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Friday, January 24, 2014

$VIX - Cycle Continues - Update

VIX formed the purple arrow Cycle low.  The result was a breakout for VIX above the white trendline. 

Next, VIX should be rising to the blue arrow Cycle high.  Unlike the past spikes for VIX, this time VIX should remain elevated as the blue arrow high forms over a period of 1 to 2 months. 

VIX is testing the red resistance currently, and may need to consolidate somewhat before continuing to rise up to reach the blue arrow high.

2hour Chart
















VIX Cycle 1:














74 comments:

  1. Quite frankly the market has been boring in recent months as the Cycle has progressed through the smaller Cycle moves.

    The beauty now is that the much more interesting larger Cycles moves are ahead on the horizon.

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  2. The reason I had said last weekend that a breakout and move above the white trendline was imminent for VIX was because the purple arrow Cycle low looked to be complete.

    The Cycle continues...

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  3. Hi SC, great call on the short at 1844. Do you see a bounce from here 1790 back to 1820-1830 before heading down to lower lows or do you see this continuing to go down?
    Cheers

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    Replies
    1. Thank you Muzz !

      A small bounce for SPX could be possible short term. The Cycle suggests any bounces should be brief and minor with more downside to follow into February.

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  4. Sc, when you say the Vix may need to consolidate, what does that mean? Are the 12's history or more specifically whats the floor for ths move to 22-28 (blue arrow)?

    Also curious what level white arrow is supposed to represent? 40's?

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    Replies
    1. VIX has broken out and is likely heading higher into February. Because VIX is testing the red line it may take a little pause here and continue higher. 12's are history for this move since the pink line should now provide support for VIX.

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    2. The bare minimum for the white arrows would be in the 40's. 50's to 70 probably more likely for the white arrows.

      Between the white arrows is when backwardation would be expected to occur. Very similar situation to summer 2011 between the white arrows.

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    3. 50-70 probably?

      Wahhh? Are you serious, or just teasing the bears, like the market does?
      --

      The Dow drops 318pts..and VIX is only 18. There is NO panic right now.

      Baring China throwing a few nukes at Japan this summer, how are we going to see VIX 50+ ?

      What is your catalyst?
      --

      Regardless..VIX is indeed on the rise..finally... have a fun week..especially FOMC Wednesday!

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    4. The target for this particular move to the blue arrow is a modest 22 to 28 for VIX.

      Catalyst for a larger move: End of QE.

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    5. Okay...I can understand that.
      -

      If we have an intermediate top at 1850, then ..the target is lower weekly bol'...which will be sp'1685 at the Monday open.

      Certainly, if market is trundling in the low 1700s mid/late Feb...the lower bol' might be hit.

      I suppose that might equate to VIX 25/30.

      I can only add though, you do realise, on the rebound...stuff like TVIX/UVXY is going to get utterly destroyed, probably 50/60%.

      Most will vainly try to hold across cycles..but surely you'd agree - after YEARS of watching this...they should be scaling OUT..once VIX 25+...assuming we even get that high?

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    6. Oh yes I agree. This move for VIX is unlikely to surpass 30, then then down again. 10 for VIX is quite possible this year at the yellow arrows.

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    7. If 1850 is a key intermediate top..then VIX 10 is off the agenda until next year.
      -
      Anyway...first things first....if hit lower weekly bol', that'll be the confirmation in my view of inter top...

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  5. Where does backwardation come into play on the chart? Or is a different chart going to be posted for UVXY Mt Everest cycle? Thks!

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    Replies
    1. The white arrows are both at the same level for VIX. Backwardation is likely to occur during the period of time when VIX is trading between the white arrows.

      UVXY would likely be much higher at the second white arrow than the first. It does show on the UVXY Everest Cycle with price continuing to rise. That Cycle will be coming.

      Remember though we still have to put in the yellow arrows first.

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    2. What price points are you now expecting for the yellow UVXY arrows? Last year your yellow target was 160-200 (600-800 post split).

      Is it still that high or would $30 ($120 post split) be more in line with expectations?

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    3. Well there are 2 different moves. The move shown with the white arrows for VIX is the first large move. The second move is not shown on this chart and is a much larger move. Those numbers could be inline for the first and second moves, but it is premature to say because we still need to put in the blue and yellow arrow moves for VIX, and that is going to take months.

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  6. Sure enough as mentioned in the analysis, VIX is consolidating from last week's rise around the red resistance. Not expecting much to occur this week other than a weak bounce for S&P. First half of February looking bearish again for markets.

    Next high for VIX projected around mid-February at the blue arrow.

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  7. What levels is vix consolidating? 14.40's pink line or is backtest to white (12.90) possible?

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    Replies
    1. I think this week VIX just churns sideways near current levels with little dip.

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  8. Is blue arrow still 22-28? If so will red line then act as support in 18 zone?

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    Replies
    1. Yes still the same range, can narrow that in February. Yes, the red line can act as support once cleared in February.

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  9. Bloomberg: An investor sold about $18 million in calls on the Chicago Board Options Exchange Volatility Index, a strategy that will be profitable as long as the VIX doesn’t keep extending last week’s surge.

    The trade included the sale of 250,000 February 22 calls for about 70 cents each, according to data compiled by Bloomberg and Trade Alert LLC. It happened after the VIX reached an intraday high of 18.99 around 12:20 p.m. New York time. The investor will keep the proceeds if the VIX stays below 22 and the calls expire worthless.

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  10. Hey SC

    Not sure if you exit your UVXY position, my analysis yesterday suggest we bounce short term anyways. Which happened today. This doesnt help with UVXY type of stocks where time eating it profit. Thinking have yesterday low as a stop. VIX dropping from 19 to 15 is that an enough dip you are thinking about when you mention above little dip? Do you think Payday is onto something when he mention VIX 12 to 14 ish?


    Cheers!
    http://investmentgossip.blogspot.ca/

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  11. We did see a little dip yesterday for VIX, but still looks to be heading higher next. SPX might see 1750-60 next few days. Then, SPX can bounce for a week.

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    Replies
    1. Is 1750-60 the level you looking to cover the shorts from 1844?

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    2. Might look to cover around 1750, the reshort around 1810 SPX.

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    3. Thanks, where do you see SPX at when the blue arrow is reached?

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    4. I think S&P heading a bit lower then a decent bounce to around the 50 dma. Lower after that. I'm going to review targets in February, once this unfolds further.

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  12. Looks like VIX ready to test over 20.

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  13. EMINI DAILY

    http://traderjoed.blogspot.com/

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  14. hi SC,

    You expecting over 20 for cash VIX or future?

    Thanks

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  15. is there any natural gas expert around this board? do they think NG have broken long term downtrend? future prices are below current price until 2015! never happened in last 5 to 6 years...are we entering into NG bull market?

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    Replies
    1. NG may be peaking here. I'd watch $4.75 for an important level. If it drops below that, then can move lower for a while.

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  16. SPX breakdown = VIX 22-28 = UVXY 120's

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  17. Vix may consolidate for next week or two while SPX forms right shoulder of H&S pattern in 1820 range.

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  18. SC, I am 100% cash now. Is it going to be better with XIV for a next week or buy UVXY at current level. I know you bought UVXY though. What do you think? Thanks in advance.

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  19. VIX did consolidate this week as suspected in the analysis from a week ago. This consolidation period is likely nearly complete, and VIX should soon start the next leg higher.

    A lot of support for VIX which is above both the 200 and 50 dma, and with the 50 dma currently sharply rising. The golden cross on track for February.

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  20. SP, at what level will you be looking to exit your UVXY position given your expectation of imminent VIX pop?

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    Replies
    1. I'll be looking to exit UVXY soon. VIX looks like it can go a little higher in mid-late February, but UVXY probably does not have much upside in the short term.

      Basically if VIX is higher in mid-late Feb, it isn't that attractive for UVXY short term.

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    2. If it gets to $120 that would be ideal exit point

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  21. I am trying to buy UVXY. Do you have any suggestion for price?

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    Replies
    1. I don't think UVXY looks that attractive short term. Already popped in January. There are better opportunities coming later in the Cycle. At the yellow arrows for VIX is the best time.

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    2. Sc, what time period is yellow arrow? April-may?

      Yellow arrow looks higher than red or purple arrows, so will VIX stay above 15?

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    3. Assuming that this continues to unfold at the same pace then April, May looks about right.

      VIX still could see a lower low. I think it probably will see a slightly lower low than the red or purple arrows.

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    4. If that's the case, would you be looking to take a trade on XIV, that would be a very interesting trade if VIX going to drop that far?

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    5. XIV could work once this blue arrow high for VIX completes in March. Then get rid of XIV at the first yellow arrow.

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  22. Sp, do you have a precious metals chart coming soon? Is silver still on track for $10?

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    Replies
    1. Yes, the metals are consolidating in tune with the Cycle. Another leg lower is expected once this consolidation is complete early this year.

      Yes, an update is coming.

      Delete
  23. VIX

    http://traderjoed.blogspot.com/

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  24. Sc, are we at the blue arrow yet?

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  25. I do think the first blue arrow has been reached for VIX.

    However, there are still 2 more peaks to form for VIX during Feb and March. These can be slightly higher than this first peak. I suspect they will be...

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  26. I am expecting VIX to dip to 15.50 to 16.50 next, and then a higher high afterwards.

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    Replies
    1. Hey SC

      Congrats on those gains.



      Cheers!
      http://investmentgossip.blogspot.ca/

      Delete
    2. Sc, what will be your Uvxy reentry price? Gap at $73?

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    3. Yes, with VIX around 15.50 to 16, UVXY probably low $70's.

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    4. Hey SC

      Your 15.5 to 16 target for VIX, is that for the yellow arrow? or the drop right after that blue arrow.

      I have to similar view as you for the short little while for metal :) according to my chart, it looks like it will just chill, and if MACD cross over, it will probably drop :)

      Cheers!
      http://investmentgossip.blogspot.ca/

      Delete
    5. Just the little dip after the blue arrow. The yellow arrow probably not until April.

      Delete
  27. Hi Joed, Thanks for the VIX chart, can you please clarify you see VIX heading for your higher blue dot from here or there is one more lower blue dot before that.

    Thank you

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    Replies
    1. I think it should be clear the lower blue time dot is in........heading to the next time high.......I am not trying to show target although I am showing support resistance.........I take that intra day in accordance to the daily at that time! Remember these are windows, in my work that is all we need as we trade my work NOT THE JUST THE CYCLE! GL

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    2. Also remember you have to take into account weekends as far as the time............so it is important you have analysis to got with time! But of course if you don't one should not trade anyway!

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    3. Thank you Joed..much apperciated!

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  28. Dude, you finally made some $$$!.. Good job!!! Now tell us what's your plan for the UVXY you own earlier?

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  29. SPX can bounce for a week next...and then lower low.

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  30. Do you see the SPX test the 200SMA at 1709 for the lower low?

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    Replies
    1. It looks possible late Feb, but bounce for a week next.

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    2. 1695 SPX late Feb seems possible. For right now we are bouncing though so can review targets later.

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  31. Sc, Vix back at 15 & UVXY in low 70's. will you be a buyer here or is UVXY back to test the lows 50's?

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    Replies
    1. I think it is a little early. VIX dropped into the range as expected. I don't expect VIX to see much lower next week, but suspect UVXY dribbles down for 3-4 more days.

      Planning to take positions next week.

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  32. Hey SC

    Looks like we are testing your target here with VIX and UVXY, you plan to just stay on the side?


    Cheers!

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  33. Yes, VIX dropped as expected and I'm planning to take positions again next week.

    SPX can grind higher for 3-4 more days though not much upside left on this bounce.

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