VXX - VIX Futures

This post has been hours in the making, I apologize.

Yesterday I covered VXX here, VXX / VIX Futures. The gist is I like the way it looks, I like the relative price performance VIX/VXX has been showing vs the SPX all week, I just don't believe in sharp "V" reversals holding up and there's a particular reason for that. We enter trades at 100 shares at a time or whatever the case may be, but it's much different than the size Pros trade in and the support for these moves is coming from the pros. For the size of their positions, they need time to enter without triggering the supply/demand dynamics that send price up and away from their position ( a bad entry), thus they have to do it in smaller chunks, but much larger orders. This is essentially what the reversal process is if I had to describe it in a paragraph. Of course there are many more subtleties involved, but that's a rough description and reason for a reversal process.

I also said I wanted to see the 5 min VXX chart at a new leading positive high, this is the evidence of pros accumulating through the reversal process.

As I'm writing right now I see the TICK is breaking the intraday down trend change, which believe it or not, I actually like for VXX and setting up a long position/add to, etc.

So lets take a look at where we are now...

 VXX (VIX Short Term Futures) 1 min showing the negative divergence that suggested a knee jerk reaction pre-F_O_M_C on Wednesday, here's the post showing the change just about an hour or so before the 2 p.m. F_O_M_C on Wednesday, Market Update and Initial Trade Plan.

Note the rounding-like reversal process in VXX, this is what I was talking about yesterday. A bounce in the market in this area would bring VXX down a bit and fit a bit better in to the reversal process so it's  actually a good thing for the bigger picture.

 XIV is the inverse of VXX, it moves with the market rather than against it like VIX or VXX. The 1 min negative divergence is confirming the VXX chart, this too is a reversal process, but to the downside.

 At the VXX 3 min chart we are cleaning up some of the short term noise and unveiling more trend, it is leading positive so that's good.

 However, the chart I specifically mentioned yesterday was the VXX 5 min which had been leading positive, but not at a new leading positive high which is one of the criteria I wanted to see before entering or adding to a VXX long position. Today we have that new leading positive high.

 However there's an even bigger picture to this chart, VXX 5 min.

This shows (to the right) a "W"-type base or reversal area, the divergence in the area has progressed and become stronger.

 The 5 min XIV (the inverse ETF of VXX ) is showing a confirming 5 min leading negative divergence that is hitting a new leading negative low today which is confirming the VXX 5 min above.

 UVXY, the 2x leveraged long of VXX and is hitting a new leading positive high as well, confirmation of VXX 5 min. There's a small head fake/stop run at the yellow arrow, although this is not the kind of head fake I'd use as an entry as it is so limited in scope and the volume-stops/shorts was noticeable, but not anything that gives us as an edge as to the head-fake entry concept.

The VXX 10 min chart is one of the majors I have been watching and it is leading positive after a period of 3C confirming the downside price action. I highlighted the area of the SPX May head fake area in yellow.

The 10 min chart of XIV, the inverse of VXX is confirming with the same trend confirmation to the left, except it is the inverse of VXX so it's an up trend, and then the leading negative in the area.

The longer term 60 min VXX is self explanatory as is..

The 60 min XIV.

It's the 5 min chart in VXX that shows a very interesting bottom formation...


This is something I can sink my teeth n to and the reason I have not been concerned about missing the short term exit in VXX calls earlier this week as I was willing to hold them if I didn't get the price concession Tuesday morning.

I do like VXX here a lot, however I do believe an intraday bounce as I expect from the market before the close, will make the trade that much better.