VXX / UVXY Volatility ETFs

I'm usually not a big fan of the volatility ETFs, especially in the choppy market we have seen, however because I was expecting a pullback (these ETF's move opposite the market) and because there were some decent signals and these can really move, I decided to open a call position in UVXY yesterday in July 8 Calls

I had some trouble opening the model portfolio earlier, but the UVXY calls from yesterday are up +19% and the USO put position is up over 20% since opening them yesterday.

These volatility ETFs can be very volatile, I prefer not to use leverage unless the trade looks very good, but otherwise doesn't offer the kind of gains I feel are necessary to be at risk with a position open in the market. As such, I try to spend the least amount of time in leveraged positions as possible.

Thus far though, I don't see any compelling reason to exit the UVXY Calls.

Here's an update, I use the non-leveraged VXX most of the time for analysis as it seems to give better signals than the Ultra ETF (UVXY)...

 Here's UVXY on a 15 min chart vs the SPY (red), you can see the inverse relationship the two have, being this is the case, analysis on the volatility indices should be similar, although the mirror opposite to analysis of the market averages, this is just another form of confirmation and the more we look at, the more confirmation we receive, the higher our probabilities are of successful analysis. 3C is named such as a constant reminder, "Compare, compare, compare".

 Here's the 5 min chart of the same, note the volume in VXY looks as if it is in a consolidation in this area.

 VXX 1 min is in confirmation of the move up this a.m.

 The 3 min chart shows a relative positive divergence in VXX followed by a leading positive divergence, as mentioned yesterday, this is typical (to see a weaker relative divergence followed by a stronger leading divergence).

 The 5 min chart since going negative on the 28th has remained in near perfect confirmation of the price trend.

 The VXX 15 min chart shows several negative divergences sending VXX lower, but in the larger context we have a large relative positive divergence with a newly formed leading positive divergence, I like this chart for timing purposes.

 Many of you know that I like to look at the long term charts, there's less detail of smaller individual divergences, but the trend in underlying action becomes much more clear, here we have a VERY clear negative divergence at the top and a clear positive and then leading positive divergence near the bottom. One word of caution when using 3C on volatility ETFs, I generally require the signal to be much stronger than other risk assets, I have found in the past a good looking divergence is often not enough, I'm usually looking for GREAT looking divergences on these volatility ETFs.

 UVXY 1 min this morning fell a bit, this does not always mean a reversal on a 1 min chart, often it is a consolidation, recently UVXY has improved significantly intraday.

 UVXY 2 min is a bit better than confirmation of the move up with a recent leading positive divergence starting to form.

 Removing some noise, the 15 min chart is in leading positive position.

Finally the UVXY 30 min chart shows a clean relative negative divergence at the May top, confirmation of the downtrend and a positive divergence, now in leading positive position.

I may decide to trade around these positions a bit "if" the market gets choppy or momentum looks like it is fading, but for the time being, in the near term I'd prefer to trade these from the long side only until we are fairly confident that a market pullback is near its end.