Updates for Thursday December 12, 2024

Click here for Signal Trades spreadsheet.

Updates 1:45 AM ET - Thursday
Read more about inflation here.

Volatility is still basing to rise
Despite the highly bullish price actions after CPI report on Wednesday, volatility is still forming that dreaded basing-to-rise pattern.  VVIX daily chart below shows it has been rising steadily since giving us the warning on Dec 9.

UVXY
UVXY which usually is fashionably late to the party is currently showing multiple W bottoms on its hourly chart.  When UVXY goes into this basing mode, it usually heralds in a spike in volatility.  UVXY may spike as high as 20.75 - 21.

NQ
Ahead of CPI report, we wrote: Don't be surprised though if NQ retests the resistance zone 21600 - 21607 quickly before resuming the dip.

NQ not only spiked up to this zone post CPI, but it kept on going to finally tag 21820 before pulling back a bit.  So does this mean the dip is done?  Not according to volatility above, and not according to NQ MACD patterns on its 1-hour and 4-hour chart.  In fact, hourly MACD is sending out a bearish warning message as we write this.

However, when the bulls go into a frenzy, they will not pay much attention to these bearish divergence messages.  NQ can keep rising higher while volatility climbs and MACD patterns drop.  

The best strategy at this point is to tightly protect bull positions and be careful about initiating new multi-day bull positions.  We think that when UVXY spikes, NQ may drop to support in the zone 21165 - 21250.

TQQQ
TQQQ initial support zone is  81.5 - 82.8.  If TQQQ finds enough buyers here, a new bull swing can start at this zone, and TQQQ may rise as high as 92 by year end.

SOXL 
SOXL strong support zone is 26 - 26.6.  If SOXL finds enough buyers here, it may rise as high as R2 at 32 by year end.

TNA
​​A new bull swing can start in the support zone of 49.9 - 50.9.   If TNA finds enough buyers here, it may rise as high as 59 by year end.

Our personal trade plan
Yesterday we wrote:  It is not easy to trade dips between bull swings within a bull cycle.  They don't typically drop low enough or last long enough for us to scale in and hold for a bit.  Furthermore, with CPI Wednesday and PPI Thursday, the risk/reward ratio is not great.  Hence our reluctance to jump into SQQQ. 

That turned out to be a good strategy in the sense that we avoided the sharp price recovery after CPI.  We did test TNA entry but decided to close it after hours.  Apology for not sending an alert out.  

We won't necessarily have time to trade on Thursday, but see spreadsheet for a suggested trade.  
​
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.