VXX / UVXY Update

We have some VXX May $43 Calls open, this is essentially exposure that is short the market as VIX/VXX/UVXY have an inverse relationship with the market.

I'm looking at these charts and finding that they have a LOT in common with the market averages I just posted here, Pre-2 p.m. Market Update .

Again, I feel that these will be fine, but I would like to add to the calls if there's an opportunity or perhaps pick up VXX or UVXY as a straight equity long position for a longer trending trade. I prefer to use the leverage of options for very short duration moves to capture initial momentum, but I usually want to be out before they can correct. However if I think there's a good chance of a trade that has at least enough duration to be considered a swing trade, then I don't like as much leverage because I want to be able to sit back a little and not get too concerned about simple, normal corrections, not worry about time decay and just let the trades work.

From the last post, Pre-2 p.m. Market Update, the general idea looked like VERY short term we could see some more choppy noise, but this time to the upside (recall the 2, 3, min charts being positive, etc.), however when we got to 10 and 15 min, even 5 mins for the IWM the charts look very much like we not only move to stage 4 for the bounce that started around April 15th, but we make a new low in all of the averages below the February lows, essentially a larger, more important trend.

Volatility looks very similar... *remember that VIX related assets trade opposite the market so their signals should be opposite the market averages for confirmation.

In the 2-3 min range....

 2 min is pretty much in line with price, this isn't very different than the market averages which were all in line with price at the 1 min charts except for the DIA.

At 3 mins we see a positive divegrence at the rounding reversal process, this is negative in the average and we have a slight negative divegrence today whereas the market averages have a slight positive divegrence suggesting VXX pulls back a little while the market bounces a little, both still seem to be within the realm of the noise / Chop of the last several days.

 The 5 min chart has a leading positive at the reversal process lows as the market averages have leading negatives in the same area, but in the immediate area the signals are weak negative while the averages are weak positive.

If you recall with the averages it was the 10-15 min charts that really were showing clear, strong signals that were negative and leading negative.

This VXX 10 min is leading positive at a new high for this chart and all of April, the opposite of the market averages which is the kind of confirmation we look for.

The 15 mi chart is doing the same thing, again confirming the idea of a short term bounce/noise likely on a daily basis, but the larger trend is coming unravelled as we have already put in head fake moves at stage 3 of the market averages.

Just to take it a little further, the 30 min VXX is leading positive in a big way at a new high for all of April and half of March, likely more.

This confirms the action seen on the last post, Pre-2 p.m. Market Update

The general idea of the last post (seemingly confirmed here ) was,

"right now the charts all seem to suggest that we are correct in largely sitting on our hands as this day to day noise/chop that is up one day and down the next looks set to continue to dominate for at least another day, however, it looks very clear to me that this market is transitioning to stage 4 from this bounce and this bounce in actuality is a volatility shakeout for the SPX and DOW so the downside implications are beyond taking out the lows of April 11th, they are about taking out the early February lows in my view."

I see nothing in VXX/UVXY or VIX Futures that contradicts the thesis above.