Volatility

Here's the VIX / VXX / UVXY charts I promised in the last post. As you know, our custom indicator that is loosely based on some DeMark principles, in the past has given us some excellent buy/sell signals and specifically with the VIX. As you know we just had a buy signal last week.

Here are the charts, as well as the reasons why (in these assets alone) it's getting hard to ignore them, even though there are some open positions already and a few underwater pretty deep, a few not so bad, but the VXX/UVXY options can move VERY fast in my experience.

In any case, sticking with our normal concepts the VXX and UVXY both have consolidation/continuation triangles, whether you draw them as bearish descending wedges or the symmetrical triangle that has no bias except for the preceding trend, in both cases Technical traders view both as bearish which sets up a head fake move which is something we'd expect to see 4 of 5 times any way, that's our best entry. 

I'd say, if you have a very high standard and can get through a trading day without saying, "I should have...","I wish I had...", "Why Didn't I?" then waiting for the typical head fake move below the triangle with 3C confirmation is by far your highest probability move.

That said, the probabilities are already VERY high for a strong upside move in both and I'd say EXCEPTIONALLY soon.

 The last buy signal from our custom Buy/Sell indicator, which is just a true/false indicator with a set of conditions that are loosely based on DeMark principles and give amazingly similar signals, sent the VIX up about +55%.

This is the 15 min VXX chart which shows a very typical reversal process price pattern that is in scale or proportion with the preceding trend, to the far right is the triangle of the last several days which is often a signal that we are VERY close to a directional move, most often Technical traders are used as these very well known price patterns are used against them.

This is the very big picture 2 hour 3C chart,  I show it because not only does it show the degree to which we have an exceptionally strong leading positive divergence, but it shows a near picture perfect divergence in the exact right place with the right price pattern.

I also show these for confirmation as VXX is managed by I-Path, UVXY is not only a 2x leveraged version of VXX, but managed by ProShares and XIV is a 2x leveraged INVERSE of VXX and managed by VelocityShares. In other words, from 3C's perspective, these assets have NOTHING to do with each other, the only way there is a similar signal between all 3 is if there actually is a similar signal between all 3.

 This is the 2 hour UVXY that looks nearly EXACTLY the same as VXX.

This is the 2 hour XIV which is the inverse of VXX w/ 2x leverage so the signal should be the mirror opposite which it is.

 I was looking at an intraday view of a 3 min chart and it looks to me like this triangle was engineered, the steering currents on a 3 min intraday chart not only form the triangle, but give last min accumulation signals.

A head fake move would almost certainly be BELOW the triangle's support, it should trigger volume and it should see 3C move higher before it breaks out to the upside on the move we'd be looking for.

 Amazingly UVXY in the exact timeframe has nearly the EXACT same 3C signals.

This is UVXY intraday, the point is, as we are seeing a downside intraday price move in these assets, we are seeing the stronger positive divergence I'd hope to see.

In my view if we get a picture perfect head fake set up, then I'd say a VXX call position would be warranted, but I'd also like to have or add to UVXY equity long exposure for a slightly longer move than we'd normally take with options.