VXX Comments

You may recall a period of maybe about 6 weeks or so in which there were no VXX trades, I just kept waiting for the right set up and it just didn't come, VXX looked like this at the time...

 VXX was moving up in this trend, but these are not the explosive trends I'm looking for. You may recall I mentioned numerous times that there's a certain "Flying" leading divergence that VXX gets when it's ready to go and it seems only VXX, UVXY, SVXY (or other VIX futures related assets) see this kind of divergence, it's not something I see in equities very often if ever and I suspect the reason is because the VIX, which is also called "The Fear Index", really sees strong underlying movement (3C signals) when there's real concern/fear as fear is one of the two emotions that move the market, Fear and Greed with Fear being the stronger of the two; if you don't believe me just look at any bull market followed by a bear market and see how long it takes for the bull market to run its course and how quickly a bear market erases all of the gains and then some.

Here's an example...

The bull market starting from the 10/10/02 lows that ran to the 10/120/07 highs is roughly 5 years, all of that was retraced and then some in a mere 18 months, most of the damage was done from 5/21/08 to the 2009 lows which is about 11 months.

The point is FEAR IS STRONGER THAN GREED and the proof is right above.

This is why I think we sometimes get these unbelievably vertical VXX divergences that I don't see in any other asset. The fact that we didn't have anything like that for so long during the period above I showed you is why there were no VXX trades during that period, luckily things have changed.

 This is a 1 min chart which we normally use for intraday trade signals, but 3C is a cumulative indicator so the trend of the 1 min chart is full of information as well and that's a very vertical signal at what looks like a textbook reversal process/rounding bottom. Of course we often see a head fake move just before the asset takes off, but if there's 1 asset in which we don't need to see it as often, it's VXX and again, I think that's because of fear, who needs to play games for a little better position when they're in a panic?

 This is an intraday look at the 1 min chart, there's a chance that this was a head fake move earlier today in the a.m. session, whatever it was, it generated a very positive divergence.

Now, this 5 min chart (which is where I really take signals very seriously), is a good example of a "Flying divergence", I don't see these in any other assets and given the Index futures charts Revisiting Targets Again & Market Deterioration Moving Fast, that might explain the signal-especially the momentum today.

Here's the 10 min chart and the reversal process I almost always look for as reversals are almost always a process rather than an event (which would be more "V" shaped"). The fact that this chart pushed to a new leading positive high as well on very strong intraday momentum (just look at today's move) makes me feel pretty good that I added to this position earlier today, Trade Idea: Adding to VXX May 17th $43 Call Position

I'm not sure what tonight's Index futures hold in store for us or what the 8:30 Non-Farm Payrolls is going to do, but there's already deterioration in the intraday 3C signals for the futures after hours, just as it started last night.