Volatility-VXX

We already know that the VIX hit 5 year lows, indicating huge complacency in the market, this has long been associated with market tops and a 5 year closing low just 4 days ago taken with everything else we are seeing, doesn't look good. There's a notion out there and I'm not sure where it is coming from, that market participants on the retail side are bearish. The VIX doesn't show any such confirmation.

However if there were any kind of major, even short term changes coming, I'd expect to see it reflected on the Short Term VIX Futures or VXX. Interestingly, VXX did not confirm the market positive divergences by having its own negatives, instead it held up well.

Remember that the VIX and the volatility ETF derivatives typically trade opposite the market.

 Here's the VXX (because I can't get VIX intraday signals with 3C) with NO negative divergence today at all, in fact it was perfectly in line or what we call price-trend confirmation and even ended the day with a leading positive divergence.

 Here's the 2 min chart's trend, notice anything about the character of the relationship between VXX and 3C? Remember Green arrows are confirmation, red are distribution and white is accumulation. Around mid-August on this chart, we went from in line with the right negative divergences in the right spots to a HUGE leading positive divergence as VXX makes a base similar to the FB base, just larger.

 Taking a closer look at the 2 min chart you can see today's intraday action was not negative, 3C made lower highs with price and lower lows where they showed up, it was perfectly in line, no negatives to suggest even a small pullback due to a market bounce intraday.

 Again, on the 3 min chart's trend, do you notice anything about the relationship? At the same area, 3C is putting in a monster positive divergence/accumulation, this tells me someone or a lot of very big someones are buying volatility up in expectation of a huge move in volatility, which would be a huge move down in the market which would fit our second and third trend assumptions nearly perfect. The second trend assumption was a very powerful move up that would likely make new highs, it needed to be strong enough to pull bulls back in to the market and I think the market has accomplished that. We then expected a head fake move, which we have in place and the third trend which would be the emergence or if you go by 3C trends, the re-emergence of a primary bear market, taking out the June 4th lows.

 A close up of the 3 min chart shows 3C following price today exactly, price-trend confirmation, no sign whatsoever of a negative divergence which is unusual because one of my methods of confirming market signals is looking for the exact opposite in different assets that trade opposite the market like VXX.

 The VXX 5 min chart's trend, again, accumulation at what appears to be a double bottom-remember what I said about Technical Analysis' definition of a double bottom and what the reality of a double bottom in the real world is, this would be a small double bottom (by TA standards), but as we often see with divergences (and this makes total sense if you think about phasing in to a large position) they start off with less intense relative positive divergences (usually represented by arrows) and then they get more extreme, stronger and we usually end with a leading positive divergence which is much stronger than a relative divergence (usually represented by a box around the 3C area that is leading). We now have a new leading positive high.

 A longer view of the 5 min trend, confirmation, 3C is moving with VXX as it should in a downtrend and then a sudden and very strong divergence or accumulation of this short term trading ETF. The first bottom is relative positive, the second bottom is leading positive.

 The VERY important 15 min chart, this is where we see a lot of reversals and strong institutional activity, This shows us a relative positive divergence probably right around the May 1 highs in the SPX and a rally in VXX of over 40% as the market works its way in to the June 4th low, but VXX never really went that negative at the top. This is where it gets a little confusing, when looking at price there's no way to classify the June to present rally as a bear market rally (BIDU is one example where you could classify the move as a bear market rally), bear market rallies are some of the strongest rallies you will see, they have to be to get traders back in the market. The Crash of 1929 and resulting bear market had at least 5 major bear market rallies.

Now, we can't classify the price trend as a bear market rally, but there are so many 3C charts similar to this one that show what appears to be the start of a bear market followed by a bear market rally that is turning now. If this were not showing such signs, then 3C would have made a new low with price, not a much higher low. This is indicative of the accumulation and strength in underlying/smart money trade, it's just strange to see it on such a short term tool such as a volatility ETF. It seems someone is buying as much exposure to volatility as they can.

Finally the 40 min VXX chart, while 30 minutes sounds like a short timeframe, the signals on a 30 min chart can move the market for months, even close to a year depending on how big the signals are. Again, time after time on every timeframe, the theme is the same, a double bottom and a HUGE leading positive divergence.

Why there's no sign at all of anything negative even on an intraday 1 min chart is beyond me, unless I was more correct than I realize that there are too many trying to squeeze out of a closing door all at the same time or there's something in the market being discounted that we don't know about yet.