Our VXX calls are in to the double digit gains since Friday, I like to capture early momentum and live to fight another day when it starts to fade, but I have a feeling we'd be selling ourselves short by taking the initial gains. If you don't have the risk tolerance to watch a gain turn to a small loss on some draw down, you may wish to trade around it, there's always the chance of the AAPL effect or curse rather, trying to be too much of a surgeon in trading rather than just letting a course of antibiotics do its work.
For example, the SPY gap today looks ripe for the filling, looking at price only that may look scary, but I don't put much emphasis on price only, here's what we have and why I'll be holding the VXX Calls (remember there's always a middle path, like taking initial investments off the table and letting gains run or taking partial profits and adding back at lower prices, it all depends on your own risk tolerance and that is not good or bad, there's no right level of risk tolerance, it's relevance is what is important for your own personal trading and success).
SPY 2 min was very clear Friday that distribution had set in and with all the other indications that we'd be seeing early downside this week.
The 3 min chart shows migration
As does the 5 min chart, but it stops, for now, short of a large move and more around a pullback size move which is what was expected.
Intraday the 1 min so far has confirmed SPY price action, it wouldn't be hard for the SPY to gain enough intraday strength to fill today's gap, sending VXX calls to losses.
However, it's the 5 min chart you want to focus on, right now that';s the highest probability of where the SPY is going and it's on the course of a pullback, the last post showed several targets, VXX trades opposite the SPY.
As for the VXX and I confirmed these charts with the actual VIX Futures already...
VIX intraday is also in line, but it wouldn't take much for that to slip and a pullback of very short duration (SPY gap fill) to take place.
The 2 min chart is much more powerful than we might expect so quickly and...
The 5 min chart is leading positive. With the SPY 5 min negative suggesting a pullback of some merit and the 5 min VXX/UVXY and VIX futures all very strong, the probabilities are high for a move that lasts quite a bit more than the opening action, for that reason I'll leave the calls in place although it's not what I'd typically do, I feel we'd be selling ourselves short by taking the gains available now and possibly missing out on much more significant gains.
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