Friday, January 4, 2013

Short Term Volatility Futures VXX / UVXY

The signals for one are the same for the other so I'm not going to post all of the chart for both.

Basically they have done well and stayed positive in to lower prices which was necessary as the market moves up toward resistance, the correlation is what drives price in VXX and UVXY, they aren't falling on their own like a single stock might, they are tied to the market and almost all of their moves are related in some way to the market.

 VXX 1 min has put in an even stronger leading positive divergence today vs yesterday as price has moved lower, remember that smart money accumulated in to lower or flat prices, they don't chase prices higher.

 VXX 2 min hitting a new leading positive high since before the move up in the market started.


 3 min shows the negative divergence and head fake in yellow as the market prepared for the move to the upside, down for volatility, we have a positive divergence with higher highs as well.

 10 min is significant, the first divergence to the left was short, but strong, then the negative for the market pop, now we have a leading positive just as strong as the last one, but much larger which is better for VXX moving up.

 Just so you see the signals are the same, UVXY, the 3x leveraged version is showing the same leading positive divergence on the 10 min.

This may be trend 4, but ultimately there's a huge change in character in volatility and it looks like someone is expecting an enormous move in the not too distant future, that would mean an enormous move down in the market.

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