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Wednesday, July 10, 2013

VIX - Tested 2008 Trendline

VIX has tested the trendline from 2008 recently, and currently is finding support around the 50 period moving average on the Weekly Chart.  VIX has been trending up for 4 months, and a break above the trendline from 2008 can be explosive.

UVXY should be bottoming out shortly according to the meltup Cycle.  UVXY should form a low soon, and then begin to rise slowly at first, and then meltup.  Initial targets for UVXY to consider are around $160 with a target of possibly near $250 late this year.

60min Chart
















UVXY meltup Cycle:
















Symmetry suggests a large move is due for VIX.  A break above the trendline from 2008 can be explosive. 

Weekly Chart














92 comments:

  1. Hi SC,

    This looks really interesting... once again, thanks for sharing your work and analysis... much appreciated.

    Your call for a top of 1650 on SPX is playing superbly and resistance at that level seems to be holding. With the market action aligning to your cycle so far, a rapid move to the downside must be very close now. With UVXY hovering in the mid-52 range, do you feel we have a good entry point here?

    Cheers,

    Roly

    ReplyDelete
    Replies
    1. You are welcome!

      I'm thinking that SPX probably hasn't quite topped yet on this move, but we are getting close.

      Everything should start slowly and then accelerate in weeks to come.

      Delete
  2. you do realize that $250 is only $25 pre-split right....and that is the best case scenario. I know previously you were calling for much higher valuations of UVXY pre-split.

    ReplyDelete
    Replies
    1. $250 is my maximum target for this year. I have longer term targets for UVXY which are many multiples of that higher.

      I have a longer term Cycle for UVXY also which is coming and will explain the long term picture.

      This is just an outlook for coming months.

      Delete
    2. Thanks SC. I'm gambling on a drop into Late July Early August, but then I will get out of UVXY!

      Delete
  3. SC, are you short SPX yet or still waiting later in the week?

    ReplyDelete
    Replies
    1. Not yet, but I am watching closely for a spot to enter short SPX.

      Delete
  4. Hi SC

    Thanks for the update.

    Are you entering your UVXY today?

    Thanks!

    ReplyDelete
  5. I want to pick up UVXY soon. It is very close to the spot I've been waiting for it to reach a low.

    SCJune 28, 2013 at 7:51 AM
    "UVXY $48 to $50 could be possible."

    ReplyDelete
    Replies
    1. Hi SC..long time since i visited ur blog..last time i was here people were gunning for you on uvxy..how did ur trade go? Did u make money on that SC? thanks

      Delete
    2. The challenge with UVXY has been to line up the best timing. VIX has made many false pops for months.

      There were decent trades to be had, but there is a bigger picture developing which is what I am most interested in seeing unfold.

      Delete
  6. Have you considered TVIX in lieu of UVXY?

    ReplyDelete
    Replies
    1. What benefit does TVIX have compared to UVXY?

      Delete
    2. Stay away from TVIX. More risk, if that was even possible.

      http://vixandmore.blogspot.ca/2012/02/all-about-uvxy.html

      Delete
  7. TVIX had issues with issuance and premiums last year around Feb/March. UVXY has never had any issues so I prefer UVXY.

    ReplyDelete
  8. Hi SC

    Dont know if you can buy in AH, but UVXY has reach the 50.ish in AH now. Or you plan to buy during normal hour?


    Thanks!

    ReplyDelete
    Replies
    1. Thank you. Looking good! I'll probably wait for tomorrow, but will buy soon.

      Delete
  9. Strong aversion to UVXY. Certain S&P 1700 this month. 1800 inverse head/shoulders target on 1600 wave down remainder of 2013. Floor is low 1600s for rest of the year.

    ReplyDelete
  10. Fade the crash calls............same as always.

    ReplyDelete
    Replies
    1. There is a reason why slicky Ben bernake made this speech on the day that the FED minutes are released. he quickly made it clear that the FED would continue with
      their QE program. It was just several weeks ago that they were talking about tapering. Something is amiss -
      this deck of cards is about to collapse and slick ben is very nervous.

      Delete
    2. Another theory but price is truth

      Delete
  11. SC, what do you think, people are talking about 1775 again, can vix go to 12, I bought vxx at 19.5

    ReplyDelete
  12. Wrong again SC....the bulls are in control. I got stopped for $1 loss but made money in other things like Gold so still up for the week.

    In this game its foolish to have a view, just trade probabilities & don't get emotional about any position.

    Trading is gambling with risk....forecasting is for palm readers.

    Never the two shall meet!

    ReplyDelete
  13. The VIX has been trending up for 4 months since mid-March. The VIX has a golden cross now. No IF's, no BUT's, this market is going to crash!

    Respect the VIX. Do not get caught in the S&P crash!

    ReplyDelete
  14. SC.........

    To be clear your call is 1400 around 5th of Aug?

    ReplyDelete
  15. The price target is around 1380-1390 SPX which is simply the trendline for SPX from the March 2009 low. I have confidence in the price, but we'll see just how fast it drops.

    It might take longer if it starts to slide at a moderate pace, but once SPX drops below the 1540 horizontal, SPX crashes in the Cycle. Very fast market is coming once it busts that 1540 SPX horizontal....

    ReplyDelete
  16. Generally, I don't care much to debate politics, but yes, I believe that the QE program will end probably late this year or early next year.

    This may surprise some, but actually, I believe that there are spots later in the Cycle that the market can rally strongly without QE.

    The Cycle called this last 100 point rally, and there are positive and negative spots in the Cycle.

    ReplyDelete
    Replies
    1. Hi SC,

      when you say "later in the cycle", do you mean later this year, or is this a long term cycle implying 2014/15 for the aforementioned rally?

      Delete
    2. My SPX Cycles are pointing lower for months. So I'll be looking for a low late this year, and a rally to start late this year into early next year.

      The long term Cycle is very negative. I believe we'll be much lower in 2014/2015.

      Delete
  17. Volatility etfs are not for everyone. I have more SPX charts coming soon. For those who trade S&P, VIX is a very useful indicator to follow.

    I have also shown the Silver Cycle recently which is interesting as well. There are many different approaches.

    ReplyDelete
  18. So are you shorting the rip up tomorrow?

    ReplyDelete
  19. I'll look at it in the morning, and probably will go short tomorrow.

    ReplyDelete
  20. Time to go long NUGT... A little earlymas i thought we'd get one more small drop. Oh well, nice run to $9 coming

    ReplyDelete
  21. Excellent call on UVXY SC! Looks to overshoot $48-50 target though.

    I still think 1700's are poseible on SPX with enough hysteria...VIX 11-12 double bottom next week.

    ReplyDelete
  22. Believe your August time frame will prove extremely important...however, the polarity may be different than what you indicated on the S&P 500 chart...some cycle analysts would call it an inversion...

    ReplyDelete
  23. Bought UVXY in the pre-market at $48.50. Overweight position.

    ReplyDelete
  24. I think it'll form a low in this $46.50 to $48.50 range. Once the low is in place then, the Cycle shows a slow and steady rise initially, and then a more aggressive meltup for UVXY.

    I plan to hold this position to the target area around $160.

    ReplyDelete
  25. I gotta say right now your prediction for $160 UVXY sounds about as crazy as your prediction of 1665 spx 2 wks ago at 1570...

    For some reason I always believe it when you predict UVXY will fall but have a hard time believing it will go back up....been burned too many times in this one.

    I hope your UVXY trade works out...wont add to this until I see definite turn in VIX (aka definite drop below $23 in XIV

    ReplyDelete
  26. According to the Cycle, UVXY should start to rise slowly at first.

    I decided to buy because all the Cycles I'm using look nicely lined up and mature, but because UVXY should start to rise slowly some may prefer to wait for that to occur, and can then position during the slow rising period instead of trying to catch the turning point.

    That would be safer but probably pay a little more.

    ReplyDelete
  27. I'm planning to short SPX probably today also.

    ReplyDelete
  28. Shorted SPX at 1670. Overweight position.

    ReplyDelete
    Replies
    1. SC you dont think that SPX wud go over 1687? But what wud be your strategy if it does goes over it?
      Thanks

      Delete
    2. It is quite possible that it goes over that level. We are close it. It wouldn't change anything if it did.

      I might be a little early. I'll still hold my shorts if that occurs. The Cycles I use are mature but it is hard to be exact so I accept some possible overshoot.

      Delete
    3. at what point/price/time level would you consider your analysis invalid? (if things dont go according to plan that is)

      Delete
    4. Hold that thought. I have an extensive list of charts and Cycles coming this weekend to show what limits are reasonable based on these Cycles.

      Delete
  29. I for one love these relentless gap up moves. everyday I think can they do t again? Everday is an even better short than the previous day!

    If we hit 1700's I will short SPX....otherwise waiting for breach of 1630

    Same goes for VIX...i'm a buyer at 12 or lower... Otherwise waiting for reversal

    ReplyDelete
    Replies
    1. May be wait for days like market up vix up...then you can watch market developments in detail for possible clues.

      Delete
  30. Overweight in UVXY at $48.50....adding that to your overweight position at $150 or whatever it was....what is your new average?

    No stops...is that 100% all in now or is that margin hence overweight?

    ReplyDelete
  31. Avg UVXY is around $96. Now my max upside target for this year is $250. My ultimate long term target for UVXY is $1,450.

    ReplyDelete
  32. I plan to take profit on UVXY around $160 and look for a dip to position again for $250. Then I see it cooling off a lot again from that point.

    ReplyDelete
  33. With due respect SC, targets don't mean anything.....its all about probabilities but I get your bearish.

    What is your average price now in UVXY & so we all understand exactly what you are doing, what is your exposure in terms of risk? 100%, 200%?

    Mkts are about risk, not about making money. Manage your risk & the money will come...

    ReplyDelete
  34. Sorry...I didn't read your comment before posting. I see your av. price now but would like to know just your risk pls.

    ReplyDelete
    Replies
    1. I'm overweight which means that I've accumulated twice a normal size trading position in UVXY. Just using cash.

      Delete
    2. Yes, risk management plan is important, and always need to have that plan in place before making any trades.

      I would certainly caution people about using margin or time sensitive options.

      Delete
  35. I'm fully positioned now. Overweight UVXY, overweight short SPX, and long Silver and Gold.

    ReplyDelete


  36. VIX did reach 13.57 this morning and bounced from that level.

    SCJuly 9, 2013 at 8:41 AM
    "VIX 13.50 for a bottom still looks about right."

    SCJuly 5, 2013 at 7:09 AM
    "The low for VIX should be about 13.50 to 14. Still more room for VIX to cool short term."

    ReplyDelete
    Replies
    1. 13 for VIX might still be possible. Maybe another half a point.

      Delete
  37. Best of luck SC....I think you are mad as a hatter but each to their own at the end of the day...:)

    Just hope you don't panic if the mkt hits 1700++ over the next month.

    I guess stops are for buses right?? LOL

    ReplyDelete
  38. SC i have a question, what would happen to the vix if there was to be a hyperinflationary period in the US?

    Thanks

    ReplyDelete
    Replies
    1. Some are talking about hyperinflation but the evidence isn't there. Metals have been in decline, dollar rising. SPX is only 100 points higher than 13 years ago in year 2000.

      The market evidence still points to deflation in my view.

      Delete
    2. Given that would kill the markets, I would suspect the VIX would set unprecedented highs....but I don't think that is a near term concern......more like deflation.

      Delete
  39. Keep calm and carry on....SC is right on this call I believe, and I am prepared to wait until July 17 for a meaningful decline to begin.....and use the stop as the high up to that point, holding at least to the end of July, probably Aug 5th or so.

    ReplyDelete
    Replies
    1. SS76, what's special about 7/17? Is it related to any cycle? Thanks!

      Delete
  40. @SS76: what's special about July 17th? Thanks.

    ReplyDelete
  41. CRUDE

    http://traderjoed.blogspot.com/

    ReplyDelete
  42. Oh dear god...going long UVXY will turn out to be a grave error. You're betting against institutions and just about every retail trader on the internet. Occam's Razor is taking place here....everyone is betting Rally....Rally. Hence....a rally. 1710-20 next ....then 1630-1650...then 1750+.

    ReplyDelete
    Replies
    1. Xiv is a good trade....30 next.

      Delete
    2. what happens when everyone expects a rally? Guess what, the opposite.

      Its coming, and by Aug 8th, we'll see the 1400's.

      Delete
    3. You have got your logic backward on that. When everyone is betting on a rally, they have ALREADY committed their funds to buy - thus there are no buyers left, and the market can only go down.

      If the market rallies further, it can only be driven by new buyers (or shorts covering, same thing) -- which would clearly mean that everyone wasn't already betting on the rally.

      Delete
    4. All views are welcome here. My Cycle has been bullish for the last 100 points from 1560. It is entirely possible that the market has some further upside but I am confident that the next major move is lower, and dramatically so. I accept that the market may continue a little higher first though.

      Delete
    5. I do often find that when everyone is on one side (in this case bulls) it does go that way a little while longer. However, more importantly when everyone is bullish it does suggest near a major top.

      Delete
  43. Sc, bottom in for NUGT? I would like to add but that 70 c gap is bugging me!

    ReplyDelete
  44. SC, do you think that SPX500 will reach 1700 before going down?

    Thank you

    ReplyDelete
    Replies
    1. It is entirely possible. This market loves to overshoot. Nevertheless I am confident that next major move is down.

      Delete
  45. Hi SC

    you mentioned:
    ""I plan to take profit on UVXY around $160 and look for a dip to position again for $250. Then I see it cooling off a lot again from that point.""

    am wondering where is that on 160$ for UVXY value is on that second chart of yours that you posted up on this post? since it just a chart with no labels.


    Thanks!

    ReplyDelete
    Replies
    1. Yes, that estimate comes from the Cycle chart. I'm making a comparison with UVXY and the Cycle chart.



      Delete
  46. Sc

    Could you mark on your cycle charts (SP and Silver) what years these are and what market they are so we can follow them? Also can you mark where we are on the chart (date) on both? Thanks for your work! s

    ReplyDelete
    Replies
    1. I find it becomes confusing if there is too much detail so I try to keep things simple. Yes, I'll be updating the charts with comparsions to show where we are in these Cycles.

      Delete
    2. Sc

      I understand BUT I believe the confusion comes from not posting the template so that we can see the years, dates, placements in time etc. for ourselves! I believe it would help rather than add to confusion! But that is from my limited time of readership, but I am sure many have the same issues here! Thanks again, s

      Delete
  47. "...22nd July...markets may rise into this time...speculation and gain without effort...just be careful of anything that sounds too good to be true..."

    ReplyDelete
  48. SPX charts are coming this weekend with both the short term and larger Cycle.

    I have shown both short term and larger Cycle for SPX. I have shown both short term and larger Cycle for UVXY. I have shown large Cycle for Silver.

    That is a total of 5 Cycles.

    ReplyDelete
  49. GOLD

    http://traderjoed.blogspot.com/

    ReplyDelete
  50. SC, looking at the big picture, last 2 years, you have not recognized the bull market and missed almost 500pt upside. This was a generational opportunity to be long, but you've kept telling to yourself it is not a bull market. The only thing you've officially managed to get is 60pt move and now we are surging higher.

    You've been wrong for so long and continue to be. What makes you think your whole thesis is not just your imagination???

    You said in the past 1500's were not possible then 1600's then 1700's ... I mean come on. Where is the proof of the BIG CRASH?

    ReplyDelete
  51. UVXY - July 12, 2013

    http://tinyurl.com/osqfz8p

    ReplyDelete
  52. Hi SC

    Great blog by the way, I have just recently got interested in the UVXY, and was wondering whats your opinion is on the contango issue regarding UVXY and its peers, is it a problem you believe or is it just a sort of premium to pay for getting exposure to the opportunities this kind of trades could offer.

    ReplyDelete
    Replies
    1. It is certainly an important issue. UVXY is quite leveraged. The potential benefit from that leverage comes at a cost which is decay. The key is to continually weigh the benefit vs. cost. During some time periods the cost will outweigh the potential benefit, and at other times the benefit will outweigh the cost.

      As well these volatility etfs track the VIX futures and not the VIX directly itself. People generally do not understand the math behind these etfs.

      It is important to research and understand all of the factors involved before investing.

      Delete
  53. Sc, given that you only see a small correction to 1640 spx, will UVXY have a better entry point (know you went overweight last week at 48.50) or will VIX start raising regardless of spx?

    ReplyDelete
    Replies
    1. Since so little upside looks possible for SPX in the Cycle, UVXY won't likely have much downside. VIX already starting to firm up last few days.

      Delete
  54. Replies
    1. Churning sideways at the moment. Let's see how it shapes up this week. I'm going to do some review on it.

      Delete
    2. Yeah thanks. Trying to decide if its bottoming or just finishing off another bear flag. DUST looks incomplete, if so its bad for NUGT

      Delete