It looks like we have another VXX shorting opportunity ahead of us. VXX touched the top of its downward sloping channel and fell away. If it breaks below that trend line we are set up for a nice trade. However, if we push higher this week, we are setting up for a very nice short trade.
VXX struggles outside of its channel.
Warning… Condescension ensues… NFTRH 307’s opening segment, dated 9.7.14:
From a post on the HUI at the site last week:
“There are worse things that could happen than filling a gap and scattering the wrong kind of gold bugs back out. Then it would be up to the longer-term charts to do the heavy lifting if the daily does fulfill this downside potential.”
The gap was filled, the top end of the anticipated support zone was reached and indeed, the wrong [i.e. momentum players] kind of gold bugs are scattering back out. The hard sell down on Thursday was very likely due in large part to the selling by traders with a fetish about gold as a geopolitical or terror hedge. (more…)
I was looking at the entire history of the volatility index (the oft-cited “VIX’) and found an interesting parallel. Take note of this chart
My beloved son finally returns home tonight, so I’m going to be involved in that happy homecoming – – – but before I get into that, I just wanted to do a short, sweet post about this chart of the VIX, which I’ve sexed up with a few lines and circles:
Each candle on the SPX:VIX ratio chart below represents one year. I last wrote about this ratio pair on July 31st.
You can see at a glance that price action has been extremely volatile, so far, this year and has nearly re-tested the lows of last year’s candle. The Momentum indicator remains elevated at an all-time extreme on this timeframe.
At the very least, bulls will have to push the price above the 150.00 level and hold it there to coax investors into putting their money in equities in the near-term…otherwise, we’ll continue to see volatile intraday swings, or even a much bigger correction in equities if price falls and holds below the 110.00 level. (more…)
Technically, I have my attention on volatility this first week of August. I saw lots of predictions over the weekend of how far down we might go (and many varying levels to watch). I shared on the weekend that I am watching 1082 for the Russell 2000 (the bottom of a double top pattern range). This seems reasonable to hold forth as a pattern-based range. We may test that support level this week (and we may not). I noticed that many missed this chart on the weekend, so I share it again below. I basically see 1082 as a “ledge”. If the Russell 2000 price firmly falls off the ledge, then the range is finally broken and odds are essentially WATCH OUT BELOW, because the markets have not seen trading below 1082 since October 2013.
Russell 2000 Weekly (worth watching for downside leadership)