Transition phase
After trending up since early September, NQ SOXL TNA are in transition phase right now.  There are two possible outcomes.

1. The transition succeeds and ushers in a bearish phase where price steadily drops to bring NQ SOXL TNA down to S2 support level.
2. The transition fails.  NQ SOXL TNA resume their up trend and rise to R2 resistance level.

Important signals
We don't know the outcome yet.  But here are some important signals to monitor for.

Bearish:   

• UVXY retests support in the zone 24 - 24.5 and rises again.
• Meanwhile NQ SOXL TNA retest their R1 resistance and fail to rise above this key level.  They form same high or lower high tops.   
• Selling accelerates.  NQ SOXL TNA drop quickly to S2 support level.   
• This may happen by early November, just ahead of the election on November 5 and FOMC on November 6.  

Bullish:  

• UVXY quickly tries to rise above 27 but fails.  It spends a couple days to form a top while its 200-hour EMA green line starts to go sideway.  
• Meanwhile NQ SOXL TNA each forms a base around their sideway 200-hour EMA green line.   
• Then UVXY steadily drops and NQ SOXL TNA resume rising.
• We are less confident in this scenario simply because of the uncertainty surrounding the election.​

Yesterday we wrote:  "By Friday 9/27, UVXY hourly chart below shows that its 20 EMA blue line has crossed above its 200 EMA green line. If this blue line keeps rising up sharply on Monday, it will make the green line trend up as well. That brings a high probability of more volatility rising and noticeable equity selling."

UVXY hourly chart below shows that on Monday its 20-hour EMA blue line rose sharply but then started to form a top.  So far all of this UVXY rising has not managed to make its 200-hour EMA green line rise up in the direction of the arrow yet.  So there's hope for the equity bull case here.

Key S/R levels
NQ

• R2:  20984
• R1:  20538
• S1:  20100
• S2:  19700

SOXL

• ​R2:  47
• R1:  40.5
• S1:  35.2
• S2:  30

TNA

• ​R2:  50
• R1:  46
• S1:  42.6
• S2:  39

​​Our personal trade plan
Despite this potential small bear storm, we expect NQ SOXL TNA to eventually recover by after November 5, and work their way up to R2 level by December.  So we are not going to sell our SOXL positions just yet. We will most likely sell them when SOXL reaches our breakeven price of 46.5.  Still this is subject to change.

Here is our updated strategy for this transition phase.

1. We started with a half position of SOXS bought on Friday to hedge, but we closed this half position Monday, collected some profit, and waiting for the formation of the next signal.
2. If the bear case emerges, we will re-enter full position SOXS.
3. If the bull case emerges, we will enter full position SOXL.

​Click here for Signal Trades spreadsheet.

Disclaimer
The information presented here is our own personal opinion. Consider it as food for thought.  We are not offering financial advice. We are not promoting any financial products. We are not registered financial advisers or licensed brokers. We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our trades.

​Big picture shows a bear market setup on the horizon
Since mid-September, we have been discussing the key chart patterns that tell us the bear market is gathering strength in the distant horizon.  See chart discussions here.
The interesting thing is these chart patterns have not changed yet.  Their persistence is telling in itself.

Like hurricane Helene, this bear hurricane potentially can be devastating, but it is still way out in the middle of the Atlantic Ocean and not approaching landfall just yet.  Nevertheless keep it in mind for the big picture planning.

Short term: there is a small bear storm brewing with possible immediate effect
Since the start of September 9, VIX has been dropping steadily.  But after this last week, VIX weekly chart below shows it has formed a contracted hammer candle sitting at the key convergence of its 20-week EMA blue line and 50 EMA EMA red line.  

This is not a bullish pattern that is supportive of equity.  The red arrows in VIX weekly chart below shows instances where VIX contracted hammer candles led to surge in VIX.  As you can see this pattern actually showed up with some regularity.   We consider this a bearish warning for the short term.

But the most concerning pattern is that of UVXY.  Whenever UVXY 200-hour EMA green line rises steadily, prolonged volatility follows, and prolonged equity selling follows.

By Friday 9/27, UVXY hourly chart below shows that its 20 EMA blue line has crossed above its 200 EMA green line.   If this blue line keeps rising up sharply on Monday, it will make the green line trend up as well.  That brings a high probability of more volatility rising and noticeable equity selling.

But keep in mind this bear storm will only truly materialize if UVXY 200-hour EMA green line starts to head up steadily.  It is currently flat.  If UVXY 200 EMA green line stays flat, or if it headS down, then it actually becomes a very supportive buy-the-dip setup for equity.

So far NQ and SOXL are acting rather nonchalant about this potential volatility surge.  

NQ

• Monitor NQ for retest of R1 resistance at 20638. 
• If NQ fails to rise above this level, NQ will most likely retest S1 support at 20000.
• If the retest of S1 does not enable NQ to climb above R1, it will trigger more selling that can bring NQ down to S2 support at 19600, before it is capable of forming a higher low bottom.  
• If VIX continues to rise up, this S2 scenario is very likely.
• Once NQ forms a higher low bottom around S2 support, it is capable of climbing up to R2 resistance at 21216. This may happen after Nov 5 election.

TZA
Since 9/19, TNA has been dropping steadily.  This is reflected in TZA chart steadily rising from a sharp bottom.

• TZA may retest S1 support at 13.55 one more time before rising over its 200 EMA for multiple days.
  
• R1 resistance level is at 15. 

Click here for Signal Trades spreadsheet.

Updates 1:55 AM ET - Thursday
Upcoming key events
Powell will be giving opening remarks via pre-recorded video at the 2024 U.S. Treasury Market Conference Thursday morning.  This is unlikely to move the market, but nevertheless...

Volatility continues to drop
VIX VVIX charts are dropping on all time frames.  UVXY (which is based on VIX futures) rose to tag its 200 EMA on Wednesday as seen in its 30-minute chart below.  We consider this rise "the pause that refreshes" rather than the start of seriously rising volatility. In other words, UVXY should drop by Thursday and continues to be supportive of equity.

However, monitor UVXY 200 EMA green line.  If it goes sideway for multiple days, then UVXY is basing to really rise.

NQ
NQ 15-minute chart below shows all of its EMA lines steadily rising.  This up trend should continue until NQ forms a multi-top formation.  NQ should reach 20600 by Friday.

SOXL
SOXL 15-minute chart below shows all of its EMA lines rising as well.  ​This up trend should continue until SOXL forms a multi-top formation.  SOXL should reach 39 by Friday.

On Thursday, if SOXL dips one more time to 36 or close to its 200 EMA green line on its 15-minute chart, then it's a low-risk setup to enter SOXL for 10% gain.  

TZA
TZA 15-minute chart shows its 200 EMA green line flat and in sideway formation for three days. Its 20 EMA blue line has crossed above and rose up from this flat 200 EMA green line setup.  Observe how similar this setup is to early September.  This setup is typically a high probability for more selling in IWM TNA RTY.  

On Thursday, if TZA dips one more time to 13.7 or close to its 200 EMA green line on its 15-minute chart, then it's a low-risk setup to enter TZA for 10% gain.  

VIX VVIX UVXY VX all signal lower volatility at least until Friday
​We shared with you UVXY 30-minute chart during Tuesday showing a possible basing-to-rise pattern.  But this rise failed to materialize by end of day Tuesday.  This failure to rise turns into a bullish signal supportive of equity.   See UVXY 30-minute chart below.

This bullish message is further confirmed by VIX steadily dropping.  See VIX daily chart below.

​NQ

• NQ 30-minute chart below shows a steadily rising 200 EMA green line, along with 20 EMA blue line and 50 EMA red line.   
  
• ​This tells us NQ continues to be in bullish mode.
• S1 support is at 19600.
• R1 resistance is at 20600.

​SOXL

• SOXL 15-minute chart below shows that its 200 EMA green line is still rising, even though it had a few sideway pauses along the way. 
• SOXL 20 EMA blue line and 50 EMA red line have just finished tagging its 200 EMA green line.
• This is overall a bullish pattern telling us that SOXL should continue to rise higher.
• S1 support is in the zone 33.8 to 34.1.
• R1 resistance is at 38.

​TNA

• Small caps are not participating in the current bullish mode like ES NQ SOXL.  Instead, TZA 15-minute chart below shows us a flat sideway 200 EMA green line.
• TZA 20 EMA blue line and 50 EMA red line have just crossed above the 200 EMA green line.
• This is overall a warning for bulls that small cap bears are gaining the upper hand.
• TZA may dip down to 12.7 support level one more time, but it is like to rise up above the 200 EMA green line some amount.
• R1 resistance is at 15.4​

Click here for Signal Trades spreadsheet.

Updates 1:31 PM ET - Tuesday
UVX and VIX futures have turned bearish
Last night we share with you VX 30-minute chart, with its pattern suggesting caution for bulls.

Today as of this writing, UVXY 15 minute chart has turned officially bearish.  We can see in the chart below UVXY has formed a base around 23.  Its 20 EMA blue line is about to cross above 200 EMA green line.   This is a bearish setup for equity.

However, NQ and SOXL charts are still bullish.  So it's not time to enter into bear positions via SQQQ SOXS yet.  But bulls should be cautious and don't go hog wild here.   

TNA 30-minute chart shows it at cross road.  If its 20 EMA blue line doesn't cross back up above its 200 EMA green line soon, then TNA will be officially bearish.

NQ remains bullish for now
In NQ 30-minute chart below, its 200 EMA green line is trending up steadily.  Its 20 EMA blue line has not succeeded in dropping below it.  Conditions are still bullish for NQ.

But VIX futures are suggesting caution
VX 30-minute chart below shows a 200 EMA green line steadily dropping also.  But its 20 EMA blue line is starting to rise up similar to how it did ahead of FOMC.  Right now, this does not seem to be an outright bearish reversal yet.  

However, if VX 20 EMA blue line loops quickly below 18 from here, and then turns right back up and crosses above the 200 EMA green line, rising higher than 18.15, then it is a serious signal that volatility is rising again.  

SOXS
Since VX has now hinted at possible rising volatility, we want to analyze SOXS chart to see if it concurs.  SOXS 30-minute chart below shows a bunched up flat 20 EMA blue line and 50 EMA red line.  By our count, this is SOXS 2nd weak attempt at rising above its 200 EMA green line.  It still needs more work to truly turn bearish.

Keep an on SOXS 20 EMA blue line (30-min chart).  If it drops below 22.4, then turns right back up, that will be counted as SOXS 3rd attempt to rise.  And this process will also form a W bottom pattern which is a strong hint that SOXS will likely rise a lot more.   This will be bearish for SOXL.

TZA
Similar to SOXS, TZA 30-minute chart below shows it has made a 2nd attempt to rise.  If TZA 20 EMA blue line:

• drops below 13.5 then reverts back up quickly
• or rises quickly from current level to cross above its 200 EMA green line at 14

then conditions will be bearish for TNA at least for a while.

Click here for Signal Trades spreadsheet.

Updates 2:30 AM ET - Monday
Upcoming key events
Read more economics new here.  ​

Big picture shows a bear market setup on the horizon
​Last Monday we discussed the key chart patterns that tell us the bear market is gathering strength in the distant horizon.  See chart discussions here.
We are projecting that volatility may start rising in a serious way again in Q1 2025.

Short term volatility signals are bullish…

• In the short term, VIX weekly chart candles are forming a series of lower high top.  VIX is likely to drop down to 12 one more time before next major spike.
• VVIX is exhibiting similar pattern.
• UVXY 30-min chart below shows all 3 EMA lines dropping.

Overall volatility is dropping steadily.  This is supportive of equity.

​…but unlikely to be a smooth rise up for stocks
At a macro level, we would expect stocks to be highly bullish because

• The Fed just cut rate by a generous 50 BPS
• BOJ not raising rate for now
• Employment situation is still ok
• Inflation is heading down
• Volatility is heading down

ES surged to 5797 last week which is a new all time high.  But NQ SOXL TNA are still struggling.  Not outright bearish, but not super bullish either.  We expect them to chop some amount this week ahead of PCE this Friday.

Be prepared for a 2nd higher low for NQ SOXL TNA
Later in October as we approach November 5 election date, we may see NQ SOXL TNA swing low to form a 2nd lower high bottom before recovering ahead of the holidays.  We may see:

• NQ gets back to its July high by late December.
• SOXL gets back up to 54 - 55 zone by late December.
• TNA gets back up to 50 zone by late December.

So how do we trade for the short term?
We don’t have a crystal ball that will tell us the exact path for equity.  No one does.  But here are setups that we are monitoring for that can yield some decent short term profits.

NQ

• Monitor for pullback to support zone 19805 - 19934.
• A successful retest here means NQ will very likely rise back up to R1 at 20200 possibly later this week. 
• R2 resistance is at 20500.

​SOXL

• Monitor for pullback to support at 30.9.
• A successful retest here means SOXL will very likely rise back up to R1 zone at 35 - 36  possibly later this week. 
• R2 resistance is at 39

​TZA
Small caps are no longer looking very bullish for the short term.

• Monitor TZA for retest of support at 12.7.
• A successful retest here means TZA will very likely rise back up to R1 zone at 14.

Our personal trading plan
In light of the strong possibility of NQ SOXL TNA having a decent partial recovery by December, we are not going to sell our SOXL positions just yet.  We will most likely sell them when SOXL reaches our breakeven price of 46.5.  Still this is subject to change.

SOXS and UVXY charts are both supportive of SOXL being short-term bullish. SOXL retesting key support at 30.9 is a low-risk entry zone for a 15% SOXL gain.

​Click here for Signal Trades spreadsheet.

​Disclaimer
The information presented here is our own personal opinion. Consider it as food for thought.  We are not offering financial advice. We are not promoting any financial products. We are not registered financial advisers or licensed brokers. We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our trades.
​

Multi-month outlook:  bullish
On VIX VVIX VX UVXY daily charts, their 20-day EMA blue lines have formed a clear lower high top after FOMC.  This suggests that while there may be some more turbulence ahead, the worst is over for equity perhaps for 2024.   Note though that this still does not remove the bear market warnings for 2025.

Short term: bullish
On VX 30-minute chart, its 20 EMA blue line and 50 EMA red line are both trending downward after looping a bit above the flat 200 EMA green line.   As of this writing the 200 EMA green line is starting to trend down too.

This is a bullish setup for equity.  You can see the same pattern on UVXY 30-minute chart as well.  As long as this pattern remains, conditions are supportive of stocks.
​
Conditions becomes seriously bearish if VX 20 EMA blue line forms a W bottom while below its 200 EMA green line.

NQ:  Monitor NQ 30-minute chart.
Bullish setup to enter or add NQ:

• As long as VX bearish setup described above does not appear and
• ​NQ 20 EMA blue line dips close to 200 EMA green line and then turns back up.
• This most likely will occur at 19800 support level.
• With this bullish setup, NQ has a high probability of rising from 19800 support level to 20600 resistance.

Keep in mind that this is the ideal bullish setup we want to see for NQ to continue its bull swing.  But we may not see it.  Instead NQ may just simply drop sharply to 19800 and then reverses rapidly, without altering the path of its 20 EMA.  It's still ok to enter NQ here.  Just use a tight stop below 19800.

Bearish setup to tighten stop or exit NQ:

• VX bearish setup described above appears and
• NQ 20 EMA blue line tags its 200 EMA green line, and then rises again, but only to form a double top pattern.

Our personal trading plan
In light of the strong possibility of NQ SOXL TNA having a decent partial recovery, we are not going to sell our SOXL positions just yet.  We will most likely sell them when SOXL reaches our breakeven price of 46.5.  Still this is subject to change.

We have placed buy order for a separate SOXL full position to enter at 33 support level, and exit at 38 resistance.  ​Click here for Signal Trades spreadsheet.

​Disclaimer
The information presented here is our own personal opinion. Consider it as food for thought.  We are not offering financial advice. We are not promoting any financial products. We are not registered financial advisers or licensed brokers. We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our trades.

Multi-month outlook:  bullish
On VVIX daily chart, its 20-day EMA blue line has formed a clear lower high top after FOMC.  This suggests that while there may be some more turbulence ahead, the worst is over for equity perhaps for 2024.   Note though that this still does not remove the bear market warnings for 2025.
​
Short term: bullish
On VX 30-minute chart, its 20 EMA blue line and 50 EMA red line are both trending downward after looping a bit above the flat 200 EMA green line.  This is a bullish setup for equity.  As long as this pattern remains, conditions are supportive of stocks.
​
The bearish setup comes when VX 20 EMA blue line turns back up and crosses above it 50 EMA red line to form a W pattern.

NQ
Monitor NQ 15-minute chart.  Its flat 200 EMA line indicates that bull and bear forces are still battling it out.  Here are the setups to look for on this chart.

• If NQ 20 EMA blue line continues to stay above 19780 >> NQ remains short term bullish until VX UVXY bearish setup appears.
• If NQ 20 EMA line crosses below 19700 >> NQ has turned bearish.

SOXL
Monitor SOXL 15-minute chart.  Its flat 200 EMA line indicates that bull and bear forces are still battling it out.  Here are the setups to look for on this chart.

• ​If SOXL 20 EMA line rises above 32.5 >> SOXL remains short term bullish until VX UVXY bearish setup appears.
• If SOXL 20 EMA line fails to rise above 32.5 >> SOXL has turned bearish.

TNA
TNA is actually the most bullish looking chart of the three.  The fact that small caps are not falling apart means the market is really not expecting a recession yet.  Our inner bull finds this data comforting.

Monitor TNA 15-minute chart. Here are the setups to look for on this chart.

• If TNA 20 EMA line rises above 44 >> TNA is still bullish.
• If TNA 20 EMA line fails to rise above 44 >> TNA may be entering a choppy period, but not outright bearish yet.

Our personal trading plan
In light of the strong possibility of NQ SOXL TNA having a decent partial recovery, we are not going to sell our SOXL positions just yet.  We will most likely sell them when SOXL reaches the range 40 - 42.  Still this is subject to change.

No plan to add new SOXL position at this point.  ​Click here for Signal Trades spreadsheet.

Disclaimer
The information presented here is our own personal opinion. Consider it as food for thought.  We are not offering financial advice. We are not promoting any financial products. We are not registered financial advisers or licensed brokers. We make no guarantee that anything will unfold according to our projections.  You are proceeding at your own risk if you follow our trades.

VIX daily chart tells us that volatility isn't likely to surpass 23
VIX 20-day EMA blue line has been forming lower high top.  One more lower high top can create a highly bullish setup for equity.​

VIX 30-min chart tells us it's likely to rise and form another top after FOMC
VIX 20-day EMA blue line has formed a W bottom below 200 EMA green line.  This is a setup to rise for the short term.

NQ
On NQ 15-minute chart, all EMA lines are flat and bunched together right now.  Price is coiling up for a big move.  So after FOMC, monitor the direction of 20 EMA blue line for the true move.

​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.