Updates for Thursday December 21, 2023

Click here for Signal Trades spreadsheet.

Updates 2:00 AM ET - Thursday

​Upcoming key events
Read more about economic analysis here.

​Key S/R levels
Updated levels are highlighted in bold.

Dip warnings from our indicators were timely
Pre-Wednesday we shared charts which showed warnings of an upcoming dip.  These are the warnings that came true on Wednesday.

• VIX basing to rise to the zone 13.3 - 14.3 >>> it rose to a high of 13.94 on Wed.
• McClellan Oscillator is grinding down to the critical zero level >>> it dropped from a high of 51 on Tue to 12.83 on Wed.
• JNK shows risk appetite has peaked on Dec 14 and is topping in the short term >>> JNK continues to fill out the topping pattern on Wed.

ES NQ RTY finally woke up and paid attention to the warnings on Wednesday.   In one day they gave up the gain since last Thursday.   

Is the stock market going to crash?
NO, not in the next few weeks anyway.  In order for the market to crash, VIX would have to spike hugely from the 13 zone up to 30 zone.  But that realistically cannot happen until VIX has based for multiple weeks. We saw this lengthy basing process from mid April to late May, and mid June to end of July.

VIX has just started basing as shown on its 4-hour chart below. It has to spend time forming the kind of pattern that we dotted in below.  VIX may not get very far before it fails to rise and starts descending below 11.8.  So no crash talk right now.

What kind of dip will this be?
We think:

• ES NQ RTY may retest Dec 20 lows and then climb back up to test R1.
• VIX may reach 14.3 on Thursday before it drops back to 11.8 by end of week. 
• If VIX rises again from 11.8, then the basing process will continue and ES NQ RTY will chop at the top.
• If VIX drops below 11.8, then ES NQ RTY will resume their furious rise.

​Our personal trade plan
At this point, we plan to wait for McClellan Oscillator to signal the pivot date to enter UVXY.  We will be monitoring for when A/D percent starts the day sharply negative.  This will bring McClellan Oscillator down close to zero.  
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​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.