The most important action today (Thursday) was that $SPX $NDX managed to stay above the lows of yesterday.   There was hope of price gaining some traction for recovery.

But the person responsible for this steady selling since May 9th has just tweeted again this evening:
"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP,"

In response, futures dropped BIGLY.  S&P 500 and Nasdaq dropped close to 1% before stabilizing.   That is encouraging, but the night is still young.

If market participants can maintain some levelheadedness, and we don't receive any more "self-inflicted wound" tweets, we may actually see a real rebound tomorrow.  

Let's take a look at the 5-minute charts below for $SPX $NDX $RUT.  We chose to highlight the 5-minute charts today because we want you to pay attention to the 200 EMA line (dark green curvy line) on each of these charts.

This important line needs to form a certain pattern (as shown on the charts) to provide robust proof that a new Up Segment is starting for real.  So watch its formation.

Note that if panic sets in overnight, then $SPX $NDX $RUT are likely to gap down to the next support levels we mentioned in the chart.

To summarize:
$SPX:
2805 is 1st level resistance
2765 is 1st level support
2720 is next level of support if it fails to climb above 2805

$NDX:
7300 is 1st level resistance
7175 is 1st level support
7000 is next level of support if it fails to climb above 7300

$RUT:
1500 is 1st level resistance
1480 is 1st level support
1460 is next level of support if it fails to climb above 1500

Since we are trading TQQQ, here are the comparable levels
TQQQ
54 is 1st level resistance
51.5 is 1st level support
47.5 is next level of support if it fails to climb above 54

We don't plan on adding any more to TQQQ until we see the formation of the 200 EMA pattern shown on the charts.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.
Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

Despite another sharp drop down and a short-term lower low for $SPX $NDX $RUT, fear in the form of $VIX $VXN continues to stay subdued.  We simply don't have an important prerequisite for a bear market.

This combines with the short-term extreme oversold condition and peak level pessimism sets up the potential for a reversal to launch another Up Segment.

However, bullish divergence, oversold condition, and extreme sentiments can stay that way for quite some time before a reversal occurs.  So we simply have to wait a bit longer.

Below are the latest $SPX $NDX $RUT daily charts.  Note that we chose to show the daily charts so that you can see the current price levels relative to the important 200-day EMA lines (green curvy lines on all charts).

There is a strong possibility that $SPX $NDX $RUT will recover a bit and bounce up tomorrow Thursday.  The red dotted line on each chart represents the 1st level of resistance that they have to convincingly surpass.

If they get stuck at their red lines, they are likely to drop further, possibly all the way to the green lines on the respective charts. 

We will be monitoring for what $SPX $NDX $RUT do once they get up to the red lines.  Their postures will tell a great deal about their strength.  

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.
Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

1:14 PM EST
Our buy limit orders for $TQQQ at 52 and 52.2 got filled.

Zoom out a bit and look at the bigger picture.  You may notice these things.

$SPX low today is 2766.  It came close to touching strong support at its 50-week EMA at 2764 today.

$NDX low today is just above 7167.  $NDX strong support 50-week EMA is at 7104, near the green line on the chart posted last night. 

$RUT low today is 1481.  During the big drop in Oct-Nov 2018 last fall, $RUT found support for multiple weeks around 1460. 

This is the 5th consecutive week down for $SPX $NDX $RUT.

Despite the lower lows for 5 consecutive weeks in the stock market, $VIX $VXN are in 4th week of lower highs relative to the initial panic during week of May 6.

To us, it feels like we are approaching the end of a Down Segment (with an Up Trend) rather than the start of a new Down Trend.

10:27 AM EST
Placed buy limit orders for $TQQQ at 52 and 52.2.

10:10 AM EST
$SPX and $RUT dropped down to the proximity of their green support lines.
$NDX didn't come close, acting much more bullish.  This is a good sign.

Fear, in the form of $VIX and $VXN, continues to form lower highs while $SPX $NDX $RUT form lower lows.  Therefore the bullish divergence is intact.

The first level of resistance is right at the yellow lines for $SPX $NDX $RUT.

Last down
Based on our charts last night, we wrote:
"The odds are high that $SPX $NDX $RUT all will re-test at least their yellow lines, most likely tomorrow Tuesday.  There is also a high probability that they will dip into the zones between the yellow and green lines before being able to start a new Up Segment for real.  It's a little early to tell how deep will this dip be, or whether or not they will drop all the way to the green support lines."

The sharp drop at the end of the day was scary looking for $SPX $NDX $RUT.   And futures actions tonight suggest a big gap down at open tomorrow Wednesday, most likely toward the very bottom of that yellow-to-green support zones we showed.

There's a lot of nervous talk about new Down Trend.  A lot of bulls are disheartened by $SPX dropping after hours below the strong psychological support line at 2800.  It feels like capitulation time.

We want to emphasize that all the bullish underpinning that we wrote about yesterday is still intact.  And we are approaching capitulation.

Here are the updated hourly charts for $SPX $NDX $RUT showing their respective strong support zones.   No red lines tonight because it's actually hard to say how high they can bounce tomorrow, if at all. 

However, pay close attention to the green lines as prices drop down toward them.  We want to see how $SPX $NDX $RUT react at these lines. 

Our trading plan
We plan to simply monitor the posture of $SPX $NDX $RUT as they approach their green strong support lines.  We will be looking for confirming indicators that the new Up Segment is ready to take off, before entering TQQQ. 

If you are holding short positions, the gap down tomorrow maybe a prudent place to lock in your profit and get out.  The current Down Segment is winding down.  The new Up Segment may not be here just yet, but you don't want to overreach.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

The bullish divergence continues
We hope you all had a relaxing Memorial Day weekend, and got a chance to get away from staring at the charts.  Sometimes that is the best way to put things in perspective. 

On Thursday eve, we wrote this about the trading plan for Friday 5/23:
"There is a high probability at this point that $SPX $NDX $RUT will have a snapback rally tomorrow Friday and rise back up.  They are likely to run into resistance at the red lines and will turn downward to re-test the lows of today (yellow lines)."

We saw the mini snapback rally on Friday, and all three indices ran into resistance and dropped down before closing.  Many bulls probably headed into the long weekend feeling exhausted and worried.

However, the market is unlikely to be heading into bear territory right now.  We have been sharing with you what our system detected since last Monday 5/20/19.   That is the bullish divergence shown by $VIX and $VXN chart actions versus $SPX $NDX $RUT price actions.

It is highly unlikely that we would suddenly get a new bear market, or a Down Trend, or a crash, without fear building up steadily first.  And since Monday 5/9/19, fear has been going down, as shown in $VIX and $VXN daily charts below.

Market internals are also relatively healthy.  NYSE cumulative A-D line took a little dip but is climbing back up.  The percentage of bullish NYSE stock is above 51%.  Liquidity is still healthy.   So again, the underpinning for the next Up Segment in stocks is all there.

And we have a very nice setup in contrarian indicators.  Stock prices are very oversold short-term.  $SPX $NDX $RUT have been down since 5/3/19.  That is 15 trading sessions being down while not in a bear market.  Participants are feeling nervous, worried, and emotional.   So the odds are high that $SPX $NDX $RUT will start a new Up Segment soon.

Testing support levels
However, $SPX $NDX $RUT are very likely to at least test their first levels of support.    Here are their respective hourly charts with the updated support levels.

The odds are high that $SPX $NDX $RUT all will re-test at least their yellow lines, most likely tomorrow Tuesday.  There is also a high probability that they will dip into the zones between the yellow and green lines before being able to start a new Up Segment for real.  It's a little early to tell how deep will this dip be, or whether or not they will drop all the way to the green support lines.

Our Trading Plan
Here are our open positions purchased so far and the entry prices.
Note that each purchase is 10% of the final position (10% of TQQQ, 10% of TNA)

TQQQ (40% purchased):     56.32;    57.1;     57.52;   54.54
TNA (30% purchased):        60.43;    59.46;   59.53

At this point, our preference is to build up more TQQQ position, and wait to exit TNA at break even without adding any more TNA.

Our buy target zones for:
TQQQ:     52 to 53.10

Our eventual sell target zones for:
TQQQ:     68

We want to see how tomorrow Tuesday morning shapes up before placing buy limit orders.  We'll share that information with you.

Possible Head Fake
By the way there is a possibility that $SPX $NDX $RUT may actually exceed their red resistance lines by a bit tomorrow.  If this happens, it is more likely to be a bull trap.  We plan to monitor for it.  We don't plan to chase it up.  We are going to just wait for the yellow line test. 

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

NOTE
We updated a good portion of this trading plan, including revised charts to show more refined S/R levels.  Please review.

What happened today
First of all, apologies for not being able to post much intraday - family matter to take care of.  Alas, the timing was not great as today was a heck of a day for the market.

We wrote in our trading plan last night:
"Keep in mind though that $SPX $NDX $RUT can spend more trading sessions anchoring themselves in the support zones still.  And they may still drop all the way down to the green lines on their charts."

Drop they did!  Way down and gave many of us heartburn along the way.

We've been writing since Tuesday about the bullish divergence our system has  detected between fear levels and prices for $SPX $NDX $RUT.  Here's a chart to show what we're talking about. 

Observe how $VIX on this daily chart has been forming a lower high pattern since 5/9/19, indicating that fear is steadily dropping.  $VXN has been forming the same lower high pattern, further confirming the declining fear level.

We do not always get bot $VIX and $VXN diverging simultaneously against price at an important price bottom.  This is a rare condition.  We also have oversold condition for $SPX $NDX $RUT.  We have price reaching key support levels.  Finally we still have healthy market internals.  

Combine them together, and we have a strong underpinning for a new Up Segment that can go back to the high of early May.  That's the big picture for any bulls who may have jumped in early to consider.  Another way to look at this is in a few weeks, $SPX $NDX $RUT are far more likely to be higher than where they are today.

However, $SPX $NDX $RUT may do the one quick last low move before the bullish reversal can take place for real.  Let's take a look at these levels on their hourly charts.

Our trading plan
There is a high probability at this point that $SPX $NDX $RUT will have a snapback rally tomorrow and rise back up.  They are likely to run into resistance at the red lines and will turn downward to re-test the lows of today (yellow lines).

$SPX $NDX $RUT may drop further to strong support at the green lines on their respective charts, perhaps early next week.  The odds are high that they will then turn upward into a new Up Segment.

A lot of Elliot Wave practitioners are calling for this last drop.  We think though that there is a strong possibility that $SPX $NDX $RUT may find support right at the yellow zone, and we may see some serious buying resumes next week.

Here are our open positions and the entry prices.
Note that each purchase is 10% of the final position (10% of TQQQ, 10% of TNA)

TQQQ (40% purchased):     56.32;    57.1;     57.52;   54.54
TNA (30% purchased):        60.43;    59.46;   59.53

Earlier this evening, we wrote about selling some of these positions at break even and buy back in lower.  But at this point, we don't think that's a wise move.  Instead, we will monitor for support at the yellow zone tomorrow and add some more shares of TQQQ there.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

9:44 AM EST
We are monitoring $VIX $VXN to see if:

1. the rise in fear is the resumption of a new Down Segment, or
   
2. it's $VIX $VXN anchoring themselves to drop.
   

Right now it's looking more like (2), but too early to tell or make any moves.

9:25 AM EST
We wrote a lengthy trading plan and a late night update about the possibility of the gap down this morning.  Please review here for background before reading these updates.

12:50 AM EST 5/23/19
A reader raised concerns about futures being down and prices are going to tank tomorrow.  

We do believe $SPX $NDX $RUT can still drop down to Mon 5/13 low, and we may very well see that happening as a major gap down at open.  We did cover that possibility in our trading plan posted earlier below. 

In fact, a panicky gap down without accompanying real fear is a very nice bullish divergence and a low-risk setup to enter long $SPX $NDX $RUT.

But no system is foolproof.  And our system indicators may very well be sending out misleading signals right now.  But as traders, we have to have a system, and we have to trade our system. 

Trading Plan Posted at 9:00 PM EST 5/22/19
First of, let's look under the hood to see what's really going on for $SPX $NDX $RUT.

Long-term market internals:   still healthy
Short-term market internals:  may swing to the down side a bit
Fear levels:  continue to drop  steadily

So the underpinning of the next possible Up Segment is still intact.  Combined this with the oversold conditions that have lasted for multiple weeks, and we have the low-risk setups to enter long with $SPX $NDX $RUT.

Let's see if the charts support this.  As far as we can determine, we are still seeing the bullish W bottoms mentioned yesterday forming on $SPX $NDX $RUT hourly charts as shown below.  (Note:  red line is resistance and green is support).

Immediately after FOMC notes were released, we observed fear dropping, not rising.  And despite some profit taking at end of day, after hours prices were still holding in support zones for $SPX $NDX $RUT. 

So we are going to continue with the premise that $SPX $NDX $RUT are anchoring themselves in the support zones (green lines), in order to build up enough momentum to blast upward and surge above the strong resistance levels at the red lines. 

Keep in mind though that $SPX $NDX $RUT can spend more trading sessions anchoring themselves in the support zones still.  And they may still drop all the way down to the green lines on their charts. 

You may have noticed we did not draw a yellow line on the above charts.  That's because $SPX $NDX $RUT have been forming bullish higher low patterns.  So while they could go all the way down to the green lines, they could very well surge up from today's closing levels. 

This is why we chose to scale in.  It's too hard to pinpoint the precise reversal moment. 

Tomorrow Thursday 5/23, if we observe these indices and ETFs dipping into these support levels, we will add more some more shares:  
$SPX:        2800 to 2830
$NDX:       7300 to 7360
$RUT:       1520 to 1525
TQQQ:      54.5  to 55.5
TNA:          58 to 58.5

Here are our open positions and the entry prices.
TQQQ:    56.32;    57.1;     57.52
TNA:       60.43;    59.46;   59.53

Our first level target is actually where the red resistance lines are on the above chart.  $SPX $NDX $RUT have to prove that they can really surge above these strong resistance levels in order for us to hold TQQQ TNA longer. 

After that, the highs of early May are the next major resistance levels for $SPX $NDX $RUT to surpass.

And at any time, if fear level starts rising for real, we'll exit our TQQQ TNA positions immediately.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.

2:50 PM EST
Here are our open positions and the entry prices.
TQQQ:    56.32;    57.1;     57.52
TNA:       60.43;    59.46;   59.53

2:29 PM EST
Recall in our trading plan last night we said there would be the opportunity to buy in at a better price as TQQQ TNA dip into the yellow-green support zones.

That is happening.  It won’t be as precise as you’d like, but if you embrace a scale-in strategy, it’s pretty good. 

How do you scale in? 
Buy small number of shares if price dips a little.
Buy large number of shares if price dips a lot.

Give up on the notion that you can nail top and bottom.   You will increase your chance of steadily profitable trading in the long run.

11:21 AM EST
Updated entry points in support zones:  
$SPX:        2815 to 2830
$NDX:      7300 to 7360
$RUT:       1520 to 1525
TQQQ:      54.5  to 55.5
TNA:         58 to 58.5

$SPX $NDX $RUT appear to be following the scripts we outlined last night.
It's looking like we may get a re-test of Monday 5/13 or Wed 5/15 lows.
You may noticed we added TNA and TQQQ to this list as well, per suggestion by a member.

We ourselves are placing buy limit orders to enter into TQQQ and TNA in the support zones listed above.

The Importance of Defining Your Trading Time Frames
Since we have quite a few new members joining us, we'd like to clarify our personal trading goals and time frames.

We personally have long-term positions that are in place to capture the Up Trend that started on 12/26/18 and is still intact.  As long as the Up Trend is intact we'll continue to hold these long-term positions. 

What we are doing in the short-term is not day trading.   Instead, we are looking to buy into TQQQ TNA positions so that we can capture the next Up Segment (within the Up Trend).  This Up Segment may last multiple weeks. 

It's important as a trader to define your trading time frames ahead of time because they affect your buy/sell decisions.

Bullish Divergence Continues
Some of you readers may not have been tracking our posts during the day today.   So we are going to briefly summarize what we did.  We added more TNA shares @60.43. 

Why did we decide to buy more TNA shares instead of waiting for price to drop lower into the yellow-green support zones marked on our charts last night?

Because the bullish divergence we've been talking about is getting stronger, not weaker.  And this is the most trustworthy signal.

In order for $SPX $NDX $RUT to truly launch the next Up Segment, market internals must stay healthy and fear must subside.  And this has actually been the pattern since Monday 5/13/19.  Price will swing up/down but eventually price will catch up with the underlying indicators and becomes bullish too.

We've been sharing with you for the last few sessions that we are seeing this bullish divergence.  Honestly, we were a bit skeptical of the recovery strength of $SPX $NDX $RUT.  But today the short-term indicators continue to shout a bullish message.  So we had to listen.

In general, bullish divergence itself provides a great opportunity to buy low, while everyone is still worried about the next wave down. 

W Bottoms
After hours updates of the long-term indicators show healthy and revived market internals.  Fear continues to drop steadily.  As long as this combination continues, we'll continue to go long TNA TQQQ.

Let's take a look at $SPX $NDX $RUT hourly charts with the updated red resistance lines, and the support zones between the yellow and green lines.

Observe how each chart shows a nice W bottom being formed below the red resistance line.  This is a very bullish setup.

The probability is high that we'll see another dip into the support zones between the yellow and green lines.   We plan to be scaling into TQQQ TNA when we see this.

Our personal strategy is to continue to scale in by adding more shares of TNA and TQQQ as price dips into the yellow to green support zones.   

We are not day trading.  We have the luxury of time on our side as we plan to hold these TQQQ TNA positions through the entire Up Segment (within the Up Trend).   Our first level target is at the highs of early May, but this Up Segment has the strength to surge above that.

Disclaimer
This information is intended to supplement your own research and trading systems.  This is our trading plan designed to suit our own investment needs only.  We are not making any investment recommendation to you or anyone else.  If you choose to follow our trades, you may make money, or you may lose money.

Before buying into them, we urge you to read more about TQQQ and TNA, which are highly risky 3x leveraged ETF.