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Sunday, August 18, 2013

$VIX - Cycle 1 Orange Arrow

VIX is likely near the orange arrow in the Cycle.  Therefore, VIX should settle and cool in the short term.  In the VIX Cycle 1, the time from the green to orange arrow is approximately equal to the time from the orange to the red arrow.  

At the current pace timing can be estimated.  The red arrow is due to be reached in September as shown on the chart.  Once the red arrow is reached, then the VIX Cycle is mature.

30min Chart 



                 












VIX Cycle 1:           
  
                                                












84 comments:

  1. Three weeks approximately until the red arrow. Then 6 weeks approximately from the red arrow to hit the top of the first big spike in the VIX Cycle.

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  2. Looks like SPX should recover and grind it's way up for approximately 3 weeks next. After that very bearish for Sept and Oct.

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  3. I like it, SC, you've made a very bold, clear, and specific prediction. Now let's see what comes to pass!

    I don't use (or, frankly, understand) your time-cycle methods, but based on a weakening daily trend and heavy bearish divergence across intermediate to long timeframes in market internals and momentum, I agree with your general outlook.

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    Replies
    1. This Cycle has progressed enough that a reasonable timing estimate can be made.

      I will have charts coming for SPX with price targets. Three weeks for SPX to rise then a low 3rd week of Oct. Then SPX should churn sideways and lower yet for months after that.

      One of the clues to support the Cycle is that the 50dma for VIX is curling down. This should put pressure on the VIX to cool in the short term.

      Delete
  4. VIX hit 15 this morning - orange arrow.


    SCAugust 5, 2013 at 11:20 AM
    "The orange arrow should be around 15 to 16."

    SCAugust 6, 2013 at 9:44 AM
    "VIX low due soon with new VIX bull market to start."

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  5. According to this Cycle, I thought VIX would come down a little lower, closer to 11.50, after the green arrow but it held strong around my pink support line and bottomed at 11.87.

    The low for VIX was way back in mid-March around 11 just before the Cyprus event erupted. VIX has been higher ever since.

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  6. Because VIX steadily slides down after the orange arrow, one would expect SPX to steadily grind up. Therefore, I am expecting an uneventful steady grind up rally for SPX for a few weeks next.

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  7. Fundamentally the storm is brewing. It makes sense that markets are approaching an environment when volatility increases. QE tapering. Debt ceiling battle to begin again in Sept. Uncertainty of US default and government shutdowns.

    VIX bull market.

    "On May 19th, the debt ceiling was reinstated at just under 16.7 trillion to accommodate borrowing during the suspension period and the treasury began applying extraordinary measures once again. Despite earlier estimates of late July, the treasury announced that default would not happen until sometime after Labor Day. Other organizations, including the CBO, projected default in October or possibly even November.

    Obama has repeatedly stated that he will not negotiate over the debt ceiling. House Republicans believe he is bluffing, but fear he will wait until the last minute and then strike a deal with the Senate that the House will be forced to agree to. In Early July of 2013, House Republicans provided the president with a 'menu' of different deals he can strike in order to get a debt ceiling increase."

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  8. 1651 SPX today.

    SCAugust 1, 2013 at 8:05 AM

    "Might see near the 50dma for SPX short term that is about it. 1650 is the level I have been mentioning."

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  9. How does your orange to red arrow drop on the Vix translate to UVXY? Are we lookng at UVXY 25?

    If so, how can your $160-200 prediction come true? That would need a 800% return
    at least!

    Also new low in VIX or will the 11.87 bottom hold? Cant tell on the chart.

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    Replies
    1. UVXY should cool off in the short term.

      TVIX has the same structure of VIX futures as UVXY and rose over 700% in 2011. The drop was 300 points for SPX in 2011. The Cycles show a larger decline this time for SPX.

      We'll see about the 11.87 low for VIX later this month and in early Sept.

      Delete
  10. Lol! How can UVXY cool off when it hasnt even warmed up?

    I was expecting at least $45 on this orange move and the POS cant even break 38$

    Ah well...at least i can rotate back into XIV for another $3-4 pop.

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    Replies
    1. According to this VIX Cycle I'm expecting the big move for UVXY once 1540 SPX breaks. Complacency is extremely high.

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  11. Agreed PayDay, that's why relying on someone's guess never works...

    Trade what you see not what you think.

    I went long UVXY last week when it hit a double bottom, nice profits at this level, will sell tonight.

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    Replies
    1. Phil

      Once again what's your point? Your guesswork then is no better and your paper trades are of no worth to anyone except your ego! Why waste your time and comments? Just saying! s

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    2. Syd,

      Point is simple - SC is long of UVXY at average $98 based on a view. My real trades (not paper as I posted my purchase last week) has just made good money.

      Ego is when people post what they THINK e.g. a crash is coming or mkt is going through the roof....I post what I see.

      Big difference because all my trade set ups to date have made money.


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    3. Phil

      Posting trades do not make them real! But my point is if you are %100 correct WHY waste your time here, just build your account! Makes NO sense to continue the horn blowing on a blog that is not yours! No one cares! There is only one answer "Ego"! syd

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    4. Syd,

      I'm not 100% correct, that would be impossible. I waste my time here because I like to know what the masses are doing + SC does come up with some good suggestions on occasions & having other people such as PAYDAY here to question what is being written is very constructive.

      I just post trades that I'm doing based on TA with tight stops & only in UVXY. UVXY accounts for less than 5% of my trades & so isn't a real money earner but over the past 2 years its worked out ok.

      You must be one of those poor fellers who is holding UVXY much higher up hence your attitude...

      I also don't care what you think, I don't know you so do us all a favour, shut up & get on with some constructive ideas yourself...if you have any of course!

      Delete
    5. Ah I see you don't have constructive ideas....all of your comments to date are negative to others.

      Typical!

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    6. Phil
      Phil

      Just as I thought! FYI I do not trade UVXY, sorry bout that! You sound like a real large trader! We have come to share ideas and learn, not to act like a little girl and snipe at SC with your hidden veil! With as large a trader as you are, I am sure JP MORGAN is knocking your door down! Until then though your the one that should shut up until this site reads "PHIL'S EGO SHOW BLOG!" lol! s

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    7. Phil

      AND you are a real positive force here! Your only posts are EGO/LIL GIRL SNIPES! Typical of the "TROL"!

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    8. SYD,

      I feel sorry for you really, a pathetic individual unworthy of a reply.

      Keep your negativity to yourself, no one is interested.

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    9. Phil

      Feel sorry for yourself as you are the truly pathetic troll! Your one that has the need to come a site and attack a man's good intentions to share and then pass your comments on to build your ego as you act like a successful trader! You poor soul! Next you will posting and answering yourself! lol syd

      Delete
  12. sc

    Are you still looking for the 3rd peak in the SnP and that being a higher high or has it already come? Tx, s

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    Replies
    1. I'm going to let the market develop here for a little while. The Dow is unlikely to see a higher high this year, but some markets might be able to do it. I'm not counting on it either though.

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    2. SC

      So your thought is just looking for a chart area to renter and trade into the down current? Tx, s

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    3. Yes, waiting for short setup. I'll see how things shape up later in the month. I think we'll bounce short term.

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  13. How high are you expecting the bounce?

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    Replies
    1. It is early so difficult to say at this point, but will wait and see as things develop next.

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  14. Oh shite, didn't see it coming. I was wrong, I admit it. S&P 1680 broke. We have a big problem in India's currency and Asia....like a little baby black swan so far. I have faith though in fake bounce to 1675 soon. But...in US indexes some past seasonal data including 1998 "currency problem" which sent VIX from 16 to 50 quickly?

    1987 summer top, october bottom, crash 20% in one day
    1990 summer top....then down 20% October, recession
    1996 July top to bottom, down 11%
    1997 aug to oct double top, swift down 13% october
    1998 july-aug top, Oct bottom 22% correction due to Russian and Asian Currency and massive LTCM Hedge Fund crash
    1999 summer top, 13% down october bottom

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    Replies
    1. Agreed 1675-1685 previous support is a logical resistance in the near term.

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  15. Thanks for the summary.

    Sept is historically one of the worst performing months of the year, and yes Oct does have the history of plunges. We have not seen this in recent years, but it looks to be heading in this direction for this year.

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  16. The VIX Cycle is looking good. Turning at the orange arrow.

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  17. Hi SC

    you exiting your UVXY? or you plan to hold it, even with the contango eating it up and this downtrend in VIX going as predict?


    Thanks!

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    1. Might just hold it since more interested in how UVXY performs as the VIX bull market progresses through the Cycle. Yes it could cool off quite a bit in the short term on a % basis, but little relative to the high of $24,500 in 2011. With the crash looming it looks great overall in the bigger picture. I might consider adding some more soon.

      This is a special situation since the last time a large crash occurred was in 2007, and at that time VIX futures etfs did not exist.

      This is a first.

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    2. If UVXY sinks in the short term that is a validation of the Cycle models.

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  18. I agree with your vision. In 2011, a decrease of 20% vix etf the future did x 7. In a bear market longer and heavier might get to do even 20 x the current price. The problem is the level at which depart. To every area in the vix 12 lose 30/40% compared to the previous low. Since 2011, they have lost 97% of their value and also something more. Continuing to decline, even if they are 20 x, and it is yet to be demonstrated, it may not be enough to cover the losses. Adding more money, become a bottomless pit. These tools have a 75% chance of losing money.
    With rising market, you lose. With low volatility market side, you lose. With slight decrease in market volatility low, you lose. Only by investing first in a strong correction or a crash, you earn a lot. As an option .... the rest. So why invest in an instrument where I have a 75% chance of losing money?

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    1. Yes, agree. Those are all the right questions to ask.

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  19. Another interesting bear ETF in a similar situation to UVXY is FAZ (US Financials). In the height of the 2008 panic it traded at $800 and ever since then has become a widow maker. But since the last peak in autumn 2011 it has bumped into that downtrend line several times and most recently did so in the late June and mid Aug dates. Yesterday it hit it again but with today's market rally has sold off sharply so it is not time yet.

    But you can clearly see a bottoming formation building up with potential inverted head and shoulder pattern possible. I think like VIX it will continue to sell off into early Sept and then make a bonafide run at breaking through the two year downtrend resistance line and if successful it could be a near term double with further unknown potential.

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  20. The next Bear Market will wild, hard and without any human compassion for those who find the wrong side. Just because it will be the first in history to give the opportunity to ride with the etf volatility. These etf for everyone cause of the wild swing on the vix, yet footer extreme that in 2008/2009. I believe in these tools to make lots and lots of money. But, at the time of each spike of the vix bullish over 15 buy XIV to cover me, mediating the position until 20. If the vix back to 12, I gained coverage by mediating in fact the position of UVXY and TVIX, if instead the crash with double leverage and compound interest, the position TVIX and UVXY still earns very well.

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    Replies
    1. It's an unprecedented, brutal time in history.

      Delete
  21. These etf for everyone cause of the wild swing on the vix, even more extreme than in 2008/2009

    sorry ......

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  22. Phil, congrats on your UVXY trade. What else do you trade? Do you trade SPY/spx? Any target you have for SPX especially if SC is correct that we top in 3 weeks time? I dont hear anyone calling for 1700 anymore.

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    1. Hi Alan,

      I mainly trade currencies using mechanical set ups, Gartley patterns/ABCD/Fibs in other mkts. Again all mechanical trades, set stop loss & target prices. All about probabilities.

      As for forecasting, the only thing I'm good at is forecasting the weather...would never dream of pretending to have any idea I knew which way mkts were going.

      How about yourself?

      Delete
  23. https://twitter.com/Meteo1970/status/370078982374301696/photo/1

    Watch out ! TNX

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  24. VIX reached 16.29 this morning. That is acceptable. VIX looks like it can slump to test 13-14 next.

    SCAugust 5, 2013 at 11:20 AM
    "The orange arrow should be around 15 to 16."

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  25. just covered my TVIX position with XIV first tranche covered position

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  26. I know the market feels "crashy" at the moment but just let this VIX configuration mature. There is some time yet before it'll be ready to crash.

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  27. EDC -5% , LBJ -5% INDL -13% ....
    EMERGING MARKETS IN CRASH MODE...

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  28. For one thing 18 is a strong resistance for VIX. Even if VIX were to continue to rise here it should stop around 18, and cool off into the 14's for a spot to take a position.

    The 50dma for VIX is curling down at the moment. Even if VIX were to rise to 18 it is not ready to crash!

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  29. I agree, which is why I cover with XIV. First batch to 16 vix cash, according to 18 and the third and last to 20. A 18 is in training the right shoulder of a head and shoulders bearish. The CRASH comes when no one expects it and if the vix should break the rising area 20, could take off in area 30 in a very short time. In which case the position on the TVIX would fly.

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  30. Hi Phil, I try to put everything together and learn from everyone including SC. SC has been on fire calling SPX especially to the long side this yr. SC, notice that VIX is above BB? SC, are you going long SPX soon?

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    Replies
    1. I'm just going to wait as things shape up and develop for a while.

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  31. I believe that have floor in stockmarket,spx,Dow like up these levels today,situation remember finally agoust 2010 before big up months.
    Buy strong today like september-october very bull.
    Eur/usd very very strong trend ,began maybe in 12 months take out 1.6000 level.
    Regards.

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  32. Interesting reversal on the day for VIX. Provided today's high for VIX is not exceeded in the short term, then my VIX Cycle model is intact, and the orange arrow Cycle high is in place.

    The confirmation will come soon and it important to let this play out. A delicate situation...

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  33. If VIX comes down into the 13-14 range that would be a step in the right direction.

    SCAugust 21, 2013 at 7:01 AM
    "VIX reached 16.29 this morning. That is acceptable. VIX looks like it can slump to test 13-14 next."

    SCAugust 5, 2013 at 11:20 AM
    "The orange arrow should be around 15 to 16."

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  34. Without a distribution day, there can be no capitulation. Without capitulation, there can be no bottom. This Hindenburg will keep crashing. You are missing out on this crash into September just like August of 2011.

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  35. My VIX Cycle model is still intact with VIX in the 16's.

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  36. Anyone notice that TVIX is outperforming UVXY of late?

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    Replies
    1. I ran a comparison from Aug 5 and see no difference in performance over that time frame overall. However, on a daily basis they can vary in performance.

      Will keep an eye on that to see if any trend develops in terms of performance.

      Delete
  37. As of yesterday I do think the orange arrow is in place. The next step after the orange arrow in the Cycle is for VIX to sink down to test the pink line in the 13's.

    There are 2 candles after the orange arrow. The hollow candle should in the 13's for VIX around the pink line VIX support.

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    1. If the hollow candle is VIX 13 then Vix should retest 11's...looks like it keepsmdropping after the hollow red.

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    2. Yes, VIX could in Sept. It is possible that UVXY may still put in a higher high than yesterday later this month. I say this because right after that hollow VIX candle, VIX make a little pop there for a lower high.

      I suspect this may be a higher high for UVXY.

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  38. SCAugust 2, 2013 at 10:30 AM

    "I think SPX is setting up for a similar move to what Nikkei did. We're trading in the tight range now that Nikkei was in mid-July, plunge "out of the blue" in about a week. Yes, a "false" downside move that shakes people up. That is the retracement I have been talking about, then the SPX can still see a high after that which is when the bears have the real setup."


    SCAugust 6, 2013 at 8:04 AM

    "We'll see a plunge for SPX this month similar to Nikkei in July which will be the dominant move for the month. However, it is just the retracement."

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  39. Since I took the profit on my S&P short I've been just sitting and waiting for a nice, clean setup. I didn't think it was worth going through all of that messy chop we had yesterday.

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  40. The Dow is weak and ultimately that is very bearish with quality companies stock deteriorating. However, the lesser quality Nasdaq and Russell are still afloat relatively speaking. So really it is just a matter of waiting and letting the low quality stock finish.

    Conclusion we're in the late stages and the evidence supports the Cycles.

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  41. Sc, you need to get over it. If criticism is a problem. It is a normal part of dialogue, otherwise all you have is a kind of “patting each other on the back club”. If somebody posts their trades in public, then it implies they invite comments on it. That means you can also say when you think something is a bad trade (or way of trade).

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    Replies
    1. you mean site like Joed? I dont recall seeing anything negative there, interesting :)

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    2. Invest

      I am not there trying to give you a trade only show price and time and my own thoughts! If you don't like it don't visit! joed

      Delete
  42. Feel free to post your own trades and ideas, and give your reasoning.

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    Replies
    1. SC,

      As I've gotten older I understand there are no guarantees in life. With that said, I like your style.

      If I am wrong, I am wrong. I'll move on. I am not trying to substantiate my position. I am looking for "truth/reality".

      I have made some great trades in the past only to understand there are forces greater that I "QE" that impact my results.

      You say what you believe, and why. That is all I can ask. The rest "DD" is up to me.

      Thanks.

      Delete
    2. gerkom

      You sound like a real trader and a man that stands on his own. How refreshing! syd

      Delete
    3. The way this market is moving, the opportunity is coming soon to make some serious money. Patience here will pay off!

      Delete
  43. What are your thoughts for Silver here....

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    Replies
    1. Silver has marched up in tune with my Silver Cycle. I think there is more to go but upside is getting less attractive. $2-3 upside is still possible.

      From the late June turquoise low, the Cycle was only positive for Silver for a couple of months.

      Delete
  44. In this VIX Cycle after the orange arrow there are two candles. The hollow red candle low is the second candle after the orange arrow in the Cycle.

    Surprise, today VIX has a hollow red candle on the daily chart!

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  45. Is it one candle per day on the Vix chart? Looks like qnother 4-5 more red DOWN candles after the hollow one.

    Vix move in sept?

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    Replies
    1. 1 Candle on the Cycle has been about 1.5 days for VIX roughly. After the hollow candle there is a small pop for VIX. So a dip for SPX can be expected late this month.

      Once that pop in VIX occurs then there are 4-6 candles to the VIX low.

      Delete
  46. I'll be doing an update for the VIX Cycle. The orange arrow high did come in a couple days later than shown. So there is a small adjustment for timing needed as a result.

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  47. Dow ,spx,ndx low 21 agoust maybe like up strong to tuesday-wednesday before other correction to 1-3 september,then up strong.This is very easy probably that other scenary is up literally ,bears are killer.
    In future i do not believe to see other down stockmarket to time march-april 2014 before other rally may-october 2014 or risk more longuer month bull .Dow in 25000 not is dream.
    True crash is more time february-december 2021,benner and mercury venus conjuction and more danguers....

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  48. SELL end wave 5 - August 2nd-5th 2013

    BUY end wave A - August 22nd -23rd 2013

    SELL B - September 7th-10th 2013

    low/buy point C - mid to end of October 2013

    DavidDT of Trading to Win

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