Click here for Signal Trades spreadsheet.
​
​Updates 9:15 AM ET - Friday 4/1/22

$VIX UVXY building W bottom
As mentioned earlier today, $VIX $VVIX UVXY are in the process of building W bottoms, and the exact path is not always predictable.   Overnight $VIX pulled back a bit.

Given the new pattern that has been etched out, we personally prefer to wait for $VIX UVXY to retest the lows of 3/30.  SQQQ is likely to do the same there.  Those are lower risk, higher reward trade setups.   See spreadsheet for updates.

​Volatility confirms bearish change
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

$VVIX continues to form the W bottom that it has been forming since 3/25.  This confirms that volatility is about to surge substantially.

$VIX woke up on Thursday and started to form the 1st leg of its W bottom.   ​This also confirms that volatility is about to surge substantially.

Trade Plan
We manually exited TQQQ when its price (along with NQ) fell out of the bottom of the channel.   That saved us from the sharp drop that followed.

Now we want to focus our attention on capturing the rise in $VIX via UVXY.  First, keep in mind that $VIX UVXY need to form the 1s leg of their W bottoms before they can really rise.   So we have a quick trade in place to capture this 1st leg of UVXY.

Next week, we have bigger trades lined up for UVXY and SQQQ as they retest the lows of this week in forming their W bottoms.

Click here for Signal Trades spreadsheet.

​To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

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.

​Volatility:  $VIX $VVIX $VXN $VXN
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

Yesterday we wrote: under the hood, $VVIX (volatility of $VIX) has now started the basing process.   $VVIX 20-hr EMA blue line and 50-hr EMA red line are bunching up and starting to go sideway.   This is similar to the patterns formed by 11/3 and 1/13.   

This pattern continues to build out, confirming that $VVIX is likely to keep coiling upward.  $VIX itself also started to pay attention to $VVIX and spiked up to tag its own 200 EMA line on $VIX 15-minute chart.   However, don't get too excited about spiking $VIX just yet.

Now is the time though to pay close attention to UVXY chart.   We find that $VIX UVXY are primed to really spike when UVXY 20 and 50 EMA lines actually cross above UVXY 200 EMA line on its 30-minute chart as shown below.   

This is UVXY from October 2021.  Observe how it took multiple weeks for UVXY to really rise above its 200 EMA green line.

UVXY current 30-minute chart below is nowhere near this pattern just yet. This doesn't mean we won't experience small spikes in volatility, but UVXY and $VIX are unlikely to really surge in the next few days.  

This means $SPX $NDX IWM are unlikely to substantially drop in the next few days.

What happens after $VIX spikes up?
However, when $VIX spikes for real, there will be a substantial pullback for $SPX $NDX IWM.   This is actually a good thing for the bulls as it cools off this overbought condition and brings in a fresh wave of buyers.

We don't think that $VIX will spike above 26.   And if our thesis is confirmed, when $VIX runs into strong resistance is when the new bottom of the bear market will form.   A new bullish leg will start, one that can take $SPX to 5000 possibly by 4th quarter.

​Trade Plan
Our TQQQ buy order targeting the bottom of the channel got filled earlier than we thought. We expect TQQQ to retest the zone around 59 - 60 on Thursday so we have loosened our stop.   

Unlike $SPX which may be stuck at 4600, there is call buying interest for QQQ all the way up to 380.   This is close to our L6 level, which implies that TQQQ may manage to rise up to 68.   This is our sell target.

Click here for Signal Trades spreadsheet.

​To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

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.

​
Updates 1:00 AM ET - Wednesday 3/30/22

​Key Price Levels
The table below has been fully updated. 

$SPX gapped up on Tuesday just above the crucial 4600 level, and proceeded to march straight up to tag the new L4 at 4637.   The rest of the indices did the same.    

Now that the dam has been breached, it is possible for $SPX to climb up to L6 at 4741 over the next week.

​Volatility:  $VIX $VVIX $VXN $VXN
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

​Stocks are very overbought right now, but this is not a surprise as $VIX (implied volatility) has been messaging that it's still dropping.   And by end of Tuesday, it's still not done dropping yet.   This is why we've been staying away from bearish trades such as UVXY SQQQ TZA.

But as we pointed out yesterday, under the hood, $VVIX (volatility of $VIX) has now started the basing process.   $VVIX 20-hr EMA blue line and 50-hr EMA red line are bunching up and starting to go sideway.   This is similar to the patterns formed by 11/3 and 1/13.   

$VVIX will win, but it most likely will take another week before $VVIX is done with this basing process.   So we must be patient and nimble in our trades.

Our rule of thumb is we don't load up on multiple bullish positions to hold for several days.   Not when $VVIX has started its basing pattern.

​To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

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.

Click here for Signal Trades spreadsheet.

Updates 5:39 PM ET - Tuesday 3/29/22

NQ has reached top of channel
We prefer Nasdaq futures NQ intraday chart because it has more data points per day than $NDX.

Nasdaq futures NQ 15-minute chart shows how price has reached the top of its rising channel for now.  So we are choosing to take a small profit with our TQQQ position here and re-enter at bottom of channel.

Volatility:  $VIX $VVIX $VXN $VXN
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

As of Monday, $VIX and $VVIX have started to diverge.  Implied volatility ($VIX) dropped sharply, while volatility of $VIX ($VVIX) anchored and rose sharply.  One is transitioning ahead of the other.  But at some point they will head in the same direction, most likely up. 

Our rule of thumb is while these 2 indices diverge, we don't load up on multiple bullish or bearish positions to hold for multiple days.

One thing we have observed in the past is that $SPX $NDX IWM may ignore the rising bearish message from $VVIX for multiple days.   So it is important not to jump ahead and try to short this market right now.   Wait until $VIX starts rising as well.

Trade Plan
Nasdaq futures NQ 15-minute chart below shows how price has been finding strong support each time it tags the 200 EMA green line.   And this green line is still rising.   So we are monitoring for this tag again to enter TQQQ.

Click here for Signal Trades spreadsheet.

Click here for Signal Trades spreadsheet.

Updates 12 AM ET - Monday 3/28/22

Upcoming key events
This week is loaded with important economic reports.   

Projected market moves
Grind up to L6:   There are many indicators signaling that stocks are overbought and are due for a pullback (see detailed discussion further below).   However, $SPX $NDX IWM may still try to grind upward a bit more to reach L6.   

$SPX near 4600 (L6) is very strong resistance level.   That's where the sellers are likely to come out and push price back down some amount.

Substantial pullback to L1:
Once the pullback starts, $SPX $NDX IWM may drop all the way back to L1.  $SPX at L1 is near 4400, and that's a reasonably strong support level.   

Robust rally that may take $SPX back to 4800 by summer:
There's a high probability that the 2nd leg of the $SPX $NDX IWM rally will be launched from L1.  If it does, we note that L1 is a higher low than the lows of February 24.  This will function as a sign of a strong bottom, and attract traders to buy more.   We may see $SPX reach 4800 by summer.

Volatile September-October may see substantial sell-off:
As the $VIX term structure below shows, traders are currently worried about September and October.   So there is a strong possibility of a substantial sell-off during that period.

Trade plan

• If futures ES NQ RTY find support at their 200 EMA lines (15-minute charts), we will enter TQQQ for a 5% trade.  
• We don't want to initiate multiple bullish positions while $VIX $VVIX indicate they are likely to reverse very soon.   
• We won't enter a bearish bet just yet, not until ES NQ RTY prove failure to rise higher.
• We are planning to enter UVXY and SQQQ when it's confirmed that $VIX is definitely reversing upward.

​Click here for Signal Trades spreadsheet.

Volatility:  $VIX $VVIX $VXN $VXN
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

In the $VIX futures term structure chart below, we can see that spot $VIX at 20.81 is substantially below M1 futures at 23.8 and M2 at 25.1. 

This tells us that spot $VIX (which is implied volatility) has dropped a little too far.  Spot $VIX is likely going to rise up very soon to get closer to $VIX futures.   This means some sell-off is likely to happen soon for $SPX.

$VVIX (volatility of $VIX) is a very reliable oscillator.   Here $VVIX tells us that traders are being too complacent.   $VVIX has formed a massive anchor for the last 6 sessions.   It is very likely to rise from here, at least back up to the 200-day EMA green line.   This ​means some sell-off is likely to happen soon for $SPX.

Trader Hedging:  P/C Ratio
In the equity P/C ratio daily chart below, we've turned off the candles and only show the EMA lines to clearly illustrate that P/C ratio has a way to go to get back to normal.   

This means that there is room for the rally to go up higher, after a moderate pullback to retest for $SPX $NDX IWM to retest their lows.

Click here for Signal Trades spreadsheet.

Updates 11:58 AM ET - Friday 3/25/22

$VIX bottoming process
That was a tremendous intraday reversal by $VIX.   So now we have the first move that is most likely the start of $VIX bottom.   For a true bottom, we want to see $VIX 200 EMA green line go sideway a bit on its 5-minute chart below.

We got stopped out of TNA.   We will update spreadsheet shortly.​

Updates 12 AM ET - Friday 3/25/22

Still bullish...
As you know we've been tracking $VIX and $VVIX for leading clues on whether stocks are going to retrace to lower support levels.   On Thursday, $VIX and $VVIX briefly acted like they were going to rise.   Unfortunately for the bears, volatility dropped instead as $SPX $NDX IWM rose. 

Futures are quite bullish right now as we write this.   So $SPX $NDX certainly have enough momentum to reach L6 Friday or Monday.   ​

So what do the other indicators tell us?
​
Put/Call Ratio:   The chart of P/C ratio confirms the potential rise in stocks, and hints that this rise may last through next week.   P/C ratio has dropped a lot, and it's going to take some time and a lot of fear for traders to load up on puts again.

Market breadth:  A/D charts as well as "happy stock" charts confirm the bullishness with improving breadth.   They are not acting as leading indicators right now.   Just confirming the story. 

Trader and dealer hedging:   According to SpotGamma, the combination of hedging by traders and dealers is likely to result in $SPX $NDX IWM going sideway, where prices are pinned in a narrow range.

Dark Pool Index (DIX):   The enthusiastic buying in the dark pool is starting to cool off.   We have to see how long this lasts.

Bond:   Junk bonds (JNK HYG) are still confirming the move up in equities.  But bond volatility (MOVE) is rising again.   There are thoughts that big money is moving out of bonds into stocks because of TINA (There Is No Alternative).  We'll have to keep tracking this.

So overall, the indicators support the continued bullishness.   Keep in mind though this may mean sideway moves for a while.   

Key Price Levels
The table below is the same as yesterday.  L6 is likely to be tested very soon.​

​Trade plan
This market is very overbought right now. And despite $VIX $VVIX dropping, they are inching towards reversal rather than towards dropping a lot more.
​
We are not comfortable initiating bullish positions for multi-day holding right now.   But we will monitor $VIX ES NQ RTY 15-min charts pre-market to look for entry points.   We are open to going bullish or bearish depending on the setups.   

​Click here for Signal Trades spreadsheet.

Click here for Signal Trades spreadsheet.

Updates 1:08 PM ET - Thursday 3/24/22

$VIX building a base
$VIX is taking its time to build a base right around its 200-day EMA. It's building up momentum for the climb back up.

The results are choppy price movements in a tight range.   It's very difficult to trade this condition.  We would rather wait for our multi-day bearish positions to get filled instead.

We've adjusted the entry prices for UVXY and TZA based on our projection of where they will open tomorrow.   We don't expect these positions to be filled today.

Updates 12:30 AM ET - Thursday 3/24/22

Transitioning to bearish
Our projection from Wednesday was:  $VVIX is signaling clearly that it is building a base to rise.   We think the odds are high that $SPX $NDX IWM are transitioning to bearish.

By end of Wednesday, we have the following confirmations that the rally (started on 3/15) is likely to be done for now.   

$VIX
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

We have been discussing the importance of $VIX 200-day EMA green line.  On Wednesday, $VIX tagged very close to its 200-day EMA green line, and turned upward as part of an anchoring process to rise.   

​Is the market crashing again?
When we say "turning bearish", we don't mean that stocks are about to crash hugely again.  They are most likely retracing back to key support levels to form a broad W bottom before launching into another rally.

There are some strong levels of support, especially around $SPX 4300. In fact, we have highlighted a projected path below for how $SPX might traverse down to retest key support levels.  The low of February 24 ($SPX 4115) is a very strong support level.     

The key indicator though is still $VIX. For the next rally to take place, we want to see $VIX surges up quickly, and then fails repeatedly around 28-30, unable to rise above this resistance level.  That would be a very healthy sign for stocks.   

Trade plan
Click here for Signal Trades spreadsheet.
​
We have prepared 2 buy orders to enter TZA and UVXY for multi-day trades.  We will adjust these at open.

To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

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.

Click here for Signal Trades spreadsheet.

Updates 11:00 AM ET - Wednesday 3/23/22

Transitioning to bearish
Our quick trade this morning (SQQQ) testing for an immediate drop did not succeed.   This means that $SPX $NDX IWM are not ready to drop sharply yet.  But $VVIX is signaling clearly that it is building a base to rise.   We think the odds are high that $SPX $NDX IWM are transitioning to bearish.

Transitioning is the key word here.   It means some back and forth moves are likely today and possibly tomorrow.   It means choppy trading is likely for $SPX $NDX IWM as well as UVXY.   

We're trying hard to stop ourselves from testing too many trades. On a choppy day, that's a good way to give back all your profits.

​Looking ahead, TZA and UVXY appear to be building a base. So testing these 2 entries at their lows is a low-risk way to get into the bearish trade.

Click here for Signal Trades spreadsheet.

Updates 8:59 AM ET - Wednesday 3/23/22

$VIX may be forming V or W bottom 
As we wrote at midnight last night, things can quickly change.   And it did.   $VIX is now starting to form a possible V or W bottom on its 2-hour chart.   So we are looking to enter UVXY this morning for a 5% trade, and possibly TZA for a multi-day trade.   We will update spreadsheet shortly.

Updates 12:30 AM ET - Wednesday 3/23/22

Warning from $VVIX
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.

$VVIX daily chart below shows that it is starting to form a contracted base, similar to the one formed on January 5.   This is not the definitive signal to go bearish, but it is a warning that volatility won't be dropping too much longer.

But $VIX is not done dropping yet
Meanwhile $VIX 2-hour chart below shows that $VIX itself is still dropping.  Observe how far apart the 20 EMA blue line is from the 50 EMA red line. They need to get close together and intertwine and form a V or W bottom.   That's the definitive signal telling us that $VIX is about to erupt.

Keep in mind that while $VIX is still dropping, it is approaching 2 key levels:

• $VIX at 22.5 is its 200-day EMA
• $VIX at 20 is its 200-week EMA

Something will happen as $VIX reach these key levels.  But as we said above, $VIX is not ready to turn around and rise yet right at this moment.   So we are still leaning bullish right now.

Why not load up on multi-day bullish positions then?  Well, we've been tracking a very simple rule of thumb that has a pretty good track record.

• Do not enter long positions for multi-day trades when $VIX has dropped far below its 200 EMA on its 2-hour chart.
• Do not enter short positions for multi-day trades when $VIX has spiked far above its 200 EMA on its 2-hour chart.

This is just a rule of thumb, but we think that following it will keep us out of trouble.

Key Price Levels
The table below has been fully updated.   Note that $SPX L6 is now around 4600, which is the high of February.

Trade plan
Click here for Signal Trades spreadsheet.
​
We will be reviewing $VIX ES NQ RTY overnight price actions pre-market. We will look for price to retest and find support at their 200 EMA lines.  Those are likely to be low-risk setups to enter and ride the direction of the 200 EMA on ES NQ RTY 5-minute charts.   

Right now, they are still rising, so we are leaning bullish for Wednesday.   But keep in mind that things can change quickly overnight.

To Read
We urge you to read this article about risk management and position sizing.  
1% Risk Rule
If you are new to trading 3x leveraged ETFs like TQQQ TNA SOXL FNGU, read:
Why 3x ETFs like TQQQ lose money over the long term
If you are new to trading inverse ETFs like SQQQ TZA SOXS FNGD, read:
​The risks of investing in inverse ETFs

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.

Click here for Signal Trades spreadsheet.

Updates 11:33 AM ET - Monday 3/21/22

Review of successful "at-open" trade
Here were our pre-market observations that led to going long at open.

• ES NQ RTY spent the night clinging to the 200 EMA on their 5-minute charts.   That's a pattern that said they're ready for a big move at cash open, either breakout or breakdown.
• $VIX was not ready to rise yet (see below).   Therefore we were leaning towards the bullish trade via TQQQ.
• Manually bought TQQQ when it confirmed the bullishness by surging out of the gate.

At this point, we are done trading for today as we think $SPX $NDX IWM need to spend some time getting back to anchor at their 5-minute chart 200 EMA lines again.  $VIX needs to do the same thing as well.

Updates 9:27 AM ET - Monday 3/21/22

$VIX not ready to rise yet
That's the message from $VIX charts, in all time frames so far today.   In fact, since 3 AM ET, $VIX has been grinding downward slowly but steadily.

So we're going to look for a pullback on the 5-minute chart this morning to enter TQQQ for a 5% trade.    We'll post update at spreadsheet shortly.  

Updates 1:15 AM ET - Monday 3/21/22

Possible pivot time - focus on $VIX
Powell spoke on Monday morning and essentially said the Fed probably needs to hike more aggressively and starts QT sooner.   That certainly will create huge headwind for stocks.   (Read more here.)

Despite this highly bearish message, $SPX $NDX IWM still hovered right near L6.  Under the hood, however, there is not a whole lot of active call buying.  Without this, the rally is likely to peter out.

It's time like this that we need to pay close attention to $VIX chart to spot the direction change when it arrives. In $VIX hourly chart below, we show what the bullish and bearish setups would be like.  Look for these setups to find the next true direction (as opposed to head fake).

Russell looks the weakest right now
Of the 3 indices, the Russell actually appears weakest.   Keep an eye on Russell futures RTY chart as show below.  Its 200 EMA is starting to trend down slightly.   If this green line keeps going down, while RTY spikes up quickly to form a same high or lower high top, it's a bearish setup for IWM TNA.

Click here for Signal Trades spreadsheet.

Updates 12:09 PM ET - Monday 3/21/22

Choppy trading ahead; watch $VIX some more
Powell is speaking soon this morning.   We expect for him to emphasize how strong the economy is and its ability to handle the Fed 7 rate hikes.   We don't expect any other new revelation.

$VIX is on its way to tag its 200 day EMA at 22.6.   Watch $VIX closely here.

Bullish scenario:   

• $VIX anchors in the zone between 22 and 22.6, then quickly bounces up to 30 and runs into major resistance there. 
• Meanwhile $SPX $NDX IWM drop down to L2-L3 zone and find strong support there
• Rally can resume from there and possibly climb higher.

Bearish scenario:   

• $VIX spends multiple days in the zone between 20-22. 
• Meanwhile $SPX $NDX IWM spend multiple days pushing up against L6
• This is likely a bearish setup, possibly for the next major leg down for $SPX $NDX IWM, dropping to L1 or lower.

Our SQQQ got stopped out for a tiny gain.  More importantly, we managed to get out of an old SPXL position for a tiny loss.   

You can scalp if you can monitor your trades closely during the day today.  Otherwise, it is best to wait for one of the above setups to unfold.   And that is our plan.

Updates 9:32 AM ET - Monday 3/21/22

Watch $VIX

• Overnight ES NQ RTY all anchored at their 200 EMA lines on their 5-minute charts.   This is the 4th times they anchor at this key support line.
• $VIX has formed a W bottom on its 5-minute chart, indicating it's likely to rise some amount.

That combination is our warning that we're approaching pivot levels.  So while $SPX $NDX IWM may not drop right away, expect at least some amount of sideway trades today and Tuesday.

Keep an eye on ES 200 EMA line on its 5-minute chart.  If it goes sideway for most of today, and $VIX forms a clear W bottom on its 5-minute chart, we'll be looking for bearish setups via SQQQ and UVXY.

Updates 5:45 PM ET - Sunday

Upcoming key events
This week is light in terms of economic news, a welcome breather from last week's series of big events.

The big picture
​The economy and the stock market is about to enter a whole new era, one that may not have been seen since the 1970's. The end of zero interest rate is the end of our current way of life.   As rate rises steadily, many things will change in how business and consumers plan and spend.   All of this is going to affect the stock market over time.   (Read more here.)

Let's zoom out and look at $SPX monthly chart to see how far we've come, and how much of a potential retracement we'll see by the time this bear market is over.

Below we've noted the big bear markets of 2000 and 2008.   Observe how in each case, the 20-month EMA blue line has pulled far away from the 200-month EMA green line before the crash.   Then after each crash, the blue line got a lot closer to the green line, and the market renewed itself again.   It is reasonable to expect a similar pattern to play out in the current bear market. 

Observe how far above the 200-month EMA green line the current market is.  At the minimum, it has to retrace about 50%, which brings price down to the yellow zone ($SPX between 3200 an 3500).   That's the "not-so-bad" scenario. 

In the "really bad" scenario, $SPX may end up around 2200, which is the low of the crash of 2020.  While this is really hard to fathom, we can't completely discount it.   

Note that we are not suggesting these massive drops will happen immediately.  We think this bear market will behave more like 2000-2003.   Big multi-month dives, followed by moderate multi-month rallies, followed by dives again, etc..  This bear market may end up lasting 2-3 years.

Short term moves
Despite the super enthusiastic short covering rally last week, it is still just a bear market rally.  This is unlikely to be the start of a new bull market.  So at this point, we don't have hope of seeing price going all the way back to January highs any time soon.   

​But that doesn't mean that the market is done with these short-term rallies. There are plenty of trading opportunities for the short term, both up and down.  The key is to focus only on the short term for now, and let price patterns tell us where the next moves will be.

What to look for this week
​Let's take a look at the 2-hour chart of S&P future (ES).   (We find ES intraday chart has many more data points than $SPX, therefore more accurate EMA lines.)   

ES is coming up on strong resistance at 4488.   We are likely to see a couple of cooling off days at the start of the week.  Then look for the following price paths:

• If ES manages to climb higher than 4488 (L6), it will strive for 4586 (high of 2/10).
• If ES peters out, then a high probability of price retracing back to 4300 zone (L3) for support.  This zone is also where the important 200 EMA green line is.  This is the first level support that can enable ES to really climb back up higher.
• Below 4300, ES has two more key support levels around 4236 (L2) and 4128 (L1) before a drop to 4000 can happen.   

What does $VIX say?
Read more about $VIX $VXN $RVX $VVIX and the effects of options and hedging on the market here.
​
After its failed attempt to surge on 3/10, the failure of this signal became a powerful signal in reverse.  $VIX has been dropping sharply since 3/15, supporting the rise in stocks.  There are 2 key patterns to look for.

• Bullish for $SPX: $VIX spends multiple days pushing up against resistance around 30.  This is a high-probability setup for $VIX to drop substantially.

• Bearish for $SPX: $VIX spends multiple days building support base between 21 and 23. This is a high-probability setup for $VIX to rise  substantially.

Other indicators
% of "happy stocks":  Nasdaq % of stocks above their 200 MA dropped to a low of 21% at the start of last week. This number is not as low as the typical capitulation number (10% or lower).

This makes us doubt that 3/15 this is bottom of this bear market.  Back in 2015, we saw a similar situation where Nasdaq happy stocks dropped to 22% in August, surged to 62% by November, before dropping again for a lower low.   We would not be surprised to see a similar scenario this time.
​
Market breadth: On a cumulative basis, Nasdaq weekly A/D line is now at the level last seen in 2016, below the crash of 2020.   This tells us that an extreme has been reached, and market breadth has a lot of room to improve.

Dark Pool Index (DIX):  Silent money continues to buy enthusiastically. They have been doing that since late January.   This provides support for the current rally.

Bonds:  Bond volatility index (MOVE) has formed a massive top recently, rivaling the top formed during March 2020 crash.  Bond price actions should calm down some amount from here, which will calm equity price actions as well.   

Additionally, junk bonds (JNK HYG) which is a leading indicator for equities, are currently forming a massive V or W bottom, suggesting more bullishness to come for stocks.