Calls and Volatility

Here are the SPY Jan $140/$145 Calls, I closed 1/2 of each like the Q's, I'll look for a head fake move to the upside and just be a bit patient and see how trade develops as it's very early, but I had a feeling this early volatility was something to take advantage of.

As far as the Fiscal Cliff, it won't be long before the market starts thinking about the next 3 Cliffs including the Debt Ceiling and how Congress handled (or failed to handle) this one part (taxes). At that point sentiment changes and we likely move to trend #2, which I expect to move below the 11/16 lows.

Any way...

 $140's about 43%

$145's 100+%

As for  volatility in VXX and the leveraged UVXY (remember positive divergence in these suggest upside and these move opposite of price)...

 VXX 1 min is already in a leading positive divergence, this makes sense with what I expected from trend 1, a fast, strong, but short lived move (so far we have the first two components).

 A little further out and the 2 min VXX is in pretty good shape, this isn't a huge divergence and at this point more intraday that anything, but it is the start of some cracks in the underlying tone of price.

 VXX 2 hour chart, a very important timeframe with a HGE leading positive divergence, this points to the strength of trend #2, VXX would shoot up, the market down.

 As for the leveraged VIX Futures, UVXY, similar signals on the 1 min and 2 min.

 This is the 10 min with a negative divergence and a head fake move right before the reversal as is common, the move down correlates with the market move up. I'd like to see this go positive before I really felt comfortable with calling a market downside reversal.

At 60 min (the 2 hour is just as strong as VXX), we have a positive divegrence here, this is a stronger signal, a longer trend and I believe part of trend #2 that comes after trend 1 which we are in the middle of now.