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Sunday, May 11, 2014

$VIX - Cycle Update - Three Blue Arrows


The blue arrow Cycle high appears to be complete.  The Cycle predicted the VIX high would consist of three spikes.  That has, in fact, been the case.  The Cycle continues.

Therefore next, VIX should decline short term to the yellow arrow Cycle low.  VIX around 10 looks possible for the yellow arrow low.

The Cycle suggests a volatile summer ahead though.  Assuming the Cycle continues to play out at the current pace, the first yellow arrow low is due in a month or so.

4hour Chart

















VIX Cycle 1:

60 comments:

  1. http://econocasts.blogspot.com/ hmmm!!!

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  2. not intended as criticism...after a review of your prior posts it is readily apparent that your timing leaves much to be desired..."the first yellow arrow low is due in a month or so" will likely prove to be another miss...

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  3. Well my January trade was perfectly timed, and I'm profitable for the year. Yes, the last trade was clearly disappointing.

    The Cycle worked with the prediction of three distinct peaks coming true. I could have taken 50 points profit on the short at 1815 SPX. However, VIX didn't quite reach the 21-22 target area and only reached 18.50.

    So while the Cycle worked, the results are somewhat disappointing. More importantly though, the Cycle is intact, and the much larger, more profitable moves are soon to begin. That is exciting, and I am looking forward to the rest of this year.

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  4. Sc, in the mean time, uvxy, tvix, vxx are decaying, so when exactly are you expecting vix to start moving up?. If vix is 10, are you expecting 1950 or so

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    1. Yes, VIX likely declines this month and bottoms next month. Then a strong spike up once the first yellow arrow is in place. After the second yellow arrow forms later this year, the upside for VIX is huge.

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    2. After yellow arrows in place, how high is that first white arrow VIX spike & how long does it last (days? Weeks?). Would UVXY/TVIX enter contango at this time?

      Doesnt look like any big moves until next year. Just hope they can last without another reverse split!

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    3. The move from the second yellow arrow to the first white arrow measures 4 times the move from the purple to the blue arrow. 4 x (21.50-11.75) + 11.75 = target 51 VIX.

      The move from the second yellow arrow to the first white arrow is likely to take weeks, and months from the first white arrow to the second white arrow.

      Yes, contango likely to occur between the first and second white arrows. Big potential profits. TVIX gained 700% on a similar but smaller move in 2011 so up to 1,000% is possible for UVXY.

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  5. SC, curious why you expecting yellow arrow Vix 10 when on the chart looks like a higher low?

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    1. That is a good question. The purple arrow is lower than the red arrow, and judging by the amount the Cycle falls from the third blue arrow to the yellow arrow, a lower low seems quite likely for VIX.

      VIX should soon retest the low of March 2013, which was 11. A slight lower low is possible in the 10's.

      Still, the strength in VIX is incredible given that it has been higher since March of 2013.

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    2. How confident are you in this model given the true Vix makes lower lows and short circuits spikes while the model shows higher lows and higher highs? What if white arrows are also short circuited like blue arrows?

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    3. Very confident in the model. It's not a mirror image, but the Cycle does show us when to expect the spikes and can measure a relative magnitude of the spikes.

      No, they won't be exact, but it gives us a picture into the future for VIX. The Cycle does an excellent job of explaining the behavior of VIX.

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    4. Also, should mention after the orange arrow but before the red arrow, VIX spiked larger than what the Cycle suggested. So it works both ways.

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  6. yesterday the VIX pierced the bottom of the Bollinger band. So far when this happens, the VIX gets a spike

    possibly yesterday was your 1st yellow arrow?

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    1. I think it's too early. There is a little bounce showing in the Cycle just before the yellow arrow too.

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  7. Looks like time to second yellow arrow around 3-4 months. Same distance as blue arrows which took 3 mo also.

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    1. Yes Aug/Sept for the second yellow arrow assuming the Cycle continues at the same pace.

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  8. whats wrong with vxx, tvix, uvxy, market is down, they are down, means market is going to go up

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  9. 2-3 more weeks for VIX to grind down to the yellow arrow low.

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  10. better check your 'cycles'...VIX is headed higher!

    http://tinyurl.com/ozojtpn

    http://tinyurl.com/o5f9go5

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    1. A small pop looks possible for VIX late this month, just nothing major until mid-June or so.

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  11. The spike after the first yellow arrow doesnt look so big. Are you thinking 17-18 end of June-july. Then retest of 10-11's for second yellow arrow Aug.

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    1. Yes, that's what the Cycle suggests. Aug/Sept.

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  12. I have seen huge disconnect between HVU and VIX futures recently...today VIX future down 3% where HVU is down by 11%! anyone care to explain please?

    Thank you

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  13. SC,

    Should we be looking at actual volatility as opposed to the VIX? It seems that over the last few years the VIX>actual volatility but recently this relationship has reversed. How does this impact your model? Secondly, was your model derived off the actual volatility or the VIX? Again thank you for sharing your work.

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    Replies
    1. The Cycle model is based on VIX itself. So it'll likely work best for the VIX directly. Thank you.

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  14. have conducted an extensive analysis of the price action on UVXY & SVXY...it appears that UVXY is putting in a low (40.52 area) and SVXY is putting in a high (73.58 area)...however, we could experience a protracted sideways move on both instruments (sideways to up on UVXY and sideways to down on SVXY)...

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    1. I agree, a short term low looks close now with sideways next, although I do expect a little lower in June to the yellow arrow low for VIX.

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  15. Hello SC, Have you read "Reminiscences of a Stock Operator" by J. Livermore?
    Thank you.

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    Replies
    1. No, I haven't, but I would like to read it. Have you?

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  16. 2000 S&P is next. Please listen. VIX to 9.

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  17. How much longer to yellow arrow? Must be getting close?

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    1. Should see a little pop for VIX soon as shown with the green bar just before the yellow arrow. Then a lower low down to the yellow arrow according to the Cycle.

      Probably 2 more weeks minimum.

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    2. What level would that be? 14-15?

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    3. Just small, around 13.

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  18. not sure if you can show charts here. But this chart looks very close

    http://stockcharts.com/c-sc/sc?s=$SPX:$VIX&p=D&yr=5&mn=6&dy=0&i=p67895716844&a=352319256&r=1401388277566

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  19. VIX

    http://traderjoed.blogspot.com/

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  20. "Pivotal resistance for this bearish model is 1923.44..."
    Zero Hedge, January 17, 2014 (more than five months ago)

    http://tinyurl.com/lsjrr7b

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  21. VIX properly reflecting fear. Market is at an extreme level of complacency.

    http://www.cboeoptionshub.com/2014/04/11/10580/

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  22. Sc, I'm still holding XIV. I'm tempted to sell here at 39 but if the yellow arrow wont be for a couple more weeks, do you think it can reach 40-42?

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    1. Yes, it can, but expect some bouncing around next. I expect a small pop for VIX to 13.xx first, then 10.xx for VIX this month in a few weeks.

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  23. Interesting analysis. Given TVIX moved 700% aug-oct 2011, i believe the figure for UVXY is a little low for his 2008 scenario.

    http://seekingalpha.com/article/2250783-how-uvxy-and-svxy-would-have-reacted-in-2008-and-2011

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    1. Thank you, that is interesting... I just read it and the author only looked at Sept to Dec period in 2008. UVXY would have likely had more upside into the March 2009 low. So yes his 1000% gain figure is probably low.

      Also in 2011, the author only looked at July to August. Most of the gains came from August to Oct for TVIX.

      I expect the same to hold true in my current VIX model. UVXY will likely gain the most % from the first white arrow to the second white arrows in the VIX model.

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    2. Are you expecting the white arrows to coincide with the 2008 or 2011 scenario?

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  24. Looks like small VIX pop to 13.xx was skipped altogether. Going straight for yellow 10.xx.

    Xiv top at 44?

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    1. Let's see how it shapes up over the next 2-3 days. VIX still holding surprisingly well over the last 2 weeks.

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    2. Hey SC

      you think with today's drop we are basically at the yellow arrow? with the recent bounce up to 12. ish which is pretty close to your 13.ish. Now back down to basically near the recent low.


      Cheers!

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    3. I also said on May 11th, that the yellow arrow low was due in a month. That date comes up middle of next week. So both price and the timing are looking accurate. The behavior of the market has definitely been consistent with the VIX Cycle.

      I don't think we are at the yellow arrow as of today, but it is getting close. It will be interesting to see tomorrow's action.

      I'll do an update soon.







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    4. So first yellow arrow does not necessarily = vix 10.xx?

      Is time (one mnth from may 11) more relevant than price vix 10.xx?

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    5. Timing is just an estimate, but definitely the yellow arrow is due this month. There is very little time left now.

      VIX still looks like it should see 10.xx, but may pop first.

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  25. Got my 42 XIV.... 46-48 possible with vix 10.xx

    Of course ascent has been quite steep so retrace to 37-38 is equally likely if that 'pop' happens in vix 13.xx

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    1. The RSI on the daily is very extreme for XIV.

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    2. Agreed....but vix, xiv like extremes.

      Here come vix 10.xx...

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    3. Did vix made bottom today? @10.xx

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    4. Xiv rsi is extream at 90. Never seen this level before.

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  26. SVXY closely tracks the movements in SPX...the SVXY Accumulation/Distribution is diverging dramatically from price...in January 2014, SVXY topped in the area of 70 with A/D at 946.6M...as of yesterday, SVXY was in the area of 80 with A/D at 650.3M...just a matter of time before VIX (with UVXY) makes a meaningful move to the upside...

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  27. Vix 10.xx.... Yellow arrow day? Or 9.xx in the cards?

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    1. I am working on the yellow arrow update. Yes, we hit 10.xx and timing looks good too. All criteria have been met for the yellow arrow VIX Cycle low.

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  28. Thanks Rotrot, saw your info!

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