Volatility Follow Up

Before I start capturing charts for the Leading Indicators and FX post, I'm going to post the earlier VXX, UVXY and XIV charts along with the current ones so you can see how the divergence developed and the confirmation volatility futures were giving in to the market downdraft later in the afternoon.

First the earlier captures of volatility assets, the timestamp on the chart is 2:40.

 This is a longer term or bigger picture of volatility futures via VXX, if it were me and I wanted to get an early start on accumulating volatility long, I'd use VXX and UVXY rather than the VIX futures/options which would be in plain sight.

This is a leading positive divergence and it shows an intraday move to the downside that is confirmation, so it's not doing any damage to the leading positive divergence.

Also while most retail traders believe the opposite, institutional selling and buying is almost always done in to a fairly stable, not very volatile market; they are trying to get an average fill around a certain price and the market bouncing all around is not helpful so we most often see divergences in flat-ish areas or price ranges.

 The VXX 5 min chart also going positive in to intraday lows today...

 Just for confirmation (although UVXY should trade at a leveraged multiple of VXX, the actual accumulation or distribution is determined by volume and the ETF's / ETNs only track price of the underlying asset, they don't try to recreate volume so different ETFs of the same asset can help give you an idea of whether there's confirmation of the signal or not. Here we have the UVXY 5 min chart with a positive divergence in to the intraday lows the same as VXX which is confirmation.

 XIV is the inverse of VXX, VIX, UVXY and it shows the exact opposite on a 5 min chart, distribution in to intraday highs so this is further confirmation.

 VXX 2 min chart shows intraday accumulation is pretty strong, however opening distribution is present, this is exactly the opposite of the market so that is further confirmation being they trade opposite each other. In fact I'll demonstrate this, in this manner if you know what the update for VXX/UVXY is, you have a pretty good idea that the market is showing the direct opposite or vice versa, here's the 2 min chart of the SPY (same as above) backed up to the exact same time (2:40 p.m.); if there's confirmation, the SPY should look roughly the opposite of VXX or close to exactly the same as XIV.

SPY 2 min chart backed up to 2:40 today with a positive divergence on the open, price moves up in to a negative divergence at the intraday high, the exact opposite of VXX above and another chart that confirms volatility/market averages.

Here's VXX 3 min as divergences should migrate to longer timeframes and you can see this chart has a positive divergence in to the intraday lows (as of that time), you can also see the leading positive divergence from Friday afternoon that would give us the expectation that VXX would gap up the next trading day. As VXX gapped up, it was in to an immediate leading negative divergence sending it lower off the opening highs.

Here are the closing charts...

 VXX 2 min shows the rest of the story from the positive divergence at the intraday lows to what is really a leading positive divergence I have marked as in line at the green arrow.

 UVXY confirming the exact same on the 2 min chart with an even stronger leading positive divergence at the EOD.

 XIV (the inverse of VXX/UVXY/VIX) going negative and in line at the close

 The SPY 2 min leading negative at the close

 VXX 5 min also leading positive at the close, the divergence migrated to a longer timeframe

 15 min VXX with a new leading high positive divergence as price is near the flat range lows.

 VXX 60 min with a new leading high positive divergence

VXX 2 hour also making a new leading high positive divergence, it looks like someone is buying volatility, you know what happens when the VIX moves up...