Live Trading System Signals on 05/16/2025

The 100 point drop in the Nasdaq from 4:40 pm EST to the 5:00 pm EST close was interesting. Moody's lowered the US credit rating from the highest rate of Aaa to one notch lower at Aa1. TLT, QQQ continued lower after the futures closed. This could set the tone for next week. The yield in which investors will demand to buy US Treasury debt will be higher to reflect more risk. Higher rates could further reduce demand and interest in equities.

The market has basically gone sideways since Tuesday's highs. The market is trading more like a VIX of 10 - 12 instead of 17-19 this week.

The Range of the Nasdaq 100 was 0.85% today while the VIX was 17. Typically, we see the VIX around 12 when the average range is 0.85% while a VIX of 17 typically sees a range of 1.30% in the Nasdaq 100.

The market has certainly "overshot" to the extreme of low volatility more quickly than normal.

This is based on 30 years of NDX 100 and VIX daily data. The first image shows the VIX values in the Y axis based on the Range % on the X- axis.

The second image shows the VIX on the X axis and the typical percentage range on the Y-axis.

The market has zoomed from one end of the distribution of the volatility curve to the other much quicker than normal. This certainly challenges the steady state nature of the market.

It has been one of the most challenging months we have seen in a while coming towards the end of a viscous news cycle. As traders, we anticipate different types of price action and within a range of normal distribution. Earlier this year we saw some of the wildest volatility and now that we have what appears to be a news cycle resolution, we have some of the narrowest ranges all of a sudden.

The One Million MNS was up +0.55% on the day while the 250K Portfolio was up +$1,375 in live trading.

V-Reversal was about 11 points away from its short profit target which was just above the level where the long stop loss was yesterday on the stop run. It was tough to watch the market easily go to those levels yesterday to hit our long stop loss but would not go to the same level today to hit the short profit target.

The market quickly reversed for a loss on the day. On April 17th we hit 4 winners in a row on a Thursday and Friday to capture new equity peaks. In the past month, the market environment has been stubbornly against us, quickly reversing before it hits a profit target and also running to stops and then reversing on many trades. A compression in ranges and a straight up trend in equities to "fix" the down trend has generated some of the most unfavorable price action we have seen for one of our top strategies. The Two System Portfolio equity and drawdown curve for the trading models are shown below. We had one of the most rapid drawdowns this week. If I have my choice, I would prefer a rapid drawdowns and rapid recoveries versus a slow drawdown and slow recovery.

The hypothetical results are shown below for the portfolios.

Stock Index Portfolio 17 (1 NQ) +$1,100.00

Stock Index Portfolio 17 (3 NQ) +$3,300.00

50K Portfolio +$1,075

EMINI NQ 2 System Portfolio -$1,275.00

EMINI NQ 3 System Portfolio II -$2,500.00

EMINI NQ 4 System Portfolio -$1,350.00

EMINI NQ 5 System Portfolio -$2,300.00