Updates for Friday July 12, 2024

Click here for Signal Trades spreadsheet.

Updates 1:25 AM ET - Friday
Upcoming key events
CPI is trending slightly lower.  Read more about its implication here.

Level 2 dip started with a very sharp drop
From WSJ regarding CPI:  U.S. inflation eased substantially in June, extending a recent slowdown in price increases that clears a path for the Federal Reserve to cut interest rates by the end of the summer. 

If we haven't been monitoring VIX VVIX UVXY messages, we would have jumped in to buy on the seemingly good news, and the very bullish initial reaction in equity.  However that turned out to be a bull trap for NQ and ES bulls.  

Interestingly enough, RTY took off on the potential easing of rates.  This makes sense as small business do much better in a lower rate environment.  One would think that growth stocks would benefit too, but NQ and ES dropped sharply for real post CPI, as warned by VIX VVIX UVXY.   

VIX VVIX UVXY:  Level 2 dip setup still progressing
On VVIX 30-minute chart below, all of its EMA lines are rising.  Its 20 EMA blue line and 50 EMA red line have crossed above the 200 EMA green line.  This is typically when the dip accelerates.

On VIX 30-minute chart below, all of its EMA lines are rising as well.  Its 20 EMA blue line and 50 EMA red line have crossed above the 200 EMA green line.  However, VIX might still retest 12.5 very quickly before rising again.   Again, potentially another bull trap.

Then we have UVXY 30-minute chart below.   In all honesty we wish UVXY would look a little more eager to rise.  This is why we are not comfortable overloading our bear position or holding for too long.  It is only a Level 2 dip.

NQ 

• NQ spiked up to resistance at 20984 and then dropped sharply after CPI.  
• On Friday NQ may try to reach up to resistance at 20630 before dropping down further.
• We anticipate NQ to bottom out around support at the bottom of the channel at 20235.
• NQ may base in a choppy manner around this zone for a bit early next week before resuming the climb up the channel. 
• This bullish assumption has to be blessed by VIX VVIX UVXY.  Otherwise it's still not time for the bull climb to resume yet.

SOXL

• SOXL spiked up to resistance at 70.64 and then dropped sharply after CPI.  
• On Friday SOXL may try to reach up to resistance in the zone 64 - 65 before dropping down further.
• We anticipate SOXL to bottom out around support at the bottom of the channel in the zone 55 - 56.
• SOXL may base in a choppy manner around this zone for a bit early next week before resuming the climb up the channel. 
• This bullish assumption has to be blessed by VIX VVIX UVXY.  Otherwise it's still not time for the bull climb to resume yet.

We entered into half position of SOXS after CPI Thursday morning when we saw VIX dropped down to 12.23 and then reversed sharply. We decided not to add to this position because SOXS was taking off too fast, and this is just a Level 2 dip which means the dip won't be that big or lasts for that long.   

​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.