While all of these are typically closely linked via price, the volume or second half of demand can be very different. 3C works using volume and price, therefore if there's confirmation between the multiple assets which will move similarly in price, but not necessarily in volume, there's almost always something to it and the confirmation between multiple assets in multiple timeframes is very high here.
Remember, under normal circumstances, VIX which can be thought of as an asst bought for protection, usually moves almost mirror opposite the market, when there are divergences/differences in the way they move it may be reflecting short term manipulation like slamming the VIX to lift equity prices or the VIX related assets outperforming their normal inverse correlation hinting at a strong bid under VIX assets, a strong bid for protection against a downside move.
This is what has been
very noticeable recently.
I had to pull up Leading Indicators to get some VIX/SPX charts I needed so I grabbed a few Leading Indicator charts while I was in the layout which also show an intensified move toward leading indicators with increased negative signals along the lines of VIX assets with increased positive signals.
Just to tell you why I think this is important,
it's not just position management for VIX PUTS, which have already lost quite a bit of value today because they did not move down as their relationship vs the market would normally dictate, thus a bid for protection.
Leading Indicators
Our SPX:RUT Ratio went positive twice at the white arrows and white trendiness at price, both bases (
the second one from the left is the April base), but instead of confirming the upside move, the indicator diverged and since the yellow trendily, has picked up downside ROC to an extreme degree.
There's no confirmation here whatsoever, in fact the worst leading signal you could have for this indicator suggesting BROAD market weakness.
Friday I mentioned that if we saw price in the market /SPX (green) move up and HYG (High Yield Corp. Credit) move down, we'd have a bigger, stronger Leading Negative signal in HY Credit, that is exactly what has happened today and on looking at a bigger picture view...
HYG first went negative by refusing to make higher highs with the SPX (green) at the red arrow, but now it is flat out leading the market lower, this is what I hoped to see when I said I thought we'd see a bounce which started Friday,
Still Leading Indicators, but now all VIX Assets...
The easiest way for me to show you what the normal correlation between the SPX (green) and VXX (short term VIX futures) in blue is to invert one or the other as under normal circumstances they trade mirror opposite and it is more difficult to see differences in relative price performance so I inverted the SPX prices (green). To the far left you can see a more "normal" correlation where the two are moving together (
in reality this would mean they are moving exactly opposite each other). Today however you can see that VXX is not only out-performing the SPX (has a strong bid under it), but it actually went green on the day while the SPX was green as well, it should have been red if the SPX was green.
This is what the chart would look like if I didn't invert the SPX prices, it's not as easy to see the differences in performance, but
even here you can see VXX has moved above Friday's close (red arrow and small blue trend-line). And this while the SPX was still above its close Friday-remember the normal mirror opposite relationship.
Even Spot VIX is outperforming the SPX correlation.
As for actual VIX futures (not ETFs)...
Again intraday today like last week, VIX futures have a positive divergence earlier as price moved down and 3C up to the left and a stronger leading positive divergence as VIX futures hit their intraday low for the new week.
This is the VIX futures 30 min chart which has shown numerous positive divergence over the last 2 weeks in many timeframes and they are accruing in a leading positive divergence on a strong 30 min 3C chart which is highly unusual for VIX futures to show (divergences this far out).
This is multiple timeframe/Multiple asset confirmation.
You'll see VXX (VIX short term futures), UVXY (2x leveraged VIX short term futures which should show the same or similar 3C signals for confirmation) and you'll see XIV which is the exact opposite of VXX, Inverse VIX short term futures or Inverse VXX, for confirmation, XIV should show the exact opposite signal compared to VXX or UVXY.
VXX 1 min with a strong signal of accumulation today, likely the reason they did not move down as normal and even moved in to the green. We saw this last week too.
1 min XIV showing distribution at it's highs this a.m. (same time as VXX's intraday lows).
Confirmed.
VXX 3 min with a strong leading positive divergence with an exceptional move today showing strong accumulation.
3 min XIV showing the exact opposite with a strong leading NEGATIVE divergence or distribution in to price highs.
VXX 5 min trend in 3C leading positive.
UVXY 5 min (2x long VXX) with an in line (trend confirmation) to the left and a leading positive divergence to the right . This is a longer chart which is why it looks a bit different.
This is 5 min XIV, the same length as UVXY above, showing the same confirmation of the trend previous to the most recent (up) and a leading negative divergence now...
CONFIRMATION.
10 min VXX confirming the price trend at the green arrow and leading positive / accumulation at the white.
UVXY showing the same chart/signal.
XIV showing the same timeframe with the opposite signal CONFIRMATION.
VXX on an extremely long 60 min chart with a negative divergence/distribution and downtrend that is confirmed until the positive divergence/accumulation to the right.
UVXY 60 min showing the same exact thing.
And XIV 60 min with accumulation to the left (the mirror opposite of VXX/UVXY distribution on the left side of their charts) , then a relative negative DIVERGENCE and a stronger leading negative now, CONFIRMATION.
The recent movement has been so strong,
my initial gut feeling is that this current market bounce we have forecasted for approx: until Wednesday, likely sees an unusual, but very fast, sharp "V" reversal to the downside. That's my take-away from the recent changes in character and the much more extreme accumulation/distribution signals. It looks like someone with deep pockets knows this most recent bounce is subterfuge, a facade and when it fails, it fails bad which I have already said I fully expect to see a new lower low in price made and with the $USD also turning to a new lower low.
These are different assets, but have a high degree of influence on each other right now for reasons I have gone in to recently. The net result should be they create a self-reinforcing, cascading snow ball effect.
No comments:
Post a Comment