Bear Cave 2 (Bull Allowed)

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We shall see!

I remain long VXF for a trade. This will be day 11 that VXF has been trending below the 3 ema on the daily. It's close to a 12% smack down so far.

SPX - 4500 is huge
SPX futs are bouncing overnight, currently trading right on the 50 day moving average. 4500 is the huge "must hold" support. Let's see how this "erratic" market plays out from here, but SPX has not been this oversold in a long time. Is this just a reset before the next leg higher, or is something bigger developing?
 

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This Small-Cap correction is one of the fastest in history
Small-Caps' failed breakout

Earlier this month, the small-cap Russell 2000 broke out of a long consolidation. When it's done that before, it had a strong tendency to keep going. While short-term returns were modestly positive, the index showed a positive return 2 months later 16 out of 18 times.

After its latest attempt, it promptly failed. And failed hard.

Within only a few weeks of trading at an all-time high, the Russell is already back into correction territory. This is its first drawdown of more than 10% (rounded) in more than a year. This is the Russell 2000's 4th-fastest correction in its history.

https://www.sentimentrader.com/blog...l&utm_term=0_1c93760246-cc27246b2a-1271291994
 

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LOD
Haven't seen one of those aggressive close prints in a while. SPX crashed below the 50 day and is down to the longer term trend line. 4500 is the line in sand, must hold, make or break level to watch.
 

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I don't trade IWM, but I do trade VXF. We shall see how much lower the RSI can go on the daily chart without a ST bounce.


Who's dead - Russell RSI is dead baby
Russell can't catch a bid (still) but it is approaching huge support levels. Range lows are still somewhat lower, but take a look at the RSI. Russell has not been this oversold since the march 2020 panic...
https://themarketear.com/
 

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Some monthly charts: Hmmm....

VXF monthly: Note the move below the 10 sma.
 

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VXF and VTI after the close: What can I say except the move down continues. This was day 10 since VXF moved below the 3 ema and the 10 sma on the daily chart. That is a sell signal for me. VTI is holding up a tad better, but it went below its 100 sma today too. Buying early to try and get close to the next DCL can be a mistake and so far it's proving that way. However, there are times I like to make these trades. We shall see how the rest of the week plays out, but for now this trade is a loser.

Bottom Line: The trend remains down!

Note that the S Fund was down ( -2.85% ) today and VXF was down (-2.41%). As I have pointed out before they are close in overall stocks they both hold, and I'm currently trading VXF. My position is small, but I too took a hit today. I decided not to sell and added today so I now have close to a 10% position in VXF. I will decided soon If I want to sell shares and wait for a move back above the 3 ema. The good news is I have unlimited moves and in TSP that is not the case.
 

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(DCL) = Daily Cycle Low

What is a Daily Cycle Low

The chart below has its low points marked. The question that might come to mind is are all of these lows significant. Cycle Analysis recognizes lows that are in the timing band for a low. My cycle studies show that stocks tend to find a daily cycle low every 30 – 45 days. So let’s apply that now.
https://lmtoolbox.wordpress.com/2-daily-cycle-lowstiming-bands/
 

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VXF Daily before the close: Well, we are in day 10 for the move below the 3 ema on the daily chart.

Bottom Line: The trend remains down for VXF on the daily chart. Is a DCL coming soon or is something bigger going on? I wait and I added a few more shares of VXF. I know, this is a counter trend trade and like trying to catch the falling knife. So why do it then? I keep it small and base this trade on where we are in the current cycle. That doesn't mean this trade will be a winner, but I like the odds on trades like this. We shall see how it plays out! My trades are always a win, lose or draw mind set when I place them. For me it's like playing Black Jack, but my tools are like counting cards. Placing bets when the odds are more in my favor. We shall see if buyers come in before the close. I normally trade VTI, but VXF is extremely oversold on the daily chart, and I'm trading short term.

VTI daily: VTI is the total stock market and we did get a bounce off the 50 sma on the daily., but is moving back down some. See chart below and we shall see if the 50 sma holds in the days ahead, or we keep moving lower.

https://stockcharts.com/h-sc/ui?s=VTI&p=D&yr=0&mn=4&dy=0&id=p43272237427&a=1070924914
 

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VXF daily: Added a few more shares, but this still remains a counter trend trade.

Bottom Line: The VXF trend remains down. A gap up above the 3 ema on the daily chart at the open, but moving back down some. So we are seeing some buyers come in. We shall see if we can close above the 3 ema, and if this is a DCL. Still plenty of fear out there so some will be selling the rips. (STR) Still lots of work to do to get VXF back above the 100, 50, 20, and the 10 sma on the daily. That is "IF" it can. I will be trading VXF from the long side for a trade only and buying shares at Vanguard using my Roth IRA. VXF is close to the S Fund at TSP, but I get unlimited moves anytime during the trading day. The higher lows pattern continues to hold for now.... 163.92 to 181.24 from March to the current marker that VXF just printed.

https://stockcharts.com/h-sc/ui?s=VXF&p=D&yr=0&mn=3&dy=0&id=p80244296760&a=1072787352
 

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It does like that way.....

VXF daily after the close: The last chart

Seeking A Bottom
Posted on November 30, 2021

Stocks are seeking out their DCL.

Stocks have already retraced back below the 38% fib level. At 40 days, stocks are right in the heart of their timing band for a DCL. Stocks are approaching possible support from the converging previous breakout level and the rising 50 day MA. With stocks currently in a daily uptrend, if stocks form a swing low above the lower daily cycle band then they will remain in their daily uptrend and trigger a cycle band buy signal.

And a successful backtest of the previous breakout level as stocks head into the most bullish time of the year could trigger a melt-up phase.
 

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COT's: A few I track. Maybe after this week's selling we will some some of these ES commercials covering. Still, we are still seeing plenty of commercials heading into TY and JY. A fight to safety?

Current Commitments of Traders Charts
 

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VIX daily: LOL...... He just called? The warning signs were there.... I took profits on my VXX position and I'm looking for a buy signal for stocks. I will be trading VXF this run if the signal comes. Will I get one? I don't know, but I play the odds and they are getting above average for a ST bounce.

I took a small position of VXF today.

VIX guy just called us!

We have been waiting for the panic call from our VIX guy. Earlier today he called us and we haven't heard him in such a panic mode in a long time. His latest logic is based around the vaccine news from Moderna, the recent VIX spike "can't you see the stress bro?" and that people had a great year and will sell etc. His main idea was to buy VIX here. Needless to say we are starting to sell volatility here. One way to play it is via put spreads in VIX. After all, volatility is mean reverting and our VIX guy has continued holding the perfect 100% inverse track record. Will he nail it again?
https://themarketear.com/
 

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VIX daily: The below 15ish pattern looks like it's about complete. Once the VIX starts its move back down inside the upper BB that is a ST buy indicator for stocks in my trading account.

For the record: I just trade what I see and the odds are above average for that pattern to repeat. A tool I added to my toolbox from Jeff Clark. Please note the date for the article below is from 2018. I'm just pointing out how to use Jeff's tool. I don't trade based on any single indicator and I want to see VXF move back above the 3 ema before adding to much.

How to Trade the New VIX Buy Signal
Jeff Clark | Jun 27, 2018 | Market Minute | 2 min read

The Volatility Index (VIX) triggered a new buy signal when it closed back inside its Bollinger Bands yesterday. We should see higher stock prices over the next few weeks.

Look at this chart of the VIX…
How to Trade the New VIX Buy Signal
Jeff Clark | Jun 27, 2018 | Market Minute | 2 min read
The Volatility Index (VIX) triggered a new buy signal when it closed back inside its Bollinger Bands yesterday. We should see higher stock prices over the next few weeks.
Bollinger Bands (the blue lines) indicate the most probable trading range for a stock or an index. Whenever a chart moves outside of its Bollinger Bands, it signals an “extreme” condition. In the case of the VIX, these extreme conditions trigger buy and sell signals for the broad stock market.

Sell signals occur whenever the VIX closes below its lower Bollinger Band and then closes back inside the bands. Buy signals occur when the VIX closes above its upper Bollinger Band and then closes back inside the bands.

Yesterday marked the fourth VIX buy signal of 2018 so far. The red circles on the chart encompass each buy signal.
https://www.jeffclarktrader.com/market-minute/how-to-trade-the-new-vix-buy-signal-2/
 

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VXF update: The selling continues..... One would think VXF will bounce soon..... I'm taking a small starter position of VXF at Vanguard. This is a counter trend trade, but VXF is getting a tad oversold. Day 9 since the move below the 3 ema on the daily. We shall see if buyers come in the next few days. If not I will just sell my position. With that said, I might add too based on what happens next! We shall see if VXF can get back above the 100 and 50 sma on the daily chart below. Keep in mind this is no more then a ST trade for me. The last hour of trading might give me a clue....

https://stockcharts.com/h-sc/ui?s=VXF&p=D&yr=0&mn=6&dy=0&id=p00290999331&a=1072787352
 

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