 NVDA earnings was excellent, but shares still fell a bit after hours as investors were still somewhat disappointed. Read more here. A time to be cautious It is not surprising that investors are becoming wary of stocks that have been highly bullish. NQ weekly chart below shows that we are in the 4th bull cycle within the big bull trend that started on 12/27/22. MACD on NQ weekly chart shows a lower high pattern forming while price reaches for higher high. This bearish divergence usually appears as the bull trend approaches the end. But approaching the end is not the same as ending right at this moment. So bears should be cautious about jumping in with both feet right now. At the same time, bulls don't want to hang on to new positions for too long. Riding an aging bull can be tough. The best strategy is to find low-risk setups to enter bull position and aim for limited profit. Lock in this profit and get out. Don't try to ride any swing end to end as you may find your profit evaporate quickly.  Watch out for bear traps and bull traps based on volatility VX daily chart below shows that it has surpassed resistance at 17.1 on Wednesday, and rose up to tag 17.6. VX pattern shows that it's likely to form a top in the zone between its 50-day EMA red line and 200-day EMA green line (18 - 19). Once the top is formed, VX will drop. This is a bear trap in the making, and not a good place to go full blown bearish. Once VX steadily drops again, the time for bulls to worry is when VX starts to base, most likely in the zone 13 - 15. When VX starts to base, equity might be marching up steadily perhaps as part of a Santa rally. And that's the time for bulls to be cautious of bull trap.  So how do we trade now? We need to monitor for low-risk setups and lock in profit quickly. NQ 1-hour chart below shows that it may be in the process of forming a W pattern. Ideally NQ will dip quickly in the support zone 20400 - 20558 one more time. If this zone holds, NQ can rise up to retest resistance at 21250. This is the limit of this trade.  We need to see NQ bullish confirmation in UVXY chart. Ideally UVXY will close the gap by spiking up to resistance at 25.45 to form a clear top before dropping. This will provide bullish tailwind for NQ.  TQQQ: Will follow similar path to NQ.
NVDA: Will follow similar path to NQ.
NVDL: Will follow similar path to NQ.
SOXL: Will follow similar path to NQ.
TNA: Will follow similar path to NQ.
Our personal trade plan Per the trade plan discussed yesterday, we exited our TQQQ position before open for a decent profit, and avoided the intraday gyration. We are currently monitoring for re-entry into TQQQ. 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.
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