The Signal the Screams

That would be, for now any way, the VIX futures which VXX / UVXY are leading. There have been a number of trades, but more importantly almost single asset analysis in which the VXX has been the single most accurate indicator from last week when it was being held down to yesterday just an hour or so before the F_O_M_C answering the question as to whether we should hold the trading shorts in to what you might call the most uncertain and far reaching consequential fundamental event of the year, VXX / UVXY have called not only the last short cycle in which the trading portfolio made its first 9% gain, but then the recent switch to the long side.

I see no reason why this indicator should have any less of an impact now, especially with a directional Bollinger Band Squeeze on spot VIX that has broken out already and done everything it needed to before moving to the mark up stage.

When the VXX signals are so strong that they can't be ignored, we know we have something, that doesn't mean that they are not subject to the reversal process like anything else. So far, they were hinting yesterday at what they've continued today. Around the time I closed the PCLN calls, I ALMOST entered VXX calls and / or UVXY long equity, although I have little doubt the signal will be there, I need that confirmation because I don't know which path it takes to get there and how long that path is.

Here's what we have so far, these signals are not too dissimilar from the averages (inverse) signals that confirm them.

 1 min chart continuing what we saw yesterday, I didn't enter a call because I don't know how large this reversal process will be until the leading positives are so large that they simply won't be ignored.

 The 2 min is beautiful so early in the move from yesterday, suggesting it is indeed the very "Knee-Jerk" reaction we see so often. The knee jerk reaction on the last significant F_O_M_C event was September 13th 2012 when QE3 was announced as an open ended program, by mid afternoon the second day, the initial knee jerk that started around 12:15 on the upside had stalled and that next day, the 14th put in an intraday high that would not be broken until the new year.

It's not just the leading divergence that is attractive here, it's the tight range which I always try to point out as being one of the biggest price based tell-tale signals of heavy underlying activity while most traders consider it a dull, boring market and move on. If you write one price based scan, looking for these tight ranges is the most useful.

Look at this 3 min chart, also note the reversal processes, remember that the bottom process like we are in now is almost always much tighter than the top process so being this is already almost the largest one on the chart, it would suggest quite a strong move that would have a much larger reversal process to the downside when it completes.

The 10 min chart never confirmed yesterday and remains leading positive and has added to that today.

 The stronger 30 min chart wasn't touched at all, it's kind of like taking a withdrawal out of your bank account to invest in stocks long, but rather than take the bulk of what's available, you only take a small portion because you know that you need the rest in place.

The VIX futures 15 min chart also held up and is adding to the divergence today.

The VXX will provide a good long opportunity whether calls or a long VXX or UVXY, SVXY is confirming as are many of the averages, but we aren't done with the volatility, thus I waited on the calls.