Updates 12:30 AM EST - Monday 11/1/21

Key dates
The big event this week is FOMC announcement on Wednesday 11/3 at 2 PM EST. 

Here's the economic calendar for the full week.   There are lots of key reports that can potentially move the market.

Monday:  ISM Manufacturing Index; Construction Spending
Wednesday:  ISM Service Index; Factory Orders
Thursday:  Jobless Claims; Productivity & Costs
Friday: Employment Situation; Consumer Credit

Here are the important companies reporting this week:  AMC, ROKU, DISCA, BABA, MRNA, SQ, BRK-A, BRK-B.

Bearish Catalysts

• ​Fed tapering bond purchases, and moving towards raising rates next year
• Inflation spiking
• Supply-chain problems; rising wage
• GDP growth slowing (2% in 3rd quarter compared to 6.7% in 2nd)
• Company earnings may be slowing as well
• Debt ceiling and infrastructure deals unresolved still

Bullish Catalysts

• Market participants are in "risk-on" mood (e.g. TSLA, BTC, ETH)
• Seasonal factors support year-end rally

Volatility:  $VIX $VVIX $VXN $RVX 
There is a good chance that $VIX will follow the path similar to the one  mapped out below in the short term.   That is:

• $VIX may spike up a bit after FOMC announcement  (11/3) >> moderate dip in $SPX.
• Then $VIX may coil downward some amount as $SPX resumes the climb.
• Then $VIX may spike up again to reach its 200-day EMA green line around OPEX (11/19) >> moderate dip in $SPX.
• Finally, $VIX will be in a setup where it can drop quite a bit, supporting $SPX year-end rally.

$VXN $RVX may follow the same path.

Equity Put/Call Ratio
Keep an eye on the 200 EMA green line on this chart.   We most likely will see it go sideway over the next couple of weeks while the ratio swings back and forth across it.   

​Then the ratio will be in a setup where it can spike up sharply, most likely around the time of OPEX (11/19).   This may correspond to a good-size dip in stocks, before the year-end rally arrives.

Updates 11:30 PM EST - Thursday (for Friday 10/29/21)

Indicators
$VVIX $VIX $VXN $RVX:

• These have been coiling upward steadily since 10/26.   The current setup is not a setup for a crash.  But it does raise the possibility of a sharp spike in volatility next week, most likely around FOMC (11/3).

Equity put/call ratio: 

• 200 EMA line on 15-min chart is flat >> bearish warnings. 

NYSE and Nasdaq A/D net issues:

• 200 EMA on 60-min cumulative charts are still rising >> bullish.

Updates 11:30 PM EST - Wednesday
​(for Thursday 10/28/21)

Volatility:  $VVIX $VIX $VXN $RVX 
The message from volatility:  choppy conditions ahead of FOMC, with maybe a sharp spike right after FOMC.  

On Tuesday night we wrote "$VIX 20-hour EMA blue line is about to cross over its 50-hour EMA red line...This is a setup that usually shows up before $VIX spikes up sharply above its 200-hour EMA green line."

$VIX did spike up on Wednesday as anticipated.  But it is unlikely to rise above 18.5 ahead of 11/3.  It is also unlikely to drop below 14.87.   The results may be choppy conditions that can last until Monday.

Equity Put/Call Ratio 
The message from P/C ratio:  Choppy conditions ahead.

On Tuesday night, we wrote: "In the 30-minute chart, 200 EMA  green line is starting to flatten.  This is a setup that usually shows up before the ratio spikes up sharply above its 200 EMA green line. "

The equity put/call ratio spiked up on Wednesday as anticipated, as the 200 EMA green line flattens out.  This flattening process may last a few days,  supporting the choppy conditions discussed above.

Advance-Decline Net Issues 
Nasdaq and NYSE A/D net issues declined sharply on Wednesday, confirming that the all-bullish mood is temporarily on hold.

Short-term Key Levels
IWM and TNA have been updated in the table below.   Everything else remains the same.

​Where price is heading
During choppy market conditions, it is very difficult to predict the precise price movements.   However, there is a high probability that $SPX $NDX IWM will bounce before FOMC (11/3).   

As part of the bounce:

• $SPX $NDX is likely to retest the high of 10/26.   
• IWM is likely to get close to the high of 10/26, but may not reach it completely.

How the market will react to FOMC is not clear yet at this point.   While we don't expect a major sell-off like September, we have to wait for the indicators to tell us which way to go.   

Click here for Signal Trades spreadsheet and our trade plan.
​
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 projections.​​​​​​​​​​​​​

Updates 11:30 PM EST - Tuesday
​(for Wednesday 10/27/21)

Volatility:  $VVIX $VIX $VXN $RVX >> bearish warning 
$VIX 20-hour EMA blue line is about to cross over its 50-hour EMA red line, as shown on the chart below. This is a setup that usually shows up before $VIX spikes up sharply above its 200-hour EMA green line.   

$VVIX $VXN $RVX are showing similar pattern.   This is a warning that in the short term, $SPX $NDX IWM are transitioning into a choppy period, followed possibly by a quick dip that may drop 2 to 3 levels.

Equity Put/Call Ratio >> bearish warning
​In the 30-minute chart below, 200 EMA  green line is starting to flatten.  This is a setup that usually shows up before the ratio spikes up sharply above its 200 EMA green line.   

What this tells us is that traders are starting to buy more puts, possibly to hedge against FOMC announcement on 11/3.   But they are only at the beginning of the process.   There isn't a rush to buy lots of puts yet, as there was in September and early October.

​So we treat this as a warning to be cautious with our long position profits, but not to rush in and bet against this market.

​Short-term Key Levels
IWM and TNA have been updated in the table below.   Everything else remains the same.

Updates 1:15 AM EST - Tuesday 10/26/21

Indicators
$VVIX $VIX $VXN $RVX:

• 200 EMA on 30-min charts are still dropping >> bullish. 

​Equity put/call ratio: 

• 200 EMA on 15-min chart is still dropping >> bullish. 

NYSE and Nasdaq A/D net issues:

• 200 EMA on 60-min cumulative charts are still rising >> bullish.

Short-term Key Levels
The table below has been fully updated to reflect the potential rise higher.

 Updates 12:30 AM EST - Monday 10/25/21

Key dates
This is a big week.  Here's the economic calendar for the full week.   There are lots of key reports that can potentially move the market.

Tuesday:  Consumer Confidence; New Home Sales
Wednesday:  Durable Goods Orders
Thursday:   GDP; Jobless Claims
Friday:  Personal Income & Spending; PCE Prices & Deflator; Employment Cost Index; Consumer Sentiments

There are earnings from major tech companies including AAPL, MSFT, GOOG, FB and AMZN.   These will certainly move $NDX.

Additionally, keep in mind the following upcoming key dates:
11/3:   FOMC announcement
11/19:  Options expiration (OPEX)
12/3:   Debt ceiling deadline

Bullish Catalysts 

• Positive earnings surprises
• End of month fund shuffling
• Traditionally, November is a bullish month.

​
Bearish Catalysts

• Negative earnings surprises (e.g. SNAP and INTC)
• Rising yields 
• Fed tapering and raising interest rates soon >> taper tantrum.
• Fed not tapering and and raising interest rates soon enough, fueling inflation.
• Inflation is on everyone's mind (from Powell to Dorsey).
• Congress potentially fails to deliver on infrastructure deal and debt ceiling deal.

Equity Put/Call Ratio >> Bullish
The equity put/call ratio gives us a glimpse of how traders are lining up their bets.   A bearish outlook means they may buy more puts than calls, resulting in rising P/C ratio, leading to negative gamma, and more volatility (due to dealer hedging).

​The chart below shows that P/C ratio is still low.  While we may see more hedging activities this week ahead of FOMC, we are not yet seeing the pattern that says P/C ratio is ready to really spike.

Volatility:  $VIX $VVIX $VXN $RVX  >> Bullish
Volatility dropped a lot since 10/6, and this leads to speculation that $VIX etc is about to explode.  In our experience though, this is usually not the case.   First we want to see $VIX 200 EMA green line go sideway for a bit (see chart below).​

Advance-Decline Net Issues  >> Bullish
The cumulative A/D line are still high for NYSE, and rising for Nasdaq.   This means that for the short-term, there are still more stocks rising then dropping.​

​Short-term Key Levels
The table below has been fully updated to better show the key support levels that are likely to be tested by FOMC (11/3).

Trade Strategy
Overall, this is a bullish market, and the best strategy is to keep riding up, take some partial profits when price reaches short-term overbought, and buy the dip when price drops back to short-term oversold.   

So when is the next multi-day dip likely to be?   Around OPEX (11/19).   (Of course, this needs to be confirmed by the indicators.)

$SPX $NDX IWM have enough bullish strength to enable them to climb up to L6 before then.  So we may see them reach that level ahead of OPEX.

But that monthly dip will come into play at some point, and $SPX $NDX IWM may need to retest L3 to bring in enough buyers for the next leg up.  

Click here for Signal Trades spreadsheet and our trade plan.

Updates 1:15 AM EST - Friday 10/22/21

Indicators

• $VVIX $VIX $VXN $RVX are still dropping >> bullish. 
• Equity put/call ratio is still dropping >> bullish. 
• NYSE and Nasdaq A/D net issues are still rising >> bullish.
• 10-years yield continues to rise >> bearish for $NDX.

Tech stocks
The big news after hours was that Snapchat missed its revenue expectations, and plummeted 22% as a result.  This is due partly to the new iPhone privacy settings, but also due to supply chain interruptions and labor shortages reducing short-term demands for more advertising.  

Ads are the primary revenue sources for Facebook and Twitter, so naturally each dropped 7% in response, and QQQ TQQQ both dropped sharply after hours.   

This revenue problem along with the sharp rise in key yield may bring on more head winds for tech stocks and $NDX.   

How futures are reacting
After the sharp drop after hours, we have been monitoring futures (ES NQ RTY) to see if stocks manage to recover.   As of this writing, they are doing fine, even Nasdaq. 

​On their 30-minute charts below, they are all continuing to grind upward.   As long as the 200 EMA green line is still rising, it appears to be a "buy the dip" market.   This attitude should continue for the cash market during Friday.

So our trade plan for now is to continue holding TNA and FNGU.   
​​Click here for Signal Trades spreadsheet and latest sell orders and stops.

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 suggestions.​​​​​​​​​​​​

On $SPX $NDX 15-minute chart, their 200 EMA lines are still rising very sharply, indicating strong upward momentum for now.   As long as this is the pattern, it is still a "buy the dip" market.   

On IWM 15-minute chart, the 200 EMA line is rising too, though not as sharply.  But the breakout pattern is strong on its daily chart. 

​​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 suggestions.​​​​​​​​​​​

Updates 12 AM EST - Wednesday 10/20/21

Indicators

• $VIX $VXN $RVX are dropping >> bullish. 
• Equity put/call ratio is dropping >> bullish. 
• NYSE and Nasdaq A/D net issues are rising >> bullish.

Yield
We should point out that the crucial 10-year yield  (US10Y) has been rising sharply since August.   Observe the 200 EMA green line on its 2-hour chart below.   This line needs to flatten out and starts heading down, or $NDX will not be able to rise too far.   

(Here is a very interesting article explaining the relationship between growth stocks and interest rates.)

If 10-year yield does continue to rise, IWM is likely to rise along with it.   IWM is showing signs that it may break out soon.   See daily chart below.

On $SPX $NDX 5-minute chart, their 200 EMA lines are still rising very sharply, indicating strong upward momentum for now.   As long as this is the pattern, it is still a "buy the dip" market.   So we plan to hold on to our FNGU position to capture 2-levels rise.   

On IWM 5-minute chart, the 200 EMA line is rising too, though not as sharply.  But again there is the possibility of a breakout.   So we plan to enter a couple TNA positions for different time frames.   See our trade plan.   

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 suggestions.​​​​​​​​​​​

​Here are the charts to show where we expect to buy the dip for TQQQ, TNA, and FNGU.  Basically, we want to wait for prices to get down close to the 200 EMA on these 15-minute charts.