Updates 2:58 PM  EST - Thursday 10/1/20

Short Term
$VIX $VXN overshot their "anchor to drop" targets today.   But they did anchored in the end and dropped.  Our TQQQ and TNA Signal Trades positions barely survived the intraday pullback, but prices are climbing back up again.

$VIX $VXN are now maneuvering to rise.  However, they won't be doing this in a straightforward way.   It's going to be hard to peg $SPX $NDX IWM to $VIX $VXN moves directly in the short term.

However, there is a good chance that after some amount of $VIX $VXN oscillation, we will see $VIX $VXN rising with great force which means really stormy bearish headwinds are coming for stocks.    

But this is a bit like forecasting the hurricane.   It's likely going to come.   The precise moment is not here yet.   $SPX $NDX are likely to reach up into their orange resistance zones on Friday or Monday.   IWM may not get that high, but it too will try.  So we are holding TQQQ TNA in Signal Trades for tonight, but probably not over the weekend.

After $SPX $NDX reach up into their orange resistance zones, it will be prudent to exit long positions and be prepared for very quick swing trades in both directions.   

We will discuss more about this tonight with charts.

Updates 9:23 AM  EST - Thursday 10/1/20

Pre-market
$VIX overnight action continues to support the "volatility anchoring to drop" scenario.   We may see $VIX rises to 26.4 and $VXN rises to 36 today, but they should anchor right around there and then drop.   This means bullish tailwinds for $SPX $NDX IWM.

$SPX $NDX IWM gapped up overnight due to bullish future actions.   We have tightened TQQQ stop in the Signal Trades.   We may get stopped out, but there is a good chance that if $SPX $NDX IWM fill the morning gaps, they will dip into yesterday's price zones.   We have placed buy limit orders to re-enter and add TQQQ at lower prices.

We expect the bullish tailwinds to continue until $SPX $NDX IWM reach into their orange resistance zones.   This may not happen until Friday or Monday.

Updates 12:10 AM  EST - Thursday 10/1/20

Short-term $VIX $VXN
$VIX $VXN 15-minute charts below show that they are starting to steadily head down, despite rising a bit intraday Wednesday. ​

This means $SPX $NDX IWM are getting bullish tailwinds instead of bearish headwinds.   This condition should support ​$SPX $NDX IWM rising higher.

​Short-term $SPX $NDX IWM
A member asked if the recent price actions is due to the end-of-month/quarter portfolio rebalancing.  No doubt that affects $SPX $NDX IWM to a certain extent.    The uncertainty about the election and what comes after the election also weighs on the market.   

If we look at the charts though, we can see that there is a clear pattern for price actions.   Take a look at the 15-minute charts for $SPX $NDX IWM below.   

The 200 EMA (bold green line) dropped from 9/2 to 9/28.   Then it rose, and has been continuing to rise.  This is a short-term bullish sign, especially for $SPX $NDX since they have been staying above their green EMA lines.   

Our projection is that they will continue rising along with the 200 EMA green lines (15-min chart), until they reach into their orange resistance zones.   Those zones are going to be fairly tough resistance.   We may see a lot more sellers coming out at that point.

Short-term Signal Trades
​We intend to trade long positions in our Signal Trades, until $SPX $NDX IWM run into resistance in their orange zones.   We will post buy limit orders for the Signal Trades pre-market.
​
​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 10:51 AM EST - Wednesday 9/30/20

Short-term Bullish
You may have noticed that despite our thinking pre-market, we pivoted to bullish pretty quickly in our Signal Trades.   We jumped into TQQQ and TNA.

This is because $VIX $VXN both started to drop sharply.   With the bearish headwinds lifted, $SPX $NDX IWM started to break out from their consolidation zone of the last couple days.

$SPX $NDX IWM are going to try to vault themselves above their orange resistance zones soon.  There are likely to be more sellers coming out as $SPX $NDX IWM penetrate the orange resistance zones.   

Therefore we are treating this as quick bullish swing trades.   We may trade in/out of positions in an attempt to lower the entry price.

Updates 8:55 AM EST - Wednesday 9/30/20

Pre-market
Futures ES NQ RTY dropped sharply last night after the televised debacle otherwise known as the debate.   Prices have been trying to climb back up since.

However, ES NQ RTY patterns do not lead us to think that they are poised to go substantially higher.   Therefore, there is a high probability that $SPX $NDX IWM will run into resistance at Tuesday 9/29 highs again and start to head down.   

We are looking for low-risk setups to enter bearish bets when $SPX $NDX IWM run into resistance again today.  The goal is to ride $SPX $NDX IWM for a quick down swing as they retest support in the green zones again.   This is not a bet on the down channels resuming.   

If $SPX $NDX IWM find enough buyers in their green support zones to rise, we will be looking to enter long positions then.

We'll update the Signal Trades shortly when we identify the low-risk setups.   

Updates 1:21 AM EST - Wednesday 9/30/20

Short-term $VIX $VXN UVXY
$VIX $VXN currently have small movements that are hard to decipher.   So we are going to analyze UVXY chart because it tracks $VIX movements, but is more exaggerated due to contango.

UVXY hourly chart below shows UVXY is likely to tag its 20/50 hour EMA (red and blue lines) and then drop again.   This means that in the short-term, the bearish headwinds from $VIX $VXN are dropping also for $SPX $NDX IWM.

But we need to watch UVXY as it approaches its previous low at 18.5.   If UVXY forms a 3rd bottom at 18.5, it can rise up a lot.   However, this is unlikely to happen on Wednesday.

Table of Support & Resistance Zones
The S/R table has not changed.  ​

We will post buy limit orders for the Signal Trades pre-market.
​
Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 2:55 PM EST - Tuesday 9/29/20

Short Term

• $VIX $VXN both formed short-term lower-high tops and are dropping.
• UVXY dropped sharply.

In the short term, volatility is declining.   So the bearish headwinds against $SPX $NDX IWM are declining.  

$SPX $NDX IWM are likely to grind upward slowly.   They may not get above the highs of mid-September in the short term.   But they are also unlikely to resume their down channels soon.

If you are new to trading, keep in mind that there are 3 directions in the market: up, down and sideway.   We are likely to be in sideway mode for multiple weeks heading into November.  

So trade small and trade nimbly.   

Updates 12:59 PM AM EST - Tuesday 9/29/20

Short Term

• $VIX anchored this morning and then rose up.   It may still rise a bit more, but it is unlikely to rise above 29.
• $VXN followed the same pattern.   It too may rise a bit more, but is unlikely to rise above 37.

While it is not easy to decipher $VIX $VXN chart, we can rely on UVXY chart with some certainty.   UVXY rose sharply this morning, formed a top and has been dropping sharply since.

UVXY is unlikely to rise higher than its morning high.   In fact, UVXY is more likely to drop quite a way and revisit the lows of 9/18 at 18.5.

So in the short term, $VIX $VXN UVXY are showing that bearish headwinds have eased up more for $SPX $NDX IWM.   They should rise some more, but do not make big bullish bets on $SPX $NDX IWM that will last multiple weeks.

Updates 11:10 AM EST - Tuesday 9/29/20

Short Term
​$VIX $VXN dropped sharply this morning, but then rose sharply also.   This caused gyration in $SPX $NDX IWM prices.

However, the one important signal we've been waiting for has not shown up.  $VIX $VXN have been anchoring for multiple days now, but they have not gapped up in fear yet.

So we have to view $VIX $VXN current mini up swings as part of their short-term top formation patterns.   Our inner bear is screaming "no", but the lack of a signal is in itself an important signal to pay attention to.

We are going to let $VIX $VXN finish their morning climb before making our moves.

Updates 9:19 AM EST - Tuesday 9/29/20

Pre-market
​$SPX $NDX are going to try to rise up to the highs of 9/15 as the next intraday resistance level.   IWM is going to try to close the gap of 9/21.

They have a 60% chance of succeeding, but to be on the prudent side we are tightening stop in our Signal Trades and not adding to the position just yet. 

There are likely more sellers coming out at the highs of 9/15 for ​$SPX $NDX to bring prices down.   So expect rapid reversals today.   Don't build up big bets in any direction just yet.

Updates 1:05 AM EST - Tuesday 9/29/20

​A member asked if $SPX $NDX IWM are done with Dive2.   Let's take a closer look below at $SPX $NDX IWM charts before we examine $VIX $VXN.

Table of Support & Resistance Zones
The orange resistance zones and the green support zones have been updated.

IWM
IWM weekly chart shows a series of declining top, going all the way back to September 2018.   Despite the rapid climb back up from 3/23/20 low, IWM spent most of August unable to rise above a key price level.   This is the price level where it was stuck at for most of 2019.   

So despite finding short-term support in the green zone, IWM is unlikely to launch into a bullish up channel right away.   Like $SPX and $NDX, IWM will be going through some rapid price swings for a while before either the buyers or the sellers will emerge as the winners.

$VXN
$VXN hourly chart below shows that while $VXN 200-hour EMA green line is still rising (indicating bearish headwinds), $VXN may wind its way downward some more. 

While $VXN does this, $NDX would have less bearish headwinds.  $NDX would then be able to rise up some amount to test the high of 9/2.

$VIX
$VIX daily chart below show it is still anchoring in its red zone.  $VIX is sitting on a ledge right now.

If it gaps up in fear, $VIX can take off substantially.   But it can also begin a series of downward moves.   So $VIX is in its own battle zone as well.

In the big picture context, the most likely reason for the recent sell-off and for future sell-off is the uncertainty around the November 3 election.   Wall Street is preparing for some pretty bad scenarios.

This uncertainty is unlikely to dissipate any time soon.   It will remain even if one candidate wins by a large margin.   This is because the citizens of the United States are starting to realize that we may be on the verge of the second Civil War, and November 3 may be the date that will trigger it.

So yes there is greed and plenty of it.   But there is fear too, plenty of it too.

Signal Trades
Given all this uncertainty, our advice to you is please don't get married to your positions.   If your goal is to make money from the stock market, then trade whichever opportunity that comes along.   Take it and then TMAR as soon as possible.

(TMAR:  Take Money And Run.   Proven survival strategy.)   

In our Signal Trades for Tuesday, we will look to add to TQQQ and possibly re-enter TNA.

Click here for Signal Trades.

​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 3:19 PM EST - Monday 9/28/20

Short Term
$NDX IWM spent most of the morning looking for new buyers to lift them higher, and it appears that buyers are stepping in.   

At this point $NDX IWM are approaching the top of their orange resistance zones, while $SPX is already there.   

There is a high probability that $SPX $NDX IWM will all be able to vault above their orange resistance zones tomorrow or Wednesday.   So we are holding on to our TQQQ and SPXL entries overnight.   We will be looking to add to our long positions via TQQQ, TNA or SPXL early tomorrow.

Please note that this is not necessarily the start of new up channels.   We will explain how to view this up swing in more details in tonight's updates.   

Updates 8:59 AM EST - Monday 9/28/20

Pre-market
Futures rose sharply overnight, so $SPX $NDX IWM will all gap up at open.  $SPX $NDX will land right in their orange resistance zones and break out of their down channels.   

There is a high probability that $SPX $NDX IWM will swing down towards their green support zones one more time before they take off and try to vault themselves over their orange resistance zones.   

We don't plan to trade this down swing because this may be a very quick swing.   $SPX $NDX IWM may form higher lows relative to last week.   They may only come close but not penetrate the green support zones.   

We will list the target entry zones in the Signal Trades shortly for bullish quick swing trades today. 

Market Conditions
Messages from market internals and $VIX $VXN went from "strongly bearish"  early last week to "short-term bullish bounce" by end of the week.   

Market internal data comes from:

• NYSE & Nasdaq Advance-Decline issues
• Percentage of stocks above 200-day EMA
• CBOE equity put/call ratio
• Equity exposure in actively managed portfolios (new)

$VIX $VXN
$VIX $VXN charts below show 2 dueling signals happening right now. 

Bullish signal:  Since 9/4 both $VIX and $VXN have been dropping .  At the same time $SPX IWM $NDX had been going down as well.  Normally they move in opposite directions.   So this is setting up a bullish divergence for $SPX IWM $NDX.

Bearish signal:  $VIX $VXN 200-hour EMA lines are still rising, which means some bearish headwinds are still present. 

Until one side wins, bull or bear, market conditions are likely to be choppy.  Therefore we need to stay nimble and be ready to trade either direction.    

Table of Support & Resistance Zones
The orange resistance zones and the green support zones have been jiggled, but not greatly altered.   ​

Short-term:  SPX $NDX
There is a high probability that $SPX $NDX will swing down to near their green support zones one more time on Monday.      

Much like a pitcher winding up his arm before releasing the ball, $SPX $NDX need to do this in order to build up enough buying momentum to propel them over their orange resistance zones.  And they will try very hard to propel themselves at least into their orange resistance zones. 

Note that in doing so, $SPX $NDX are likely to break out from their down channels, and rise up some amount above their 200-hour green EMA lines (see charts below).   

So will this be a short-term bullish bounce or the start of a new up channel?   

We think it will be more of a short-term bullish bounce.   There is too much uncertainty surrounding the November 3 election.   Market participants are unlikely to commit to either direction up or down right now.

How to use our Signal Trades for best results
If you are following our Signal Trades, please understand that it is very difficult for us to provide you with instantaneous buy/sell prices.    There will be delay because first we have to execute the trade, then update the spreadsheet, then post the alert on Stocktwits.    

Furthermore, in our own account, we don't buy and sell at a single price.   We scale in/out in small tranches to build up a position.   We may do this very rapidly depending on market conditions.  

We encourage you to think about scaling in/out of positions in small tranches.  This helps you from overcommitting your capital right before price reverses against you.   Basically, scaling into position lets you test the water.   Scaling out of positions mean you won't go home hungry.   

While it may feel fantastic to nail top and bottom on a trade, in reality it's impossible to do that repeatedly.   Successful traders aim to take a chunk out of the middle of the move consistently.   That is how they survive, by focusing on collecting profits rather than bragging rights.

To help you scale into a position, we will provide you with a price zone where we think price is likely to test before taking off.   If you want to optimize your entry, you can closely monitor this entry zone and scale into position if you see the candle pattern that confirms the move.

We will do the same with scaling out of positions.   

If you don't mind following in our footsteps, we will still continue to post our entries and exits.   But know that there will be some lag time.

Click here for current Signal Trades.

​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 2:00 PM EST - Friday 9/25/20

Friday's trade results and positioning for Monday
The current market condition is:   bearish headwinds for $SPX $NDX IWM still in effect.  But the headwinds have eased up today.   $SPX $NDX IWM have bounced as a result.

In the Signal Trades we went long today with TQQQ and TNA.   This was based on our assessment pre-market at 9:05 AM.   

We tightened the sell limit prices for both positions ahead of the weekend.   TNA has already gotten stopped out for a small gain.  We are waiting to collect our profit with TQQQ.

We don't want to hold positions long or short over the weekend.   This is a very choppy market.   $SPX $NDX IWM are oversold and are attempting to bounce.   But the bounce won't be a smooth and easy ride.   And it may be a short bounce.   Therefore the reward:risk ratio is not favorable for holding on to positions over the weekend.

$VIX $VXN are both approaching the zones where they are expected to anchor.   They may start anchoring later today, but $VIX $VXN are unlikely to pivot and rise substantially today.   They most likely will resume their rise early next week, but the timing for it is unclear right now.

We have temporarily removed our UVXY buy limit order.   We will analyze the data more for the weekend analysis.

Updates 9:05 AM EST - Friday 9/25/20

Pre-market
The current market condition is: bearish headwinds for $SPX $NDX IWM, but the headwinds are easing up today.   

Futures ES NQ RTY stabilized last night.   They did not drop below 9/24 lows.   This is likely to set up an attempt for futures as well as $SPX $NDX IWM to climb higher today, at least back to the highs of 9/24.

$VIX $VXN will most likely spend the day grinding downward to anchor at their 200-hour EMA lines.   

• $VIX will most likely anchor in the zone between 26.5 and 27.5.
• $VXN will most likely anchor in the zone between 34.5 and 35.5.

Given that today is Friday, if you plan to trade bullish positions, you may want to consider booking your profits when $VIX $VXN get down into these zones.   $VIX $VXN are likely to pivot upward once they have anchored themselves one more time.   When $VIX $VXN resume their rise, $SPX $NDX IWM will resume their drops.


Updates 11:40 PM EST - Thursday (for Friday 9/25/20)

Market Internals
All the messages from market internals continue to be strongly bearish.   This means $SPX $NDX IWM down channels are likely to continue a while longer.

$VIX $VXN UVXY

$VIX $VXN 200-hour EMA lines are both still rising.   This means there are still strong bearish headwinds for $SPX $NDX IWM.   $VIX $VXN may drop a bit to anchor around their 200-hour EMA lines a bit on Friday, but they are unlikely to start a major descend soon.

It is interesting to analyze UVXY daily chart below.   Observe the giant W bottom that has been forming since late August until now.   Compare this giant W bottom with the one formed from mid January to 2/20/20, right before UVXY erupted.

Short-term:  SPX $NDX IWM
For $SPX $NDX IWM, they are still battling it out between the bulls and the bears, between the green support zones and the orange resistance zones.   

Based on futures tonight, $SPX $NDX IWM are very likely going to gap up and start Friday close to their orange resistance zones.   Then $SPX $NDX IWM are likely to drop down towards their green support zones.   

Medium Term:  SPX $NDX IWM

• IWM is the most bearish index.   It has dropped below its 200-day EMA line since 9/23.   This reflects the growing nervousness about the state of the US economy.   IWM is the canary in the coal mine, and investors are losing faith in many US companies.
• $SPX is getting close to its 200-day EMA which is officially at 3136 right now.   
  
• $NDX still has some distance to drop before reaching its 200-day EMA which is officially at 9817.

The key thing to track on $SPX $NDX IWM charts is when their 20-day EMA crosses below their 50-day EMA.   That bearish crossing will accelerate the selling.  They are currently getting close.

​Click here for current Signal Trades.

​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 1:40 AM EST - Thursday 9/24/20

Market Internals
The charts for NYSE and Nasdaq Advance-Decline Issues are heading downward steadily.  This is bearish for stocks.

The charts for NYSE and Nasdaq Percentage of Stocks Above 200-day MA are also continuing to form their series of lower high patterns.   This is bearish for stocks.

The chart of CBOE Equity Put/Call Ratio is forming a rising W pattern.   This is bearish for stocks.

$VIX
The message from $VIX is firmly bearish.   The red rectangle that we've been showing you is intact.   It is highly unlikely that $VIX will descend into bullish territory any time soon.   

In fact, $VIX is either going to anchor in the red zone one more time and then gap up like on 2/21, or gap up right away on Thursday 9/24.   

​When $VIX gaps up, the sell-off in $SPX IWM will accelerate.

$VXN
The message from $VXN is also firmly bearish.   $VXN 200-hour EMA green line is rising, which means bearish headwinds for $NDX.   

Like $VIX, $VXN is either going to anchor at its 200-hour EMA green line one more time and then gap up, or gap up right away on Thursday 9/24.

When $VXN gaps up, the sell-off in $NDX will accelerate.

Short-term Signal Trades
We will look to re-enter UVXY SQQQ and possibly add TZA when $VIX $VXN anchor at their 200-hour EMA green lines again.

We may do a quick small trade of TQQQ if $VXN forms a quick very short-term top at open on Thursday.   

We have not placed any orders right now as there's no easy way to speculate what $VIX will do overnight.   But we suspect the message will be clearer pre-market.

​Click here for current Signal Trades from Wednesday.
​
​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Click here for current Signal Trades.

​Updates 1:58 PM EST - Wednesday 9/23/20

Short-term:  $SPX $NDX
Both $SPX and $NDX struggled this morning to reach the bottom of their orange resistance zones.

• $VIX $VXN 200-hour EMA lines are still rising.   
• $VIX $VXN have anchored for the day and are rising up slowly from their 200-hour EMAs.   
• Market conditions are transitioning back to "Rising bearish headwinds for stocks".

In the short-term $SPX $NDX are likely to continue downward in their down channels.   However, in $SPX hourly chart below, we have temporarily removed the channel lines.   We want to focus your attention on the 3 hourly EMA lines.

This stack of lines and the orange resistance zones are the targets that $SPX $NDX will push up against in the next few days.   They yearn to rise above this resistance zone.

Before $SPX $NDX can succeed, they need to revisit their green support zones to bring in more buyers.  The green support zones are strong short-term buy zones.   $SPX $NDX will most likely bounce up strongly from these zones if they form some kind W bottom or big sharp V bottom.

While $SPX $NDX attempt to find support in the green zones and push through the orange zones, they will break out of the channel format.   So we are giving you the heads up to think about this scenario:   $SPX $NDX going sideway for multiple sessions while oscillating between the green support and the orange resistance zones.

So the best strategy right now is to trade short segments in both directions.   

Updates 12:30 AM EST - Wednesday 9/23/20

$VXN

• $VXN 200-hour EMA green line is still rising.
• $VXN candles are descending towards its 200-hour EMA green line.

This means that the bearish headwinds for $NDX eased up a bit today.   This enabled $NDX to rise some amount.

However, as shown in its hourly chart below, $VXN is likely to anchor at the red rectangle near its 200-hour EMA.  If $VXN does, this is an anchor-to-rise pattern.   When $VXN resumes its rise, it means the bearish headwinds are accelerating, and $NDX will likely drop sharply.

$VIX
$VIX is forming the same pattern of ascension that it formed back in Feb, as shown on its daily chart below.   Despite spending the last 7 sessions futzing around,  $VIX has shown that it is clearly anchored in its red zone.   If it continues staying at this level, $VIX is capable of breaking out.   

Again, this would be very strong bearish headwinds for $SPX IWM.

​Table of Support & Resistance Zones
We've​ updated the orange resistance zones and the green support zones to reflect the short swings within the down channels.

$SPX 
Despite rising up sharply on Tuesday, $SPX is still below its 50-day red EMA line, as shown on $SPX daily chart below.   $SPX will most likely need to retest its green support zone, demonstrates that it can find support there to lure in buyers.   If enough buyers come out there, $SPX can rise up substantially.

However, $SPX will run into pretty tough resistance at its orange resistance zone, just below its 20-day EMA blue line.   Sellers are likely to come out here and a battle will ensue before there's a chance for $SPX to surge up higher.   

Finally $SPX 20-day EMA blue line is dropping down at a steep angle.  If this blue line crosses below $SPX 50-day EMA red line, it’s can lead to a bearish breakdown for $SPX.

​Click here for current Signal Trades.

​Updates 2:57 PM EST - Tuesday 9/22/20

Short Term

• $VIX $VXN 200-hour EMA lines are still rising.
• $VIX $VXN candles are dropping towards their 200-hour EMA lines.

Per our $VIX $VXN table of signals, this is condition #3 "Bearish headwinds for stocks are easing".  As a result, we see $SPX $NDX bouncing up in their down channels.   

Does this mean that the bearish conditions are all gone?  No.   This is the subtle part.

Take a look at UVXY hourly chart below.   UVXY is at a crucial point.   When its 20 and 50-hour EMA (blue and red lines) cross over its 200-hour EMA green line, UVXY can erupt.

However, if UVXY keeps getting stuck at its 200-hour EMA green line, it may mean it is forming a top and will descend substantially from there.  So we have to monitor for these 2 possibilities.

Updates 9:20 AM EST - Tuesday 9/22/20

Pre-market
Futures ES NQ RTY spent most of the night in a contracted range, butting up against resistance.   

$VIX is anchoring around its 200-hour EMA.  This increases the odds of $VIX rising up again and its 200-hour EMA rising as well.   

$SPX $NDX IWM may rise a bit at open, but watch for them to retest the lows of Monday 9/21.   A successful retest here may enable them to rise a bit further up in their channels.  However, the down channels are still intact.  

Updates 11:30 PM EST - Monday (for Tuesday 9/22/20)

​Market Internals
On Monday 9/21, the messages from market internals are definitively bearish.

• Net Advance-Decline issues are very negative for both NYSE and Nasdaq stocks.
• Percentage of stocks above their 200-day MA dropped sharply for both NYSE and Nasdaq stocks.
• Equity Put/Call ratio formed a W bottom ready to rise.   

$VXN
Volatility for Nasdaq $VXN chart currently shows:

• $VXN 200-hour EMA green line still rising.   This means the overall mood is bearish for $NDX.
• $VXN 20 and 50-hour EMA (blue and red lines) are rising up and away from the 200-hour EMA.   This means the bearishness is accelerating.

This qualifies as condition #4:  "Strong bearish headwinds for stocks".  

Table of Support & Resistance Zones
We've​ updated the orange resistance zones and the green support zones to reflect the new short swings within the down channels.

Short-term:  $NDX $SPX IWM
The following 2-hour charts from $NDX $SPX show how they have dropped into steeper down channels.   $NDX has not been able to close 9/17 gap down, and $SPX has not been able to close 9/21 gap down.    These are bearish signals.

Jerome Powell is scheduled to testify in Congress Tuesday through Thursday this week.   His words will be closely scrutinized no doubt.

However, for us we will be closely monitoring $SPX $NDX IWM actions if they reach their orange resistance zones on Tuesday.   We want to see if $SPX $NDX IWM will anchor to drop because too many sellers come out in these zones.

We will also be monitoring $SPX $NDX IWM actions if they reach their green support zones on Tuesday.   We want to see if $SPX $NDX IWM will anchor to rise because enough buyers come into these zones.

In short, these zones will be crucial tests for $SPX $NDX IWM on Tuesday.

Click here for current Signal Trades.
​
​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation

Updates 2:00 PM EST - Monday 9/21/20

​Short-term:  bearish
Market is still in condition #4 "Strong bearish headwinds for stocks".  

• Market breadth:   Net Advance-Decline Issues are very negative for NYSE and Nasdaq stocks.
• $VIX $VXN 200-hour EMA are still rising.  
• $VIX $is likely to finish anchoring in the zone between 27.4 and 28.   Then it is likely to pivot and rise.   
• $VXN $is likely to finish anchoring in the zone between 36 and 36.5.   Then it is likely to pivot and rise.

Monitor for upward reversals in these $VIX $VXN zones.  These are low-risk setups to re-enter UVXY and SQQQ.

Updates 9:53 AM EST - Monday 9/21/20

Bearishness is accelerating 

• No quick up swing for $SPX $NDX IWM.
• Bearishness is accelerating along with selling for $SPX $NDX IWM.

Updates 9:31 AM EST - Monday 9/21/20

Just a quick swing up, then likely a bigger drop
We just want to clarify that we expect $SPX $NDX IWM to do a quick up swing and then they are likely to drop again to lower levels in their down channels.

This is because we expect $VIX $VXN to anchor in the zones described below and then rise up to resume the highly bearish condition.   

Please review the condition #4 "Strong bearish headwinds for stocks" in the table below.   That's where $VIX $VXN are heading.

 
Updates 9:20 AM EST - Monday 9/21/20

$VIX $VXN anchoring to rise
Pre-market $VIX data tells us that $VIX is forming the "anchor to rise".   It anchored at its 200-hour EMA on Friday 9/18, and it gapped up during the early hours of today.

This morning we are monitoring for:

• $VIX to re-test the zone between 26.5 and 27.5 one more time before taking off to higher level.
• $VXN to retest the zone between 35.5 to 36.
• $SPX $NDX to do a quick up swing within their channels.   
• IWM to rise out of its green support zone by a small amount.

$VIX $VXN need to drop down and anchor a bit more before they will take off.  But $VIX $VXN are basically transitioning to go back to condition #4 "Strong bearish headwinds for stocks".

Click here for current Signal Trades.
​
​Disclaimer
The information presented here is our own personal opinion.  It is intended to supplement your own research and trading systems.  Consider it as food for thought. We are not registered financial advisers or licensed brokers.  We make no guarantee that anything will unfold according to our projections. While we offer scenarios for you to consider in your trade planning, know that you are proceeding at your own risk if you follow our suggestions.  

Note that we trade highly risky 3x leveraged ETFs.  You may end up losing a lot of money with them. They suit our portfolio, but they may not be appropriate for you.   Please read more about them before trading them.

Proshares UltraPro and UltraPro Short ETFs
Direxion Leveraged and Inverse ETFs
Why 3x ETFs like TQQQ lose money over the long term
The risks of investing in inverse ETFs
Simple explanations of contango and backwardation