VIX Charts

You already know about what I think , timing wise taken with record margin debt (leverage) and record investor net worth as well as investor sentiment (Investor Intelligence) with "percentage bearish" levels lower than any reading on the chart, presumably since they've kept records back to 1990, all of this indicates the most sensible contrarian trade of the last nearly 24 years (maybe more) and that's before we even look at the VIX.

Remember earlier this year when the VIX just kept hitting new lows, first a new 1 year low, then 2 year low and then lowest VIX reading since 2007 and then it just stopped, it's at this point where VXX also can be seen refusing to make lower lows, it was apparent then that investors were seeking the safety of VIX, but still not willing to give up on their record bullishness. This brings Warren Buffet's admonition, "When there's blood in the street's it's time to buy", which is just a way to say when emotions have reached an extreme, things are usually on the tipping point of change, the reverse would be true.

 The VIX Bollinger Band, I rarely use BB's except on the VIX, there they seem to be especially useful and I'm sure it's because the VIX is an emotional gauge, even called "The Fear Gauge" A Bollinger Band Squeeze like this I have found to be very effective over the years, the only other indicator I like as much is my Custom, DeMark inspired Buy/Sell indicator which has been right on the VIX on each of the 3 signals it gave this year.

As you know I had said well before the VIX started to breakout of the BB' Squeeze, in fact while price was still under the 20-day moving average on the chart, that after the initial breakout price tends to hang around and pullback to the 20-day then make it's move to the upside, I even posted a chart showing every VIX breakout on the chart (over a half dozen) all pulling back after the initial breakout to the 20-bar m.a. before rocketing higher.

Friday's touch of the 20-day was unexpected, but as you may recall mid last week was a "foggy market" and I suspected something was up with HYG being held together and VXX being suppressed in to Friday.

Today's candlestick is much more bullish, price is in the area, it's a perfect Doji star, perfect balance of indecision which is where we find reversals of trends.

 The Tend 3C showing mostly confirmation, but I marked some smaller positive and negative divergences, the current leading positive is clearly the largest divergence on the chart.

 Plus the actual VIX futures (unlike spot VIX, this is the tradable asset) with a never before seen 4-hour leading positive divegrence put together in what would likely be record time.

Remember the VIX trades nearly perfectly opposite the market.

The 3 min UVXY chart, a very strong positive until last week when it was held up as the red box.

Compare to the inverse of VXX/UVXY, SVXY...

 The 4th is the key date and the current divergence after the 5th.

5 min VXX and the congestion mentioned last week holding HYG and holding back VXX.

Compare to SVXY 5 min.

 The VXX's leading positive in November is the exact same as SVXY's leading negative in November.

 UVXY intermediate/strong 15 min signal leading positive...

compared to SVXY...

SVXY is even worse as UVXY is at least in line in October (green arrow) while SVXY is relative negative, the current divergences are opposite each other as well on a strong  timeframe.

UVXY (just because I can't scale VXX this far out (although this is just the 2x leveraged version of VXX and most think it tracks better), this is a huge leading positive divergence.

Compared to the inverse, SVXY.

These are nearly like the folded paper "Butterfly" images, UVXY slightly negative at the 7th, SVXY slightly positiver at the 7th and UVXY leading positive around the 25th with SVXY leading negative and the current signals as well.

As I said, I'd have a very hard time now not having a position in a VIX long product as Fear moves the market faster than anything, just look at the 4 stages from a bull to a beat market and see how much faster a bear market falls vs a bull market rising. Fear is stronger than greed