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Sunday, July 8, 2012

$SPX - Freefall Commenced

Price reached the green target, and collapsed from that level.  There is some support at the yellow oval for SPX.  Watch for that level to be tested next.  Even if SPX tries to bounce back up from the yellow support there is major resistance above now.  Therefore, any attempts to bounce would result in failure once again.

The cycle analysis is negative this week, and regardless of short term gyrations, a July freefall is imminent with the downside target at 1245 SPX.

30min Chart
UVXY started to rise gradually as expected according to analysis shown in green from Tuesday, July 3rd.  A large bullish wedge is in place.  Price is gaining strength which is perfect at this stage. 

There will likely continue to be small rallies and dips short term as it continues to build a strong base.  The outlook remains extremely bullish for UVXY.   

30min Chart

102 comments:

  1. I plan to hold UVXY through any short term fluctuations as I see this as base building prior to the large move higher anticipated.

    There is no upside for SPX according to my work. I'm expecting any bounce attempts to be met by failure.

    ReplyDelete
    Replies
    1. Hi SC:

      Are you going to add if we get down to $7.20 ?

      Delete
    2. I'm fully loaded, and holding the UVXY position with no plans to do any short term trading.

      Delete
  2. imho, during top formation, vix related (uvxy, vxx ...) might not be a good investment, as they might be sideway or down due to lack of negative market volatilities. but will be a great investment, especally after breaking above the wedge.

    ReplyDelete
  3. $spx and Greece has the same pattern formation.
    http://humblestudent777.blogspot.com/

    ReplyDelete
  4. Any change in your view for metals?

    They are following the main market so far, if/when HUI takes another hit (along with SnP) that would bring more downside to the metals as well..

    ReplyDelete
  5. Hi SC, hope you're enjoying your weekend. Would like get your thoughts on this week. Do you think we make a another move higher before declining or do you think week move sharply lower? thanks

    ReplyDelete
    Replies
    1. I think we work our way down to the yellow target area to start with.

      Delete
  6. Your analysis of SP is fine, but the problem is there is no fear in the market....We saw on Friday, market drops and VIX dropped with it...it was a lose lose situation....

    ReplyDelete
  7. Yes, the critical problem is that there is no Fear in market. hope of QE3 will kill us.

    ReplyDelete
  8. The typical pattern is that there is no fear at the top, and when the market first starts to decline there isn't much fear initially. When the market continues to decline, fear becomes much more powerful. The most fear is near the bottom of the market.

    The fact there is no fear implies we are at a top.

    Keep it simple. UVXY has put in higher highs and higher lows since July 3rd. That is a good start.

    ReplyDelete
  9. thank you SC. sounds reasonable.
    Experience is:
    when SP500 went up, UVXY went down absolutely. when SP500 went down, UVXY recently went up and down caused by QE3. so I'm afraid there's the chance that investors would think QE3 should come when SP500 is very low.

    ReplyDelete
  10. You're probably right SC. Been also following this guy for some time now and he shares a similar view. His calls are pretty spot on www.tradeyourwayout.com

    Hard to imagine downside with all this intervention going on. They will probably announce something if it gets nasty.

    ReplyDelete
    Replies
    1. Are you joking? This guy has been absolutely wrong on every major major market turn over the last year+. He's had a couple short term correct calls, but flipping a coin would give you overall greater odds than David.

      Delete
    2. Don't know where you are coming from, but I've made some nice profits on his calls. Especially in the metals for the last couple of years.

      Delete
    3. I have to agree with "Unknown". David has made bad calls over the past year, but the worst is he stubbornly held onto his wrong bearish call for months (fighting the rally every step of the way). Anyone who traded based on that lost a lot of money.

      Delete
    4. I was following him during this period and I also lost money on it. But his excellent calls on the other markets dwarfed those losses.

      I have 6 people I keep on my list to watch and they are all good. Not everyone gets it right from the 6 I consider great, but they are all consistent and I put David in that group. The main thing is consistency in my books, the rest is all up to us as traders to follow the trading plan, risk, etc.

      Delete
  11. SC...In your earlier chart you had a initial drop (16th?), a counter rally and then we end up at the 1245 around the 30th. Is this still the formula. I have some July puts (20 July) that I need to move to August and I am looking for the best time/price window between now and the 20th.

    ReplyDelete
    Replies
    1. That is the rough plan. I'll do another update this week once we see some more price action, and will be able to outline the plan with more accuracy for timing/price. There are a few things I want to see unfold in the coming days.

      Delete
  12. Wake up, everybody, this week &next week are vital for us. We don't have much change. Fed meeting is at the end of July.

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  13. I hope you guys focus on VIX instead of SP500, because we bought UVXY & HVU, we didn't short SP500.

    ReplyDelete
  14. market dowm, UVXY down too again today.

    ReplyDelete
    Replies
    1. $VIX up over 5%, UVXY down 1.4% ... must have something to do with expensive August and September vix futures I guess.

      Delete
  15. Can anyone please confirm if HVU is splitting to 1:10?

    link from Horizon would be great...

    Thanks

    ReplyDelete
    Replies
    1. Yes it is "consolidating" after market close on July 19, 2012.


      Horizons ETFs Announces Unit Consolidation

      Canada NewsWire

      TORONTO, July 6, 2012

      TORONTO, July 6, 2012 /CNW/ - Horizons Exchange Traded Funds Inc. ("Horizons
      ETFs") and its affiliate Horizons ETFs Management (Canada) Inc., the manager and
      trustee of the Horizons BetaPro S&P 500 VIX Short-Term Futures Bull Plus ETF
      (the "ETF"), listed on the Toronto Stock Exchange ("TSX") under the symbol HVU,
      has announced today that it intends to consolidate the units of the ETF, as
      indicated below:

      Unit Consolidation

      After the TSX has closed for trading on Thursday, July 19, 2012, the units of
      the ETF will be consolidated on the basis of the ratio (the "Consolidation
      Ratio") set out below, and will begin trading on a consolidated basis on Friday,
      July 20, 2012, the effective date of the consolidation:


      ETF Ticker Consolidation
      Ratio
      Horizons BetaPro S&P 500 VIX Short-Term Futures Bull Plus ETF HVU 1:10

      Delete
    2. Probably get the f out before that happens, and switch to something for short lol...this worst product ever....keep on dropping no matter red or green market....cant blame it not jumping, green market obvious that it drop, red market we have QE hope, lose lose situation hoping for MM to turn this around...

      Delete
  16. UVXY will be manipulated so low that when the market turn oes come those holding at 10-12 will need 100% spike to break even. This thing is completely controlled.

    ReplyDelete
  17. Going back to the summer of 2011 we can use TVIX as an example of some of the behaviours of VIX futures etfs during a plunge.

    TVIX started to rise gradually from July 22nd to Aug 1st then accelerated up to Aug 9th. TVIX rose from $16.45 to $47.15 during this period even though it started slowly. SPX fell from 1307 to 1101.

    Most interestingly, from Aug 9th to Oct 4th TVIX rose from $47.15 to $109.17. SPX fell only 25 points from 1101 to 1074 during this period. VIX itself didn't even manage a higher high from Aug 9th to Oct 4th.

    VIX futures etfs typically start to rise gradually initially. They are correlated with SPX, but the behaviour is much different. The largest gains for VIX futures etfs occur near a bottom for SPX. The VIX futures etfs often lag behind the VIX itself, but can continue to rise even after the VIX has topped.

    The freefall I have proposed for SPX should be similar to July/Aug 2011. The scale is smaller than 2011.

    Patience is the key.

    ReplyDelete
    Replies
    1. SC, thanks for the history lesson. If July does turn out to be ugly, the largest % gains will be near the exhaustion point, I gather.

      Delete
  18. What difference does it make for us if HVU is consolidating ?

    it's still going to be the same value. This week better bring some fireworks this week, its getting difficult to watch this erode everyday

    ReplyDelete
    Replies
    1. I heard somewhere, reason for these ETF to consolidate is cause it below 5$. If it below 5$, funds cannot short it, but above 5$ they are allow to short it again. Same thing for buying if it below $5, some fund cannot buy, above $5, they can buy again. Best thing to do is sell on the 19 or before that time and buy it back on the 20th or later. Something is fishy if this goes through, with a high price, let say we are above 5$ and at SC target of 7.45$. If they consolidate, wont that make it 74.5$ per share. Thinking they will keep this thing down to justify the consolidation lol. No one will pay 74.5$ for this POS lol

      Delete
    2. Guys, some friendly advice from someone who has been burned by this vehicle.

      In December/January of this year I put a pretty large (for me) position on in UVXY and TZA. I watched every day and "hoped" for the inevitable decline that everyone was talking about. I got psychologically pounded and eventually sold out for some decent sized losses to start the year. I was so emotionally beat up that i didn't have the fortitude to buy UVXY later in the year when I could have made some decent gains.

      This vehicle will truly test your patience.

      1. Keep it small -- putting large amounts of money into this vehicle is a sure-fire recipe to get over-emotional and sell out if there is weakness. If you have a position size that is making it hard to sleep, sell some. It's great thinking about doubling or tripling your large position, but it can and will spike down in large dollar amounts. If you want to hold a large position for a few weeks you have to have the conviction, discipline, and patience like someone of SC's caliber.

      2. Add in small increments -- In addition to keeping it "small" I like to add in small increments. In doing so, psychologically I see red days as a chance to increase my position size and lower my dollar/cost average. Nothing is worse than being "all in" and watching this thing go against your intended direction, especially red days in a red market. As SC notes, this tracks the VIX futures which tend to spike towards the end. If you continue to build in small increments, when the position does eventually start to move up you will have averaged in at a decent price.

      Okay, now from theory to practice.

      My current position I've laid in 3 layers so far -- one at 10.00, 8.40, and 8.05. My total position size is approximately (3/10) what I am willing to ultimately hold. I realize I won't make as much money, but I have enough invested that I WILL be happy if we see some decent gains. I also understand it could go down, so I'm not "all-in" giddy.

      If the market DOES decide to re-test 1370 you can sure-as-hell bet we will see UVXY in the 7's and for that reason I am waiting to potentially add larger amounts in the 7s to get to 6/10 or 7/10 in the next week or two.

      If the market decides to plummet from here, I'll HAPPILY take gains on this vehicle.

      Please don't blame SC for any losses, or why UVXY is red on a red day -- he is a nice gentlemen sharing his knowledge with others. However, DO blame yourself if you are in over your head or haven't laid out a sound money management plan for this extremely volatile ETF.

      Good luck everyone, stay patient and continue to layer in a position in UVXY -- but remember -- KEEP IT SMALL.

      -Bicky

      Delete
    3. Nice post Bicky ... very worthwhile information.

      Delete
    4. So you're lecturing SC and defending him at the same time. He's all in waiting for the spike, and going with the volitility down or up. One way to do it, yours is another. Nothing new or novel.

      Delete
    5. I couldn't have said this better myself Becky. Thanks for your insight and I agree with everything that you said. I'm lucky to have come across this blog.

      Delete
    6. You sound like someone who is disgruntled. Probably all-in without conviction....

      I am not lecturing SC. SC is the one who is using 8 different cyclical methodologies that all point to the same outcome, and therefore he is willing to go "all-in" to avoid the near-term gyrations to catch the larger move.

      Me? I have a hard time holding positions that go against me. I have a more conservative approach to a very aggressive ETF.

      That's about as polite as I can respond to douchebags like yourself.

      Delete
    7. Your logic is from another planet. It's OK for SC to go all in, as his trade is based on 8 different cycle methodologies, yet his followers shouldn't do the same as it poses too much risk and strays from sound money management. You come to a free site with a clear message and *leader*, try to steal/alter the message, then resort to name calling. Yea, we should all follow you.

      Delete
    8. This comment has been removed by the author.

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    9. "Unknown"

      What's REALLY bothering you buddy?

      I agree with SC's thesis; I (slightly) disagree on the method of profiting from his analysis.

      SC is playing a medium-term trend and isn't worried about short-term fluctuations; I am trying to maximize the short-term trend to position myself optimally for the medium-term trend.

      Off to ride my mtn bike to get away from internet trolls.

      SC -- once again, thanks for everything!

      -Bicky

      Delete
    10. Ain't disgruntled...just been around the blog/trading world long enough to know there are *experts* down every path. SC has a clear and concise trade set-up that's based on more than opinion. We should all appreciate it and trade to our own personal appetites. All the other *expertise* is just noise and mental masturbation for the aurthor. Just my humble opinion having been there, done that. I have a 70% position at 8.58.

      Delete
    11. Agree with you Bicky. Just ignore "Unknown", he seems to have an answer to everything and criticize anything you post here. Someone who make comments such as his, isn't making money.

      Delete
  19. Anyone who has any doubts about the coming fall in the markets should read this:

    http://www.zerohedge.com/news/hope-reality-gap

    Another round of QE in a politically charged election year would only be possible if S&P is sub 1280 or so.

    ReplyDelete
  20. Nice post Bicky. Good things come from good discussions. I'd also like to mention that SC puts his money where his mouth is.....that doesn't always happen with analysts. No analyst can be 100% right all of the time.....but I trust that he is totally committed to his analysis....which is why I'm here. The rest is my problem.

    SC - keep doing what you're doing. Tough crowd.....but you handle us nicely!!

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  21. by using pitch fork and volume indicator, i was expecting a market down day on Friday, also expect a market down day today.
    http://humblestudent777.blogspot.com/

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  22. Yes, the freefall did commence. In UVXY

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  23. cannot be the most negative week right now, just not seeing it so far.

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  24. I think SC said it best.....the market is in a topping pattern, however that action is negative for UVXY and HVU....I think we are close though, but first the market will head up to 1363 or so.....last gasp so to speak. Then kaboom, I predict Wed or Thurs.

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  25. Unknown,
    I think if you read what Bicky wrote with a less critical mind, U might find that what he is saying is that if you arent mentally prepared to take the downswings there is another way to do it instead of bailing at the worst place...
    Nothing less nothing more.
    Beeing to fast to criticise is not a good trait...

    ReplyDelete
  26. AA beat earning...the firework starts...

    ReplyDelete
  27. Hi SC,

    You said that precious metals will rise in late june/early in July. It did not happened.
    What do you see this week ?
    Thanks

    ReplyDelete
    Replies
    1. Gold did rise from June 28th to July 3rd nicely, and actually has been rising since the mid-May bottom. It's been choppy, but I still expect Gold to rise further.

      Delete
  28. Inverse H&S on USD in play...target is $90. Markets move opposite of the USD.

    ReplyDelete
    Replies
    1. Hi Roth

      Do you have a chart showing that, that you can show us?


      Thanks!

      Delete
    2. Not sure how to post charts here other wise I would??

      Delete
  29. SC, I know you are bullish on gold for the follow weeks but my question is : in your opinion, is it possible that precious metals go down further this week ?

    ReplyDelete
  30. SC - some chart study shows your analysis is proving to be very close - but I'm thinking you already know that :-)

    ReplyDelete
  31. GOLD/TBONDS

    http://img811.imageshack.us/img811/9363/goldgq.jpg

    http://img196.imageshack.us/img196/1152/tbonds240min.jpg

    ReplyDelete
  32. I'm averaged in at 2.85 on HVU....not sure if I should I add today, since we will likely be below $2 today

    ReplyDelete
    Replies
    1. If you are at or near your full position, I will suggest hold and let it play out. There is less of chance for the under $2.00 at least today in my opinion. Range may be between $2.15 - $2.30

      Delete
  33. Strange, a little good data makes UVXY drop so fast.

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  34. Looks like broadening bottom, and uvxy could hit 7.20 or so.

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  35. My 2 cents...The market is trying to shake out both the retail short and longs before taking it's next significant step. Hang in there everyone.

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  36. SC:
    Why would any trader front run an expected decline in SPX using the UVXY if the VIX future typically rise gradually and the largest gains for VIX futures occur near a bottom for the SPX?

    ReplyDelete
    Replies
    1. Using the previous example the best percentage gains are at the beginning and first half.

      The largest dollar gain at near the end of the move. If I take a position half way through the move then there is little percentage gain to be had. To take a position at the beginning and then sell half way through is ok, but catching the last part of the move is where the compounding can really pay off.

      Obviously the best is to be positioned near the beginning and have patience to hold to near the end.

      Delete
  37. i think UVXY works this way.
    very bad data continues some days can make it shoot up.
    a little good data can make drop easily. from the chart of UVXY/HVU, easy to find they went down and down. No wonder UVXY got reverse split in FEB. NEXT reverse split will happen soon. So i think the better way is short it instead of buying it. next time let's do shorting.

    ReplyDelete
    Replies
    1. When the time comes that we believe S&P will move up significantly (ie. apparently starting in August according to SC), then shorting UVXY might be a decent option as you state instead of buying HIV.

      Let's first win something on the S&P drop in July. :)

      Delete
    2. I'm dying to win in July. Or i'll have no chance to play.

      Delete
  38. SC, do the vix futures move up ahead of markets, thus uvxy would turn up before spx top? uvxy moves this morning seem to be more in sync with spx moves compared to previous days.

    ReplyDelete
    Replies
    1. Quite often they do. The holiday week, and the sideways churn in the markets lately have kept the lid on UVXY so far. There should be signs of UVXY heating up prior to SPX falling in a more substantial manner.

      It does look better today, and the upper white wedge line for UVXY is within striking distance next few days.

      The next step is to break out of the wedge, and then review again at that point in time.

      Delete
    2. This comment has been removed by the author.

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  39. Operation X on AAPL
    http://humblestudent777.blogspot.com/

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  40. keeping the faith, but with a 3rd of this month already gone and HVU and UVXY down almost 20% in July alone...it's hard to imagine a 300% increase in the next few weeks !

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  41. This comment has been removed by the author.

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  42. prediction for $spx:
    http://humblestudent777.blogspot.com/

    ReplyDelete
    Replies
    1. Hi,
      I see your prediction for today, thank you. What do you see happening before end of July for SPX?

      Delete
    2. For that expensive sub price, the forecast is sure arent working right now...

      Delete
  43. Hi SC, which price for gold would you like to see to buy it ?
    This week may be bearish as previous week so what is your target in term of prices ? Thanks

    ReplyDelete
  44. Not sure of the SPX will go this low (1200), but that is what it will take for another round of QE.

    http://www.zerohedge.com/news/bernanke-put-strike-now-1200-sp-500

    Its a hope driven market where if you are not short then better not be long either and watch from the side lines.

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  45. I have a dream. one day, all of sudden...

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  46. This comment has been removed by the author.

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  47. HVU: 12+% swing from today's bottom to now - looks like this rocket's about to shoot for the moon!

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    Replies
    1. I'm sure many retail investors have jumped aboard this vehicle, so I would imagine there will be a few retrace days to shake them out of the trade

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    2. That's why volatility plays like this one are so much "fun"... Continuing Good Luck to All.

      Delete
  48. Hi SC, have you ever considered instructing courses (for a fee) on cycle analysis? I'm sure many people will be interested in learning your methods.

    ReplyDelete
    Replies
    1. Thank you. I might consider something like that at some point. There is much more detailed analysis that I do using different methods. Some are fairly straightforward, and some of it is complex and time consuming.

      Delete
  49. CBEAR

    HOWD LAME JAY DO???????????? hahahahahahahahha GOT TO LOVE TO FADE EMMM!!!!! charlie

    ReplyDelete
    Replies
    1. Just closed all my SHORTS & go LONG for Wednesday. Anytime the Jaytard goes bearish, I get nervous being short.

      Delete
  50. SC,

    Every time market reverse before close, next day market goes rally...are we in for another rally here?

    Thanks

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  51. I think you are right Stockboom. Tomorrow, there will be some speculation of more FED intervention and once people will know that there is none, we will see the freefall !

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  52. Maybe samething as today, bounce green in the beginning then drop again, then buying near the end, end the day in red in general though.

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  53. or we just gap down and then bounce hard into close. ~1330 tough nut to crack.

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  54. looking at the spy chart, so far we have had 4 red days...near a bottom is the way I see it...bounce is coming...then could be further drop...

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  55. Fitch Affirms Its 'AAA' Rating on the US, Keeps Outlook at Negative (Click for story)

    This will bounce the market if it matter

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  56. Hi SC, do you think we may get a descent bounce (2-3 days) into major resistance before hitting the 1245 SPX target or are we free falling with perhaps a pause day or two along the way? Thx

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  57. FWIW, those also following redlinescenario.blogspot.ca have seen the author Souljester just half a day away from confirming that his fractal analysis has hit its 10th target (so far he's 9 for 9). Where he and SC diverge is on time frame - his meltdown starts on July 26 - 27 after an S&P leg up from the current level to 1449(!). Whoever's right (or even if neither is), it promises to be a very interesting finish to the month...

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    Replies
    1. That's worth a lot actually as sj has been right with his rls......remember that it is more time than price

      Delete
  58. congrats SC...UVXY cracked the falling wedge last hour of the day...not a true breakout but it's out and if it stays above $8(more like $8.25) then fire up the thrusters...aim for the stars...GL and GREAT WORK!!

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  59. There are so many analysts out there saying the markets are going to bounce short term back up to the July 3rd high that i'm starting doubt that this happens. Although, we are at good necktie support, if we continue to sell tomorrow and close below the necktie then no bounce will occur (imo). Also, if this bounce occurs it will result in a perfect setup for the bears and there seems to be a lot of bears out there waiting for it...i'll be going heavy on the short side if this bounce occurs so i'm almost hoping in a way that it does...

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  60. DOW

    http://img585.imageshack.us/img585/9719/dowc.jpg

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  61. this is why $spx bottomed at 1325.
    http://humblestudent777.blogspot.com/

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