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Sunday, May 24, 2015

XIV - Flashcrash Setup

The SPX Cycle analysis has suggested a bearish move ahead.  However, the market has been slowly grinding higher.  The bullish move looks likely to finally complete in June with SPX declining rapidly, particularly in July, once the high has completed. 

The high should form with churning in June, and then July looks to be the most bearish month of this year.

A comparison with the Flashcrash of SPX in May 2010 with XIV is interesting.  XIV may have some upside in the first half of June, and then complete the high in June.  The comparison suggests a Flashcrash in July.   

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67 comments:

  1. Er, not sure what ou mean by 'flashcrash' set up for XIV?

    Are we talking down to $30 or even lower than that like in 2011 where it lost 80%?

    Price target & corresponding UVxY would be helpful.

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  2. The comparison indicates upside for XIV to approximately $52 reaching a high in June. June looks choppy. Then July target $29 for XIV.

    For UVXY it should dip under $35 in June and run to $70 in July.

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  3. What is your expectation for spx for june and july

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  4. 2150 SPX still looks possible even though the market is extremely weak and struggling to get there. Then 2,000 to 2,020 SPX.

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  5. VIX

    http://traderjoed.blogspot.com/

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  6. Check this out, very interesting...

    "Greece and its EU/IMF creditors have been locked in talks for months on a cash-for-reforms deal and pressure is growing for a deal, since Athens risks default without aid from a bailout program that expires on June 30."

    http://www.cnbc.com/id/102719755

    June 30th!!!! That is the exact day XIV is projected to peak in the flashcrash comparison.

    It seems June negotiations may have twists and turns but ultimately fail with Greece defaulting June 30th....

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  7. If that is so and Greece defaults would that not cause XIV to drop lower than $30? 15-20 possible with Vix 40?

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    Replies
    1. $25 at the lowest for XIV according to this comparison.

      It's a well known fact that Greece is bankrupt, and this issue has been going on for 5 years. Yes it'll rattle the markets for a couple months, but not the end of the world. So with that in mind, the comparison and numbers look appropriate.

      Delete
  8. SC,
    I have been working for awhile on a “DELTA” Model. After much trial and error I have a model thats very workable. It is a “Nominal” model based on a few key planets. The key is how the market acts in the cycle. If there is UP Pressure and the market goes up it is following the model. The reverse is true. There are times the market does not follow the model and that means that MONEY is moving against the model and that is a tell also. Today is a low in the model so we see how the market behaves. Since we are moving into an “Up Pressure time frame how the market acts is very important. If the Market trades sideways or slightly until the next peak in up presssure…….then that likely indicates the next “Down Pressure” segment will be stronger. It is relative strength at its finest. Also on the chart are unique “Matrix” based on planetary position.

    http://screencast.com/t/JUb4k9ffa

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  9. SPX should be forming a low here according to the comparison. There were a couple down candles, and then up into mid-June.

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  10. I think it's best to have a more active strategy for June so that's my plan. The comparison model looks choppy for June. So I exited UVXY and will look to re-enter UVXY mid-June.

    July looks to be the month to hold UVXY. June just looks choppy.

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  11. "Greece is to bundle its four debt payments to the International Monetary Fund due this month into a single payment now due on 30 June, the IMF has confirmed."

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  12. Hi SC, how much upside is there, in your opinion, in XIV for the short term?
    Thanks,
    Z.

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    Replies
    1. XIV looks like it'll hit a low today/Monday. The chart is configuring into an explosive pop. Upside of about $10 from this level short term into mid-June.

      S&P can pop about 50 to 60 points.

      Delete
  13. VIX

    http://traderjoed.blogspot.com/

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  14. Daily chart is positive for XIV with the 50dma starting to pressure it to the upside. Volatility is low, and that is good for XIV in the short term.

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    Replies
    1. $50 next, a little dip and peak around $55.

      Delete
  15. SPX looks only ok. The chart is a lot flatter and should rise but it'll be a grind up and bumpy ride.

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  16. 2150 SPX target but it will be slow in getting there!

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  17. This is a strong spot in the comparison model, expecting price to rise sharply into the end of June.

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    Replies
    1. Having said that a dip next week looks quite possible.

      I'm confident the market is likely to be higher at the end of June.

      Delete
  18. Hi SC, it seems that the stock market has a lot of buying pressure. You have tried to forecast the final peak many times whereas the stock market continues to make higher highs. Forecasting a peak is always complex and I will closely monitor July to see whether a peak is tangible. Paradoxically, most market participants expect a correction while the stock market continues to invalidate our thesis. My question: Let assume the SP500 peaks in July at 2,150, which downside potential you see in terms of duration and magnitude? Best regards

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    Replies
    1. There is a difference between a peak and a high. My view is for a significant high around 2150. I'm expecting a decline to around 2,000 from that high.

      It's not a peak of the bull market in my view.

      Delete
    2. Point A is where the Cycle predicts the bull market ends.

      I've stated that may be around 2,350. So basically my view is we can see a high around 2,150 SPX dip to 2,000 and run up to 2,350.

      Then from Point A the bull market ends and a bear market begins and larger decline of 500 + points.

      Delete
  19. More positive news out of Greece today. Talks have stalled which likely means the bankruptcy process has been delayed yet again...

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  20. A little wobble in the market but interestingly XIV holding up nicely - higher than the low of last week in contrast to S&P. This is short term bullish.

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    Replies
    1. XIV holding the trendline from February. It's quite a positive chart.

      Delete
  21. SC, although XIV is holding here, what do you think is the worse case scenario for XIV if the Greece situation really blows up. Where would you place a stop?

    Thanks,
    Z.

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    Replies
    1. Is XIV 39 the worst case or the stop?

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    2. The stop. The market is whipsawing, so may see some chop short term, but the comparison model is pointing up into July for XIV. It's a very strong uptrend for XIV, however may bounce around as it's currently consolidating.

      Delete
  22. I wouldn't worry about Greece until late July. The Greek drama will likely quiet down for a while next. Talks are slowly ongoing and the Greek drama can play out all summer...

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  23. VIX

    http://traderjoed.blogspot.com/

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  24. the maximum price the S&P 500 could attain by the end of this calendar year is approximately 2170...that projection is based on mathematics/geometry and not speculation!

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    Replies
    1. I agree with that for THIS year. Thanks.

      Delete
  25. XIV flashcrash still on track for July?

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    Replies
    1. No, as mentioned previously the Greek issue has been delayed to about July 20th.

      The market is following the comparison model and should runup into mid-July to July 20 around SPX 2150 with a significant decline at that time. August looks choppy and then at this pace the flashcrash is due in September.

      I'll be updating the comparison as is continues to unfold.

      Delete
    2. A little dip is due around June 30th so I may look to exit XIV around $51 or so and reenter around $47 to $48 to position for a runup to $55 or so in July.

      Delete
    3. July 21, 2015 time frame...
      https://twitter.com/allerotrot/status/603927432303931392

      Delete
  26. Played out perfectly!

    SCJune 11, 2015 at 9:13 AM

    "More positive news out of Greece today. Talks have stalled which likely means the bankruptcy process has been delayed yet again..."

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  27. "August looks choppy and then at this pace the flashcrash is due in September."

    With all due respect you previously stated that the US equity markets would decline in July. Now you have again changed the timeframe and you are saying the sell off won't come until September.

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    Replies
    1. I still expect a July decline for the market (late July) and a larger decline in September.

      Based on the model we should expect a runup early in July and a decline in late July.

      Delete
    2. The difference is that I wasn't expecting the flat spot between late May and mid-June to last as long as it did. It took a month for that flat spot to finish, but more importantly it's following the model, and we're making money.

      Delete
    3. The decline will occur in due course and it'll be quite spectacular!

      Delete
  28. So as long as Greece doesn't default XIV should keep rising? 60 possible this summer?

    Correction to 30 no longer relevant?

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    Replies
    1. The comparison model measures a high around $55. The model measures a decline down to $25 to $30 after the high is in for XIV.

      Delete
  29. Will this 'spectacular decline' finally see VIX over 30? That would be interesting for a change.


    What would the corresponding UVXY price be with XIV 25-30$? $70-80 or closer to $50?

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  30. S&P 2053 by Tuesday or Wednesday.

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  31. Inevitably, Greece will never leave the euro. Media bullsh-t. This precedent is unacceptable in relation to any future Europe crises. As for corrections....it won't surprise me to see 7, 9 or 13% at any given moment during 2015, 2016. Nothing all that interesting, yet impossible to forecast timing.

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  32. Hi SC,
    Do you still see a high around 2150?

    Cheers

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    Replies
    1. It can still do it. Indicators are starting to get oversold. It'll be choppy but the bias is still to the upside.

      Delete
    2. Way oversold!! Can you find similar example of intraday spike in volatility in the last couple of years.

      Delete
  33. TICK confirms change-in-trend...
    https://twitter.com/allerotrot/status/615639548383612928

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  34. We hit the first high in the comparison model, and dropped. Therefore XIV should form a low this week not much lower, and rise back to around $48 in July. There is still a higher high in the model around $52 for XIV.

    The updated model will be posted soon.

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    Replies
    1. The market should bounce a little here, but it needs to spend about a week before it will be sufficiently oversold to get a stronger bounce into mid-July.

      I'm long looking to exit mid-July around $48 XIV.

      Delete
  35. The implication is that Greece isn't going to be a major negative for the US market in July/Aug.

    We should expect a rate hike in September, and that is the real negative in September.

    It makes sense.

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  36. Your original analysis had XIV flashcrash in July & looks to be playing out so not sure why you are backtracking & expecting another XIV high instead.

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    Replies
    1. Basically, the drop yesterday in XIV only signaled the start of a choppy phase. So the flashcrash itself isn't due until Aug/Sept according to the comparison model.

      Check out the update just posted!

      Delete
  37. SC, how low can XIV go here. I understand that your stop is $39 approx. thx.

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    Replies
    1. It should form a low this week. I don't have a stop on the trade currently. Next week I expect a strong bounce.

      Delete