I am combining these two posts because they are inseparable as to the reasons for taking the May 15th VXX $21 and $23 Puts off the table, even though we have a strong 10 min divergence in the averages (positive) and VXX (negative) suggesting the market has more to this move,
I can't rule out a near term gap fill and with May 15th expiration next week, I can't afford any loss of momentum or consolidation, thus I decided to close the VXX put positions (for now) and book those gains which have only deteriorated since closing the two put positions.
First, here's the P/L for the VXX May 15th $21 and $23 Puts that were just closed at 12:21 pm EDT, Taking Both VIX Puts off the Table
Our VXX May 15th $21 Put had a cost basis of $.56 with a fill today of $.80 for a gain of +.42%
Our May 15th VXX Put with a strike of $23 had a cost basis of $1.69 and at a fill today of $2.49, the P/L came out to be a gain of +47%, not quite as good as if they had been closed a bit earlier but still a decent gain for a 1-day move.
As for the charts and reasons, one of the main reasons was the expiration and increasing Theta decay of the options as they expire next week so even if this move is going to make another higher high, if it consolidates or fills the gap first, we'll have trouble that is just not worth taking the risk of when we can always re-open a new position with a longer strike and while we have a very respectable +40% to near 50% gain.
Bulls make money, bears make money, PIGS GET SLAUGHTERED".
VXX 1 min intraday showing interesting leading divergences.
UVXY (2x long VXX) also showing interesting intraday positives.
XIV, the inverse of VXX showing a confirming 1 min leading negative divergence.
VXX 2 min also leading positive so there's
some evidence of migration or a strengthening divergence.
UVXY 2 min confirms the same thing is occurring. While price would move similarly in UVXY as a 2x leveraged version of VXX, volume can and usually is totally different. If there weren't true, actual confirmation, it wouldn't show up hurter. The point is, just because these assets are locked t move in unison with regard to price, the actual demand via volume can be totally different
, the 2x leveraged ETF is mandated to move 2x the underlying, IT IS NOT MANDATED TO MATCH VOLUME.
XIV 2 MIN which is the inverse of VXX is confirming with a leading negative divergence and no confirmation the same as the averages (which it moves with as VIX moves opposite them).
VXX 5 min is starting to see migration of the divergence to a strong intraday timeframe giving me some pause and concern as this just became more than simple intraday movements as the 5 min chart is the first or earliest timeframe I consider to show institutional movement intraday.
XIV 3 min leading negative
And for now, VXX 10 min is still in line with the move lower as the averages are with the move higher. This doesn't mean a near term gap fill is not possible which would kill our VXX gains.
XIV 5 min leading negative as well
As for the averages, hopefully the charts are still relevant as these are fast moving intraday timeframes and it takes some time to capture and post them.
SPY
1 min showing intraday deterioration in line with VXX findings.
SPY 2 min absolute lack of confirmation, not even trying. As I speculated earlier, this may be because the $USD hasn't moved much and I made a strong case yesterday for a $USD based or supported move.
SPY 3 min seeing some deterioration,
QQQ
QQQ 2 min seeing the same and no confirmation which on this timeframe could have happened within the first 15 minutes of the market open.
3 min leading negative deterioration which is getting more serious, at least near term.
And QQQ 5 min showing the
minimum 3C based price target on the upside according to where the divergence first started on this chart as we often see price move to that area as a minimum target, often exceeding it (at the green trendily).
The relative negative is obvious and
while relative divergences aren't as strong as leading divergences, the fact that it is on a stronger 5 min chart is the issue.
Like the SPY 10 min, the QQQ 10 min is still leading positive suggesting for now that we have more upside to go, but
I can't rule out a gap fill first as FEW THINGS MOVE IN A STRAIGHT LINE IN THE MARKET (except perhaps an intraday short squeeze).
IWM
2 min negative which may not be a big deal on its own,
but this is why we use MULTIPLE TIMEFRAME AND MULTIPLE ASSET ANALYSIS AND CONFIRMATION. Each chart is a piece of the answer, not the answer in and of itself.
IWM 3 min seeing increased intraday leading negative signals.
It simply was not worth putting those hard earned gains at risk when we can always re-open a new and more appropriate position if need be.
IN THE TIME THAT HAS ELAPSED SINCE THE CLOSING OF THE VXX POSITIONS, THEIR GAIN HAS BEEN CUT BY 1/3RD.
