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Sunday, March 10, 2013

$VIX - Backtesting White Trendlines

What is most interesting about the VIX is that when SPX declined substantially from September into the November low, VIX did not spike.  Since then the VIX has spiked twice on relatively small dips for SPX in December and also February.  VIX was a great indicator in November to correctly signal a rally coming for SPX in months ahead. 

Similarly, the recent spikes in VIX signal serious warnings for the future.  The conclusion is that the SPX rally is in the very late stages.  

VIX is backtesting the white trendlines and therefore may see a small pop this week.  VIX could still see lower after a small pop as the SPX rally finishes.  However, it is important to emphasize the loud and clear warning signals from the VIX going forward.

Daily Chart















The pink fork lines were excellent in defining that last spike for UVXY.  UVXY has formed a wedge (white) and may see a small pop this week.  After that it may cool off again and see the final low. 

60min Chart

97 comments:

  1. I think VIX can see a small pop this week and then settle lower again. SPX can see a small dip this week and then rally into a final high this month.

    The recent spikes in the VIX need to be taken very seriously imo. The VIX gave the all clear to the bulls in November, and since has provided loud warnings!

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  2. Small pop to VIX 15 give or take this week imo.

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  3. How far do you see spx selling off to? 1425-1430??

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  4. Once SPX peaks, the Cycle predicts a decline to the red trendline around 1420.

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    Replies
    1. SC, if SP500 is at 1600 points, is your model still correct ?

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    2. It predicted the V dip into the 26th of Feb so that confirms it is working. It won't predict a peak price, but expect to see a dip for a few days next, then peak perhaps around the 20th of March.

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    3. I will short the SP 500 from 1600. Maybe ariybd tge 20th of March if you are correct

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    4. We're so close to the 1575 level that it would not be surprising to flirt with that. Let's review around the 20th.

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    5. Indeed, it is the pyschology of the market. Even a little higher something like 1605-1610. It is how the market works.

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  5. Replies
    1. VIX at a 52 week low as well

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  6. UVXY wow this is really tanking. SC you adding to your position you bought at 14.50 its 8.50 now

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  7. Uvxy making new low but Xiv not making new high... Vix under 12... Wow!

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  8. I bought at 9.05 & I'm already getting worried....

    Looks like $8 by tomorrow at this rate, mkt only at 1551 & this is still a wave 3 up!

    Will try & average in around $7.5-$8...

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  9. UVXY should still see a decent short term bounce this week. Probably into the $10's.

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  10. Price action is good imo. The lower Vix is pulled to downside the higher/more forceful springback reaction will be...just like a rubber band...

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  11. Why should UVXY bounce to $10's this week out of interest?

    Yes the VIX is oversold but it also got down to 9.89 in 2007...

    The mkt could go up to 1600....what will UVXY be then? My guess is $7

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    Replies
    1. Short term, the market is hitting resistance and VIX is testing the lows of Jan/Feb so I think that this week the market should dip.

      However, I also agree that the market probably will go higher but not until later this month. Therefore UVXY could make another leg down late this month, but does not look likely until then.

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  12. VIX is at the trendline connecting the Jan, Feb and now March lows.

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  13. UVXY will be in 7's before end of day... sorry SC

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  14. I bought some UVXY at 8.15 stop at 8

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  15. Probably only bounce into the $9's this week since it dribbled down lower today.

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    Replies
    1. SC

      you plan to exit your UVXY at 9 at all?


      Thanks!

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  16. S & P to 1565 and then to 1470 or lower....

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  17. Let's see how things go over the next two days as that seems to be a window for the market to dip. I'm keeping some powder dry for later in the month.

    I think UVXY can bounce first but I am eyeing that orange line thinking that may be tested. On a test of the red trendline for SPX my estimate for UVXY is $19.50.

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    Replies
    1. SC, will you not be in trouble if UVXY does a reverse split soon? I read from one of the blogs that this might happen soon.

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    2. No, not at all. Reverse splits would not have any impact on the overall value of the etf, or my analysis going forward.

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  18. How many days straight VIX is dropping? more then week? whoever entered never seen day light! LOL

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  19. UVXY trading in the 7's after hours right now... what a beat down

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  20. Spx up 9 out of 10 days...VIX 11.50! Wow! ...and XIV still cant manage a new high (kind of disappointed with that)...

    2 more weeks until the end of the month...then the fireworks begin

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    Replies
    1. Hi PayDay

      Are you looking for some red fireworks after 2 more weeks?


      Thanks!

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    2. Yup! Fireworks always follow low volatility extremes...

      Read this today....coincidence?

      "That being said, there is no denying that the last time the VIX closed below today’s close was February 26, 2007, the day before The Biggest VIX Spike Ever, a 64% jump in one day.




      http://vixandmore.blogspot.com/2013/03/lowest-vix-close-since-day-before.html

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  21. Very pissed off with a certain bullion dealer today! Been watching silver closely and now that its below $30 starting to wet my beak again...so I go online and place my order like I usually do. Then AFTER THEY PROCESS MY CREDIT CARD, they ask for Drivers License and Passport info to be faxed over.

    I ask what for?

    For all 'new' customers.

    I explain I am not a new customer, and what do they need photo ID for after CC is processed?

    REFUSE TO ANSWER. instead I have to deal with Robot Sally who keeps repeating over n over that this is standard policy for all new customers.

    Finally I get fed up and tell them to cancel the order. First they refuse...then decide to charge me $75 cancellation fee!

    I am posting this warning as I have placed online bullion orders frequently with no problems and NO ID required. Now they put in some new photo id policy?! WtF! My colleague also placed and cancelled their order!

    Capital controls coming soon.

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  22. PAYDAY - which country is that in? If its the US I'm not surprised, over here in Asia things are much easier...

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    Replies
    1. US &'Canadian suppliers...i will now purchase directly from Joe local dealer even though cost is 20 cent more per oz.

      Been nervous to purchase from asian suppliers with pm fraud over there. Got a bad Panda once.

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  23. With regards to the mkt, given we are grinding higher now its possible we see 1570-1590 which is going to be extremely annoying for the bears.

    Guessing the low on UVXY is impossible but I will probably add to my position at 1565-1570 by which time they could be $6 at this rate!

    All good fun....not so sure on SC's target however unless the Korean's decide to play macho.

    My target to sell the decaying beast is 10.5 which is reasonable if the S&P drops to 1520.

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  24. HVU will be consolidated 1:4 from tomorrow....everyone including me got screwed now..becoz of this

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  25. You've got to know when to cut your losses.

    UVXY will kill you. It will roll over into the next futures contract, and bam, all the downside ahead again.

    You have to play the bounce, and get out. Bottom line. Can't sit and wait for the BIG one which may not come for years.

    This could be the new normal for VIX, under 10. Personally I have the next high on the SPX slated for March 31st with the low of Feb 25 - Feb 27 coinciding with the Alternate Roadmap I have posted on my blog, so at this point it is looking likely, but I'm prepared to be wrong.

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  26. SS76, roll over is around 25th, isn't it? even if roll back today, next month price is 14.50 or something...that will still give enough room for VIX to move advance...

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  27. Stockboom, welcome to the club. Just be thankful it wasnt 1:10 like UVXY.

    If vix ever makes prolonged upmove they'll be forced to do forward split but that ould only happen if the stock is over $1-200....

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  28. Darn, contemplated buying UVXY at $8.10

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  29. is it just me or everyone else also sees xiv head and shoulder pattern =D

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  30. Yes, i see the H&S on XIV...target 16.50 if neckline broken

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  31. UVXY found support at the pink line yesterday, but then the blue line acted as resistance today.

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  32. Quite a strong reversal for the VIX though.

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  33. VIX is down to yesterday price after market close....LOL...roller coaster...

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  34. Really nice movement in the VIX, for sure.

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    Replies
    1. 9 point move in SPX and 12% move in VIX. Now that is an emotional market!

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  35. Why is that fantastic? I want VIX to move up not down....

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    Replies
    1. We're seeing signs of an emotional market which only occurs every 5 or 10 years at major turning points. Big moves happen in emotional markets. Yes, the VIX has been coming down, but it's setting up for a huge move imo.

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  36. Well I guess the sell off in UVXY from here will be all telling....

    We should grind higher to over 1565 on the S&P, if the decaying beast can hold 7.8ish that might be a positive sign?

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    Replies
    1. I'm thinking much the same Phil. UVXY might see just a touch lower, then up into the $9's.

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  37. SC,

    You are way too early shorting this market. We are inflating into may. October 2013 has a potential to be VERY fun month.

    Good luck.

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  38. AM, are you long XIV into September then?

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  39. Payday, i dont trade volatility. There are some pointers towards panic later in 2013, i'll fine tune the dates as we get closer.

    We are topping out, but it is a process, i was hoping to get long on a correction and up into the inflationary top in the summer. For now its a waiting game. Time to short will be late in the year IMO.

    Dont repeat other people's mistakes folks!

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  40. It looks like the market will be sideways and choppy for a while, probably weeks.

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  41. 1580 could be the high for SPX this year. As long as we close below that level, I'll 100% short from this point on wards.

    I'll be surprised the market will move in a narrow range between 1580 and 1460 range for this entire year.

    No one can time the market precisely, but estimated range based trading will give a high hit ratio.

    indusequitiesFebruary 20, 2013 at 6:16 AM
    We are almost there.. Just 1 more dollar down, we will reach 7.60. Not necessary it has to complete the pattern bottom, but one can take position in these range with a stop loss below 7.30 area. Position management accordingly for a stop loss below 7.30. Immediate target 10.80

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    Replies
    1. Hi Indusequities

      Are you planning to exit at the 10.8 target with your UVXY position?


      Thanks!

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  42. I will keep a trailing stop loss.

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  43. Got my average down to 8.60....will be selling 50% at 9.6 & then on rising prices thereafter (if they get there that is!!).

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    Replies
    1. Careful. I have the S&P topping March 31st for the short term. Rough idea of where it tops is just shy of 1600. I'll have new charts soon, but at this point the Alternate Roadmap is proving itself:

      http://timethetrade.blogspot.ca/p/s-roadmap-till-mid-june.html

      Now, even if its not as high as 1600, you are looking at a prolonged topping process, which is not good for UVXY.

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  44. For every bullish chart there is a bearish chart....

    Unless you are 'IN' with the elite ponzi scheme crew, its all just a guess at the end of the day.

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  45. UVXY 7.60 is coming in the next two days. I'm expecting it to reverse from that point

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  46. 1562 is major resistance, S & P should pull back from here....

    Watch the action...

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  47. how many took new position in HVU or UVXY?

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  48. That was disappointing yesterday that UVXY just wouldn't come down. VIX was down a fair bit yesterday, but UVXY found support at the trendline from Feb 20, and just would not come down.

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  49. Its looking good that wave 3 has probably ended & wave 4 will test 1547 now before we get a move up again to 1565.

    Either way, I think we have seen a good bottoming in UVXY now with 8 being the level.

    Still looking for 9.5 to sell 50% & see what happens after that.

    Would you agree SC?

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    Replies
    1. Let's see how it plays out today. The action has been slow.

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  50. I'll be opening another set of position in UVXY @ 7.72 level. Initial position opened at 8.81. Will clear the position opened at 7.72 for 9.40 and keep the 8.81 position for next targets.

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  51. Sounds like a good plan Indus. I added to uvxy at 8.75 but got stopped out. Waiting for next VIX spike confirmation before adding. In meantime, carefully watching VIX...any move under 10 I am a buyer of uvxy.

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  52. The thing that drives me crazy with UVXY is that it will make a top and hold it for 20 minutes. Whereas XIV will spend upwards of 2 weeks meandering at the tops and staying chronically overbought days on end.

    Will be nice when tables turn. I still think XIV has a date with $10 in the not too distant future.

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    Replies
    1. Just imagine what UVXY would have done during the 2010 flashcrash.

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    2. You expecting a flash crash anytime soon?

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    3. Not really, but do expect a violent turn once this rally finishes.

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    4. Yes, I concur.... Look.....

      http://albertarocks-ta-discussions.blogspot.ca/

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  53. I changed my UVXY target to 7.38 for next week. Buy target moved down to 7.55.

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    Replies
    1. Thank you, it seems like it may try to undercut that trendline from Feb 20th doesn't it...

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    2. Its based on VXO chart, since UVXY does not have sufficient history to rely on it completely.

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  54. According to this chart institutional investors are still in accumlulation mode and no sell off appears imminent.

    http://www.safehaven.com/article/29148/are-institutional-investors-in-accumulation-or-distribution

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  55. BLACK SWAN..???

    http://www.businessinsider.com/cyprus-bailout-risks-europe-bank-runs-2013-3


    This has the potential to spread like wildfire...are these bankers STUPID or what? The only thing holding the EU together is "confidence" games and this latest stunt throws that right out the window...
    That's it...I 'm cashing out all accounts except for my trading acct. on Monday..leaving exactly $1 in each of them to keep them active tho.

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    Replies
    1. ""The only thing holding the EU together is "confidence" games"......

      AND a bit of string & sticky tape...

      Common UVXY!!!!

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  56. http://www.cnbc.com/id/100560852


    i think its game over now.........gg bulls

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  57. Certainly big news, but the government will vote against it and the market will rally. Chart says up into late March, then down into early May.

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  58. Cyprus only has two stinky options:

    1. Vote FOR = bank runs
    2 Vote Against = cyprus first domino to leave euro

    #2 better option for cyprus in long run but no political will... So #1 is my bet

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  59. Wonder how uncle Ben & the Fed are gonna handle this one...spx futures down....turn those machines back on!,!

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  60. Pre-mkt prices in Asian/European trading - 8.54 - 8.86.

    Not sure we will reach 9.5 at this rate but it might get close over the next day or two?

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  61. Rally over, and big drop coming imo.

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  62. You might get lucky SC....personally I think the downside is 1530 & then we rally again once 'they' come up with a solution.

    I thought UVXY would be up more than this pre-mkt....maybe we see a bit more upside when the mkt opens.

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    Replies
    1. I think SPX will probably attempt to rally back somewhat only very short term but the damage is done. Timing looks good for the decline to commence per the Cycle.

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    2. For UVXY I actually think it cools off first somewhat very short term. Support is around $8. Then runs up to around $10.50 or so this week. There is resistance there shown on the chart above with the pink and blue lines around $10.50 to $10.70 for UVXY.

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