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Sunday, May 6, 2012

UVXY - Popped but NO Sizzle

SPX did confirm negative early May cycles with a mini waterfall last week.  The VIX and VIX futures popped, but did not spike strongly.  According to the cycle analysis, while early May cycles were weak, the dominant feature of May cycles is a very positive middle part to the month particularly the week of May 14th.

UVXY could still have minor upside to near the red line, but it should drop just under $10 in the third week of May.  The drop would then complete a large wedge pattern with the white trendline marking the upper boundary. 

The target for UVXY in June is $28 with VIX making a massive spike up.  June SPX cycles are dramatically negative, and start to turn negative late May.    

60min Chart

63 comments:

  1. Hi SC,

    I know you are probably so busy but please share your gold and silver charts and comments at least due to we are waiting for more than 2 weeks.

    Thank you sir,
    RB

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  2. I haven't forgotten about Gold/Silver. The action has been slow for the metals, and I've been waiting patiently for the best time to show some charts. I promise to do an in depth update tomorrow.

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  3. Thank you Sir,
    Greatly appreciated.
    RB

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  4. If May 7/8 isn't a high, then maybe it's a low!

    http://s15.postimage.org/k81sh9ukr/collision.png

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    Replies
    1. Yes, I think so. Copper is trading higher than April. Good sign for a low.

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  5. The possibility of this weekend drop is why I waited until Monday to buy XIV. Will likely take a position in the morning.

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  6. Soon the media will be spinning the lower oil prices into a positive.

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  7. Zig,

    Tx........one more? When would you decide your cycle broke? If lows come out of 4/10 as you commented they will not? Tx, you ever had ulcers? lol gj

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    Replies
    1. The cycle is probably broken if we fail to see new highs by late September. It's possible this May 8th peak came early and the next low is around June 5th. I'm still a buyer on the dips.

      I'm sitting on a pretty big cushion from my Oct 3rd cycle low, so no ulcers yet :-)

      Delete
    2. Hi ZigZag

      wondering your take onthe coming week? we going lower and lower to your June target from now on? Or you see we may have a bounce still and that your May 8 Peak may have pushed foward to 14th instead?

      Thanks!

      Delete
    3. I don't know for certain on this week and it's possible the May 8th peak came early. The big cycle that I posted here 6 months ago has been pretty darn reliable.

      This shorter term cycle has a probable peak around May 14th and we can't rule out a green close for tomorrow. If it all goes to crap then I would look for a likely June 5th low.

      http://tinyurl.com/czzynr3

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    4. Hi ZigZag

      If we have a green close tomorrow, then would the 14th peak be more likely to happen?

      This peak if it going to happen, would it be a lower peak compare to the recent peak we just had?


      Thanks!

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    5. We don't have to close green today for it to happen, and it doesn't have to be a new high around the 14th.

      Delete
  8. sc, don't you think snp will go 1330-1320? or it will be in June?

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    Replies
    1. No, my waterfall move was correct, but I don't see it reaching that target until June. There isn't enough time left in the negative cycles to make it there imo.

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  9. If I had to take a guess I would say on May 8th we bottom and then go up to the 14th ... and then down again to the 5th.. but really who the heck knows these days .... its a crapshoot over there excuse the francais

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  10. Sc

    What is canadian etf for short vix future...like hvu..do we have any with horizon fund?

    I think xiv is usa based..correct?

    Thanks

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    Replies
    1. HVI is the equivalent.

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    2. So you think going short on vix throuh hvi is good move short term?

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    3. So you think going short on vix throuh hvi is good move short term?

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    4. This is how I'm playing it. Chart above is looking great.

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  11. Hi SC

    Did you happen to have had a chance to get into XIV this morning? Or you see a better opportunity in a later time?



    Thanks!

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  12. Sc
    Idont mean to be stupid but where do
    I find your charts above.
    Regards

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    Replies
    1. I was just referring to the chart at the top of the page.

      Delete
  13. Hello SC !
    Your updates on gold and silver are welcome !
    From a global macro point of view, I would say that euro/dollar is going to drop sharply not thanks to improvements in the US macroeconomic situation but because of bad politic events in Europe (Greece and France).
    As a result, gold and silver will correct.
    I would appreciate your point of view !

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  14. Hi SC,
    Curious what you think about a gold scenerio based on roughly 90 day cycles :

    cycle #1 - 87 days
    June 30-Sept 25 2011 (right translated)

    cycle #2 - 93 days
    Sept 25 - Dec 28 2011 (symetrical)

    cycle #3 - 96 days
    Dec 28 - April 3 2012 (right translated)

    cycle #4 90 days (guesstimate +/- 1 wk)
    April 4 - to 7-2-12 (severely left translated, as 4-11-12 would be the gold cycle high where 4-30 was a lower high).

    This would suggest that we would go sideways to down to the end of June never breaching the April 11 high around 1680. It fits on a seasonal basis over the last few years (previous post 2008 major summer lows on 7-27-10, 7-7-09). I've had this July 2nd date along with an April 4th date pegged for gold lows since last Thanksgiving.

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    Replies
    1. Thanks, let me take a look at that.

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  15. sc,

    Thanks for your answer. do you mean May 14 will be the top(higher high, or lower high Apr. 2)? then down to 132x-133x or down to 10xx? i have some confuse about short term picture and longer picture. Thanks

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    Replies
    1. SPX can form a high in the third week of May. It could be a higher high than April 2, but will review as things develop. Later in May, then the market can start to drop and June looks really weak.

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    2. We'll take it one step at a time otherwise it does become complex. Best to keep things simple.

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  16. ZigZag are you still looking for a move downwards after tommorow may 8th?

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  17. Hi Sami, I don't know for certain if it's going to be the 8th or something closer to the 14th. I posted this short term chart last night and was saying we could go green today. My feeling is we will go up to the 14th before coming back down sometime in early June. Overall, we will probably see new highs for the year by late September.

    http://tinyurl.com/czzynr3

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  18. I'm currently working on Gold/Silver analysis. Finally Gold looks like it is going to put in the lower low I've been talking about.

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  19. I have aged considerably since I bought TVIX in Feb, and I have held with high hopes! I won't trade it again b/c I don't understand it. I should not have gotten into it w/o a much more thorough understanding. Really, though, it is out of my investing realm, and I'm ok w/that. I know TVIX is essentially uncharitable/unpredictable, but does anyone have any thoughts about volatility in the upcoming months? I'm getting the sense that it will increase dramatically. I have been thinking this for awhile, though, and the market complacency has astounded me. I'm in at $17.35 many many shares which is why I simply could not afford to sell. I am not good enough to recoup that kind of money.

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    Replies
    1. you entered in a very high price and it may reach there again or never, simply due to contago month over month...so you might see VIX reaching new high but may not see TVIX reaching that price level..

      your best bet is to trade this and reduce cost.

      Just my opinion.

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    2. Many cycles are pointing to the VIX setting up to spike sharply in June. It'll be a large move up, and then can recoup a significant amount.

      Ratandrea send me an email cyclicalanalyst@gmail.com

      Thank you

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    3. SC,

      But that is in June, how about VIX moving up here? you are still targeting UVXY below $ 10 before june?

      Hows Silver looks to you, daily chart is exhausted and may call for some rebound here...

      Thanks

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    4. My cycles are mixed for much of this week, but the negative cycles are winding down, and the positives are starting late this week. Therefore, the VIX should not move much higher in May than it already has. June should be when it rises.

      Delete
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  21. Joed,
    Well that red yard jart isn't exactly where I wanted it but i'm likin the direction that you threw it. Thanks.

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  22. Hi SC

    Do you see further upsize for UVXY still? It went pass your estimate above 16$ today.

    Thanks!

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    Replies
    1. The last of my negative cycle comes in tomorrow. I think there is little upside for UVXY. Watching XIV closely, and feel it can dribble down a touch more.

      Delete
  23. Ratandrea:
    This is just my opinion, an anonymous stranger on the internet.
    Stock market trading is all about risk assessment and playing the odds.

    Tvix is designed to go to zero, it says so in the prospectus. It will not actually go to zero because of reverse splits, but for all intents and purposes it will go to zero. It loses about 11% per month.

    It is tradeable for short time periods only. You can make your money back easily but not with a buy and hold on tvix.

    If you can't afford to lose half of your money then your chances of losing all of it have just upped. I can't say that tvix will never go to 17 again, I don't know, but if you look carefully at the one year chart of uvxy it may give you some idea of what is in store for it. In my opinion shorting tvix to near zero would be the strategy with the odds favoring you.

    I wish you the best of luck. I have no affiliation with it but the http://vixandmore.blogspot.com/ website has a lot of great information on trading vix futures vehicles.

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    Replies
    1. Would you say Steven then that owning XIV/HVI, the opposite is true since its the inverse of the VIX and benefits from backwardation?

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    2. All bull/bear etfs go to zero in the long term by design. They are not suitable for making long term investments. The key is simply to use analysis to determine when to trade them short term, or sometimes hold them for medium term periods.

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    3. SC, have you seen the chart on HND?

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    4. Yes, natural gas is an example of a market that has declined for a fairly long time. So yes a bear NG etf has worked for quite a while. However, such examples are rare.

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    5. Frankly there is no long term with the markets anyways. Everything is just a trade - some longer than others. All of the uncertainty and instability have created the golden age of trading.

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  24. SS76:
    My understanding is that xiv/hvi would be a possible long term buy and hold. Maybe SC knows something about it I don't.
    Having said that, I would not want to be the one to try it, especially in this market. SC, maybe you know, does xiv lose money in the churn?

    According to the charts xiv went from 19 to 5 in a month last July so who wants to buy and hold that?

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    Replies
    1. XIV has benefited from the drop in VIX futures since Oct. However it decays the same as UVXY as the fund manager balances futures contracts. Definitely not a buy and hold.

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    2. XIV benefits when the futures contract is in backwardation.....where as UVXY/HVU decays because of Contango. You need to understand that as its really important in understanding how these ETF's work. Both are hit with management fees.

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  25. Shorting tvix or uvxy every time they pop up, all the way to zero as a buy and hold would be about as close to free money as I have heard of in stock market trading.

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    Replies
    1. That is possible but then would have to also hedge the other side of the trade. Otherwise a spike in the VIX would present serious issues.

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    2. You are right about the hedge necessity, at least at first. A trade like that could become unglued under extreme circumstances.

      Having said that if someone shorted uvxy at 240 six months ago, I doubt they would ever need to panic from now on, no matter what the vix itself does.

      Delete
  26. You have to consider if its in backwardation or contango.....that is the key....Nat Gas is always in contango which is why the bear ETF is a long term buy and hold....fear only rears its head every so often, HVU will end up leaving you with Zero but XIV won't because markets are designed to rise over time. Backwardation will benefit it however you will still pay the fees. So they are certainly not the same.

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  27. its funny how the us markets always misteriously climb back up while the rest of the markets r near their lows or going lower. I think there is a lot more risk here than what it seems.

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  28. Sc
    If someone was to trade HVU/UVXY/XIV To short the S&P
    And HVI/VIX To go long S&P.
    A Which ETF would you use. I know HVU is Canadian along with HVI
    B) Why does HVI not have the Liquidity of HVU

    Regards

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  29. Today was a big day.
    here is a weekly chart.
    I warn you. this is how ZigZag got me hooked.
    the highs listed are too big NOT to ignore.
    so instead of 7/8 being a high, it's a low.
    that's right, if you are wrong, it's 100% wrong.

    that all said, notice I'm taking a big chance of looking like an idiot by end of week.

    http://postimage.org/image/k5x2m1hoh/

    -GG

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  31. GOld and silver are getting hammered overnight....phew..one more red day in store...

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  32. Hi Sc,

    When can we see your gold & silver charts & expectations?
    Pls share your looking for PMs.

    Thank you,
    RB

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