TVIX, ES and NQ - a bag of mixed signals
Let’s start with NQ. It has not changed since the last noon update. It looks bullish because it made a higher low on Friday, Jan 31, 2020 and today it made a higher high over the previous high. The bullish trend is still intact.
NQ - 15 min chart updated at 10-30 PM on 2-04-2020
Now let’s look at TVIX. On Friday it completed a rally with an impulsive structure. When we get five wave up structure from an all time low that suggest that it was only the first leg up and after a corrective a-b-c structure we may get another rally to a higher high. Two five wave up structures connected by a corrective a-b-c comprise a corrective pattern called “Simple Zig Zag”.
On the chart below you can see that TVIX has declined in such a red corrective a-b-c down structure. Subwave c = subwave a. That corrective a-b-c down structure retraced 61.8% of the preceding rally. What makes it even a better long setup is that this drop stopped right at the low made by a minor wave iv down.
TVIX - 15 min chart updated at 10-30 PM on 2-04-2020
Finally, lets talk about the most complicated case, ES-mini.
The main problem is that ES made a lower low on Friday, January 31, 2020. And today it has made a lower high. Based on that we can easily build a case that correction in ES is not over. That obviously contradicts to mush bullish picture in NQ but is totally aligned with a bullish picture in TVIX.
ES may follow NQ higher. And I added blue labels showing that bullish path. First, it needs to stretch higher in subwave -a- of wave -v- up to retest the previous top. Then needs to correct in -b- down. And finally rally again in -c- of -v- up. But NQ is far ahead in this count. I frankly I do not have a good vision how to reconcile bullish picture in NQ with potentially bearish picture in ES.
In conclusion, if we trade each chart on its own I would say:
1. TVIX is setting up a long trade.
2. NQ – pullback from Tuesday high is a buying opportunity.
3. ES – no reliable setup yet.
ES - 30 min chart updated at 10-30 PM on 2-04-2020
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