ES and RTY are still climbing up, and VIX is basing.  

FOMC Dec 13 is still likely to bring a moderate dip
This week, we may see a shallow dip for ES RTY and a moderate dip for NQ. After FOMC on December 13, we may see a moderate dip for ES RTY and a bigger dip for NQ.

Until VIX is done basing, traders should treat these pullbacks as dips within a bull trend.  

Our personal trade plan
Yesterday, we wrote:  "While VIX bases, SVIX is likely to retest the zone 33.7 - 34 again.  We aim to enter SVIX in this zone for a 10% gain."   

We got our SVIX half position filled early Monday. We'll lock in a small SVIX profit because we think VIX is likely to rise again after retesting 12.5.   We will monitor to re-enter a full size SVIX position when VIX retests the zone 15 - 15.5.  Note that this may not happen until after FOMC.

See the spreadsheet for details.
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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.​​​