Short Term VIX Futures....

I've talked about and illustrated this 3C concept before, but this is another chance to show you a good example of it and we'll come back and take a look and have an "After action report".

First VXX and UVXY (the VIX short term futures), these move opposite the market, UVXY has 2x leverage.

 VXX 3 min, the negative and then leading negative divergence at the top at the same price area is a somewhat interesting event, just showing the difference between price at the exact same level but the second time there had been significantly more distribution.

There are two areas of positive divergence here, this is a concept that is a bit more rare and we don't get to see that often, but in just about every case over years of using 3C, wherever the first divergence starts, price almost always significantly passes that area which I marked roughly with a green hash mark by price of where the first started. The reason this is interesting is because it takes institutional money a while to put together a position, if it's a large position for a large bull market trend, it can take up to a year. The point is in this case the with accumulation continuing in to lower prices (the same as they sell in to higher prices) there's an average position cost somewhere in the middle, typically as we see stronger divergences toward the end I'd presume most of the position is at the lower cost, but in my experience even though they wouldn't need to pass the area where the divergence first started to have a profitable trade, they almost always do and usually by a pretty significant margin.

 5 min UVXY shows the same two areas, also notice how flat the range of the last two days has been despite price and the fact VIX futures trade nearly mirror opposite market averages' price.

The flat range also opens up the higher probability of a head fake move right before a reversal, however I'm not sure that this behavior is as prominent in something like VIX futures vs a stock controlled by 1 market maker or specialist. In any case the other concept would be that distribution and accumulation are most often seen or at their strongest at these flat areas, this is why I always say, "Quiet markets are like the kids in the room next door being a little too quiet, you know they are up to something" and a flat range like that is about as quiet as you get.

VXX 15 min also shows the two same areas at the exact same place/level with a stronger leading positive now.

XIV is the opposite of VXX, it trades with the market, for confirmation VXX and UVXY should have the same signals and XIV should be the opposite signals.

This 5 min chart is clearly opposite, it also features the very flat range seen as underlying trade is prominent.

XIV 10 min is pretty much the mirror opposite with the start of the move being almost exactly the same , but mirror opposite, the same price level 2x with a stronger leading positive at the second test of the low.

We also see the same two negative divegrences like VXX has the two positives, I didn't look at the exact date, but I'd bet they are the same date.

XIV 15 min leading negative and much stronger on  a long term timeframe that usually takes some time to move, it is quite a move in a short period and right where price is in a tight/flat range.

Obviously I like VXX and UVXY long and as I said, they trade opposite the market.