Volatility / VIX / VXX

As mentioned last week we have some members trading the VIX options and making good money (40% on a quick trade). So this VIX/VXX update is for them, but as the VIX has an inverse relationship with the market, it is also an update that addresses market conditions more broadly. A move up in the volatility indices is bad for the market, a move down is generally good for the market. The VIX has longer term implications, the VXX has longer term implications as well, but also intraday implications. Last week I updated both as well as the long term daily positive divergence in the VIX which is about as strong as we have seen in several years, that does not bode well for the market, along with the rising SKEW index, nor does the fact that the DOW had no volume at 13k and couldn't hold it.

 VIX intraday is looking worse then the VXX intraday below.

 The VXX looks like it is forming a consolidation symmetrical triangle with volume confirming, this is sort of like a Bollinger Band Squeeze and the closer we get to the apex, the more likely we see a highly directional move in the index and the market.

 This 2 min VXX chart has a lot of green arrows just to demonstrate how often 3C has confirmed price action, so the divergences are rare, the first was a negative in red sending the VXX lower, but that has now gone positive and much stronger then the negative divergence that sent it lower.

 The same indications are seen on a 5 min chart, the negative divergence is the same as above and current positive leading divergence.

Today for the first time, the 5 min strength has bled in to the longer 15 min chart and it is now leading positive. It appears the volatility indices are preparing for a move higher.