A conservative short term target on a breakout of the wedge is $43. The gap area is just above that also.
Notice that the volume has been rapidly increasing over the last week. This is likely an indication of UVXY approaching a major bottom. Bigger picture charts will be coming soon.
30min Chart
Take a look at the following CNBC comment on the VIX.....http://www.cnbc.com/id/49046994
ReplyDelete"Yet activity in the options market shows some very bold bets that volatility could skyrocket in the months ahead. Call option buying on the VIX — bets the index will rise — is close to a record high at 5.182 million contracts, according to Schaeffer's data. The record is 5.249 million set in August.
The most actively traded VIX calls on the Chicago Board Options Exchange were October calls with a strike price of 60. Those also had the highest open interest. The VIX would need to rocket more than 300 percent by mid-October, hitting its highest level in about four years, for that trade to break even.
Open interest, or outstanding contracts, on the October VIX calls with a strike price of 60 was 37,000 while traded volume was around 40,000. Many of those were bought in blocks of 2000 to 5000 for 5 cents each, suggesting a single buyer, according to Todd Salamone, vice president of research at Schaeffer's.
"Somebody's really playing a disaster by October," said Salamone. "If they're looking for something that big, that is not a portfolio hedge because that would be a lot of downside in the market before that hedge would actually kick in."
If CNBC is reporting this the opposite should happen...imo
DeleteSC,
ReplyDeleteIs it fair to say that the VIX made a bullish divergence on the daily chart?
The SPX made a higher high but the VIX made a higher low which I understand always occurs at or near a major market top.
Your thoughts appreciated,
Regard,
Phil.
Yes, the VIX does have a higher low from Aug. I suspect the VIX may still see a lower low yet, but in any case it is holding up well. The VIX is saying clearly not to trust this market.
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DeleteHi SC,
ReplyDeletePlans for this week.
With your 75% position, do you plan on selling this UVXY pop this morning and then reloading back at $30 or hanging on until the 40's before selling?
What are your plans for the remaining 25% cash for UVXY this week?
Tks in advance.
I'll probably just keep what I have for now. I doubt this is a real upside breakout of the wedge just yet though. More likely the wedge is just expanding and probably not mature. I still have more to buy on dips.
Deletehmmm, VIX futures tanking, while the market is red. Looks like the VIX futures are telling us TO BELIEVE THIS MARKET since clearly for them to be down while the market is down, is quite telling.....right SC? Just keeping with your logic above.
ReplyDeleteYes, most likely I think SPX can probably hold up for a few more days before it collapses.
DeleteIts starting to "feel" like the bottom is going to drop out of this market.....
ReplyDeleteSC76...looks like you are into HVU or UVXY and didn't wait for VIX to hit 10! LOL...just guessing based on your comments..cheers..
ReplyDeleteNo, not yet, I want to see a decisive turn first, however finger is on the trigger, and tight stop losses will be in place when I do buy...
ReplyDeleteMentioned this 1455 SPX level on Fri. There should be some support here for the short term.
ReplyDeletehi SC,
ReplyDeletedo you see the S&P making a new high by the 20th-22nd & then turning down?
SPX isn't ready to break down just yet imo. It is possible to make a slight new high, but I certainly would not count on that. I plan to add to UVXY if SPX does pop short term.
Deletealso, do you think UVXY will come down to 29.35, based on VIX Oct coming down to 16?
ReplyDeleteor do you see UVXY going even lower if S&P makes a new high?
ReplyDeleteFor UVXY there is support in the $30-30.70 area imo. It could bounce again from that level back to $32-$33.
DeleteHowever, if SPX makes a new high, then UVXY might be able to see $26 or so before it runs to $43. I'm buying dips for UVXY and building a position for a run to $43.
thanks SC
DeleteSC,
ReplyDeleteMy own view on the mkt is that we might see 1420/1435 on the downside max but then we push higher till the yr end & prob into early next year before any correction takes place.
Can UVXY still bounce in this scenario? If not, I may have to settle with 33/34 on the next bounce as a level to cut.
Thanks.
I plan to take profit at $43.
DeleteWe will get a mild and controlled pullback similar to what we've been seeing intraday....this will lead to decay and and large spikes down on the few up days we have while the SPX declines gradually...
ReplyDeleteI think yr right...pre-opening down over 2% with nothing happening in the mkt. Its impossible to beat this one...decay is over 7% per month.
DeleteLong at 36.1 & going to cut my losses this morning...worst trade ever.
The decay is much more than 7%. Normally it's around 11% but now with traders worried about October the futures premium is much higher and the decay is more like 20% per month at this time.
DeleteHi SC,
ReplyDeleteWhat are your thoughts for the next few days.
It seems that UVXY has been decaying as SPX has been slowly declining. This seems to put UVXY into a precarious state should SPX bounce back higher at this point.
Tks in advance.
what if it trades down to 15 ? NO STOPS ?
ReplyDeleteUVXY is likely to see the lower low according to plan. The wedge is maturing nicely. Once the wedge completes, and breaks out, then UVXY is in a position to spike up, and I plan to take profits at $43.
ReplyDeleteI've been waiting for it to come down to build my position.
But is this based on the mkt falling? If the mkt holds up which I think it will, are you sure UVXY can still perform?
DeleteA pop to $43 looks likely once it bottoms imo. This wedge could take several days yet to complete. SPX would also dip.
Deletehi SC,
ReplyDeletehave you bought your final 25% yet?
No not yet, I'm going to give it some more time. I think most likely it'll make a lower low.
Deletehow low do you think it will go? VIX futures currently at 16 & looks to not want to go lower
ReplyDeleteIt might bounce from here to $31 or something, but still could dip to $26 possibly afterwards.
Deletethanks
DeleteHowever, it's getting attractive for a larger spike to $43. At this point it is just a matter of debating the best entry.
DeleteSC, what happened to Mid-Sept being very negative? all i see is a bullish consolidation which is now playing out?
ReplyDeleteSo far from the mid-Sept high SPX fell 20 points. I think SPX could attempt to retest the high, but more serious declines are coming soon.
DeleteWhat is your target for UVXY when serious declines put in the low?
Delete$43 is the short term target once the low is in place. Bigger picture charts and targets are coming soon as well.
DeleteUVXY just popped up with a breakout of the wedge. However, sometimes what happens is it bounces up, and then cools again to backtest the breakout. So it may not have bottomed yet. Still need to let it develop and play out.
ReplyDeletethanks for the advice
Deleteyou saved me from buying too early on the breakout
September HAS NOT been negative.. if you are claiming that a small pullback from an intra day high last week is negative you are wrong. Admit you have been wrong on your calls get some creditability back... you bought UVXY at 52 its 30 now.. enough said.
ReplyDeleteWhat I said in Aug was that the second half of Aug was negative, and also mid Sept. Early Sept was more positive than I expected.
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DeleteGet ready...my spidy senses are tingling...the recent boring trading days are coming to an end. i think we are on the verge of a new top (or a retest of the recent top) within the next week. As a result of this topping process, we will get some whipsaw action over the next week maybe starting today...my 2 cents only, please do your own due diligence...good luck everyone.
ReplyDeletebe carefull
DeleteI think this is a short term bttm. going back up to new high by 25th I think