CBOE VIX Futures / VXX / UVXY / XIV

Last week our custom, DeMark "inspired" indicator fired off a buy signal for the VIX, these are infrequent, this would be the second one this year for the VIX, the first one took the VIX 52% higher.

I also have the direct CBOE VIX Futures, not just the short term VIX futures (VXX).

When I mentioned a VXX setup earlier in the week, Tuesday in fact in this post, "Volatility" I showed you what the set up I'd be looking for, this is all based on market behavior and psychology and is backed up and later confirmed by indicators, I hope you have a chance to go back and read the post linked above.

Here are some excerpts from it...

"...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. "

"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"

All of the above, including the charts are from the "Volatility post from Friday including the very last one showing the break below the Descending Triangle that I was expecting, after that it is a matter of volume and 3C confirmation, that brings us to today, 2 days later.

These are the current charts...

 These are the current 60 min VXX charts doing exactly what I said to expect them to do in the post from Tuesday.

This is a closer view, if you read the "Volatility Post" you'll see this is EXACTLY what I said these would do based on the predictability of Technical traders. 

The reason I was/am interested in the assets is not just because of the price pattern that is used against technical traders because of their predictability, it's not the proportionate basing pattern in VXX, it's not the positive 3C signals in place before the move below the triangle took place, it's all of the above as this is almost a perfect conceptual scenario of the market.

One thing that is necessary for a head fake move and one of the reasons for running it is to create supply, that means an uptick in volume which you can see above in yellow. That supply has to show that it has been accumulated.

 This is the most recent buy signal in the VIX that I mentioned above from last week, the VIX hasn't traded under it yet.

This is the 1 min CBOE VIX Futures with a leading positive divergence...This is a pretty good indication from the future itself that the move is being accumulated.

 And this is the 5 min VIX Futures, also a leading positive divergence, these are VERY similar to the VXX/UVXY and XIV signals.

 This is the 3 min intraday VXX chart, again, the move below the descending triangle HAS to show a positive divergence to confirm a head fake move vs. a regular break down.

 This is the 5 min VXX chart, it too shows the same so there's confirmation as well as migration of the divergence once the break below the bearish triangle (in Technical analysis vernacular) takes place.

 This is the long term 2 hour or "Big picture chart of VXX.

What I look for in 3C charts like this for confirmation and good signals are good signals in the past, for instance the confirming green arrow at the uptrend to the left, the red distribution at the top, I would draw, but forgot to, a green arrow confirming the downtrend, but you can see 3C moving lower with price. These are all good confirming signals in the past for VXX.

These signals give the current large white positive divergence which is standing out now a lot more credibility.

However, above and beyond that, I confirm with additional assets that are managed by different companies, such asUVXY below managed by Proshares rather than IPath and is also 2x leveraged.

 Note the signals are nearly identical.

XIV is not only managed by a third company, Velocity Shares, but it is the inverse of VXX and UVXY and 2x leveraged to boot which means the signals here should (if they confirm) be exactly the opposite.

A look at the signals reveals they are the opposite of VXX and UVXY.

This is where I want to be a buyer of these assets (if you like them), this is the strongest, highest probability, lowest risk set up for the asset.

You know they trade opposite the market so keep an eye on them.