The VXX-NOT the VIX, tends to confirm our market theory

The VXX is more reliable then the VIX in my opinion, it is the intraday volatility index and like the VIX, it trades inversely to the market so a strong VXX means a weak market or a strong positive divergence in the VXX means the VXX is under accumulation and should move higher, meaning the market moves lower. I hope that wasn't too confusing.

The indications on the VXX seem to follow the market theory of a bounce that can be used to short in to in the market and then a fall in the market.

Here are the full VXX charts

 The 1 min chart shows weakness in the VXX, which matches with the market positive divergences we have seen in recent updates today.

 Even though the 2 min is leading, relatively it is showing some weakness, again matching up with the markets as they should have nearly the opposite readings.

 The 5 min VXX shows a positive divergence at the lows, this is when the market started to roll this week, it is leading, but there's a little recent weakness, still it suggests any market bounce will be contained and fairly short lived.

 The 15 min chart is much more bullish, this would be bearish for stocks.

 And the 30 min chart is very bullish for the VXX, negative for stocks, below I compare the SPY 30 min so you can see the inverse correlation.

 SPY 30 min is leading negative and looks very bearish for stocks. The 30-60 min charts are more the trend of the market, not short term counter trend moves, so this indicates a bearish trend as the top in the SPY/Market rolls over. At some point that roll hits critical mass with longs trapped, they start selling and we get the snowball effect on the downside which can be a sharp decline. The EU downgrades and the pace they are coming in won't help the trend in equities.

Finally the VXX 60 min is leading positive on the VXX pullback, this again is bearish for equities. Now if we can just get a short term bounce to get good short positioning, all the pieces are lining up. Unfortunately the end of year not only has a lot of window dressing from funds, tax selling, etc, but volume is typically low, which makes all the moves in the market that much more volatile.