As mentioned previously, the UVXY equity/ETF long and the July 17th VXX $18 call positions remain open. I've been watching VXX for either a new entry for those interested or an add-to entry.
I still like this position a lot, even though my original intentions were to exit it last Tuesday morning, but I had made clear back then that even if I didn't get the exit I was hoping for, I still wasn't concerned about the position. I'm still not concerned about the position. I also mentioned in the last post that in looking for an entry in VXX, "The market is going down", is not what I'd call objective evidence. The objective evidence in the form of charts below is looking better and better, but there's still something I don't see yet and therefore haven't put ut any trade ideas as of yet, I suspect I'll know it when I see it.
As for where we stand right now...
VXX daily chart and an obvious range, an easy set-up for a head fake/stop run move. Do you remember the enormous bid under protection (VIX) last week?
If you consider the information in last night's
Daily Wrap from BofA/ML with the client types of net selling last week with some record setting selling and about $4.1 bn of equities sold last week alone to
the greater fool, where would it make sense for some of that money to rotate to? If you're an institutional client selling in what some cases were record amounts of equities last week alone, you probably don't have a very healthy outlook on the market, thus protection would make sense, I suspect that's the reason for the strong bid under VIX / VXX last week.
I'd call the yellow area a head fake move/stop run under a very defined range that usually would be where we'd expect to see accumulation (typical in flat ranges to see acc./dist.). I also noticed something interesting if you consider how orders are filled typically at an area or VWAP, that is the range in VXX compared to the SPX at the same time showing no such thing (considering the two usually move mirror opposite each other).
VXX daily chart in green and the SPX in red, note the SPX shows no similar flat range in the area and the only time the two sync up as they normally would is on the move up in the SPX which we already know was heavily sold and the move down, in to what would be the head fake area in VXX.
Remember that head fake moves have been some of the best price-based timing indications for a reversal (in VXX's case, up).
Charts...
This is the 1 min current equity/ETF long UVXY with a nice leading divergence, especially in the area that would be considered a head fake/stop run area.
What a great set-up for institutional money, sell in to a bounce and buy protection at a discount!
This 2 min VXX chart is probably along the lines of that "thing" I'm expecting to see that I know when I see it. Although very impressive on this chart, it's still a 2 min chart and I'm still siting on my hands for the moment, at least for timing reasons for options. As for equity positions, timing is still very important with VXX, but not as important as with options and certainly not as important with options of VXX.
Last Monday is when we saw a bounce coming as the SPX put in a second tag of its 150-day moving average, I was looking for the market to pullback Tuesday morning and form a stronger "W" base which would have sent VXX up to the yellow trendily where I planned on exiting the position at a nice 50+% gain and then re-entering later (around now), but that move never came, which I had said the day before, I knew I was taking a risk of missing it, but I'd be fine with holding the July VXX options even if I had missed it.
Since, the 3 min chart has led to the upside, especially in our area of interest and is now at a new leading positive high.
The 5 min chart of XIV, which is the inverse of VXX and UVXY and moves with the market is showing a deep leading negative divergence through our time of interest, before that XIV was largely in line at the green arrow, so this acts as confirmation of the positive VXX/UVXY charts.
With 3C, I always want multiple timeframe confirmation and multiple asset confirmation. It doesn't matter that UVXY will move 2x VXX or XIV will move -1X VXX, 3C is also based on supply/demand or put another way, volume and while these ETF managers are tasked with matching price, there's no way they can match volume which is the measure of supply and demand dynamics, thus these are working confirmation assets for 3C.
VXX's 10 mi chart is also clearly leading and compared to the exact same timeframe and length (zoom)...
XIV's 10 min chart is confirming with its negative divergence after a clean confirmation trend to the far left. It's divergences like this and not confirmation to the left that offer us our greatest opportunities as most traders only see price and price aded indicators, not underlying flows and problems with them.
As for VIX futures, they've always been a bit touchy on the 3C charts, but there are some interesting ones that are catching my attention.
The 15 min VIX futures chart from in line to leading positive and...
The 30 min VIX futures chart which shows the last VIX futures move on a 30 min positive divergence to the left with another right now.
All in all, I like what I see, but I'm still missing a chart or two that makes me quickly jump on the website and put out a trade idea as fart as I can.
No comments:
Post a Comment