TLT & VXX Follow up (P/L) and charts

First the P/L from the closed TLT and VXX positions from earlier, Closing VXX June 19 $120 Calls and VXX June 19th $19 Calls which I corrected as the $120 calls were TLT, EDIT* Closed TLT $120 Calls

The put position in both looks to be short term by the chart signals which are the same reason obviously for closing the Call positions. I did leave the equity longs in TLT and VXX in place as I'm not worried about draw down and these are meant to be longer swing trades if not more in VXX's case at least.

However very near term, the short term does look probable for at least a speculative position in puts as posted just 15 minutes or so ago.

As for the closed Call positions P/L first, the VXX position was opened last Wednesday, Trade Idea: VXX which also explains treating the two positions (VXX long equity and VXX Calls as 1 position for risk management reasons).

The VXX position was a VERY minimal gain, this was more to keep the position from any losses, but still came in at +2.5%

The TLT add-to Trade Idea: TLT Long, which was adding to the original 2x long TLT (via shorting TBT, thus creating a 2x long TLT position) position meant as a longer term trend position, was a shorter term fill-out of that position, also treated as 1 position for risk management purposes.

The P/L for TLT was much better at a gain of +50.4%

Here are the TLT and VXX short term charts and reason for closing the Call positions as well as opening the new speculative put positions.

TLT (20+ year Treasury bond fund)... I'm expecting a counter trend bounce in TLT, however this is more of a shakeout move that is expected, but as with most counter trend bounces/rallies, these are some of the strongest rallies you'll see in any kind of market even though they typically occur in a downtrend, they are almost always far stronger than bull market rallies.

For proof, just look at the counter trend bounce/rally we forecasted in the $USDX with the strongest weekly move last week since 2008 and this is a counter trend bounce within a larger  downtrend.

 However right now the options positions are for very short term moves. This is today's 1 min TLT chart showing the leading positive divergence late Friday with price picking up where the 3C divergence left off on Friday and moving much higher. 

However on a very near term basis today we are seeing negative divergences in TLT as if it is setting up for a short term pullback, perhaps a gap fill of today and maybe some depending on how much more today's negative divergence develops.

 TLT 3 min chart is showing migration of the 1 min negative divergence today (strengthening as it moves to a longer timeframe). You can likely see the leading negative signal to the far right of the chart.

And on a 10 min chart which is a much stronger timeframe, we have a weaker form of divergence, a relative negative divergence, but on a much stronger timeframe.

As to why this is a SPECULATIVE position, the bounce or counter trend rally to the upside is still expected and still the dominant signal, that's why these put positions are short term and speculative.

 This is the much stronger TLT 15 min chart with a LARGE leading positive divergence signaling a counter trend rally.

For the reasoning behind this trade set up, see the original trade idea here, Bond Rally / Swing. This will explain the head fake move or in this case specifically the volatility shakeout of new shorts in a trade already thick with treasury shorts.

 This is the daily TLT chart. You can see TLT has made a lower high and a second lower low breaking below the long term trend line. Technical traders will go short on the break of the long term trend line just like they'll go short on the price break below the neckline of a H&S top, which is EXACTLY why we won't. Wall St. knows how technical traders think and respond and they'll shakeout the new shorts on a volatility shakeout above the trendily creating a short squeeze and very strong counter trend momentum, the same way as they do with the break of the neckline of a H&S top. 

However as the base for the counter trend bounce develops in TLT below the trendily, it looks like the daily candle today is seeing resistance/distribution as it has a long upper wick in addition to today's negative divergence above.

VXX (short term VIX futures) which move opposite the market.

 On the 1-min intraday chart we see accumulation/positiver divergence in to the close Friday and price picking up where Friday's divergence left off. However in to the price gain today we have a negative divergence on the 1 min chart...

Which has migrated to the 2 and 3 min chart above...

Again the larger trade we are looking for is VXX to the upside as this 15 min chart leads positive, this is why I keep the long equity position in place and why I see the VXX put as a very speculative/very short term trade. We should be entering a new VXX call position on a short term pullback, again like TLT, perhaps a retrace of today's move.

XIV (the inverse ETF of VXX) showing confirmation of the VXX charts. Remember this moves opposite VXX and should give opposite 3C signals for confirmation. XIV moves with the market as VXX moves opposite the market.

Giving a confirming signal on the intraday charts from 1 to 3 min above, we have the negative divergence Friday in to the close and price picks up where 3C left off with a move lower which we captured with VXX calls earlier. However as VXX shows a negative divergence today, XIV shows a confirming positive divergence today (3 min).

And like VXX's 15 min chart with a strong leading positive divergence, XIV's 15 min chart moves from 3C price/trend confirmation at the green arrows to a leading negative divergence (the opposite of VXX's 15 min leading positive divergence) and the reason this is the larger trade and the VXX puts are the shorter term , speculative position.

XIV moves with the averages and VXX moves against them. We have confirming signals in SPY, IWM and QQQ today. I simply don't want too much short term , speculative  exposure. However a SPY, IWM, or QQQ call position could be used, I just liked the charts of TLT and VXX better at the time.

 SPY intraday today on a 2 min chart not only with a positive divergence, but the rounding reversal process (yellow arrows).

 QQQ 3 min showing Friday's closing negative 3C divergence picking up where it left off today from Friday's negative divergence as was shown in the Daily Wrap Friday... Today a positive divergence confirming the VXX, XIV and SPY charts above.

 IWM 5 min also leading positive today intraday on the decline and a lateral price trend reminiscent of a very short term intraday base for a bounce. IWM looks like it needs to come down toward this morning's lows to build a more stable base ("W"-shaped).

Looking at the same 5 min chart of IWM on a longer trend basis, you can see why any long position here would be very short term and very speculative as we have a stage 1 base at the 5th/6th/7th of May like all the other assets, stage 2 mark-up 3C confirmation at the green arrows and stage 3 top distribution at the red arrow/box as price is lateral and the start of stage 4 decline.