View: VIX - 2 hour 12.1.2015.png
VIX - 2 hour 12.1.2015.png
VIX 2 hour. This is an opinion and not investment advice.
does lower vix normally mean higher spx and xiv ? 12/1/15
So, in theory long Vix on a clean break over the wedge?
Eh, entry is a personal decision. Personally, wedges are exceptionally unreliable for entries. I would never go long the VIX on a break over the wedge, but that is personal to everyone's style. However, the overall structure still implies a correction to a prior breakout. The wedge could easily turn into a channel or break beneath the wedge into a steeper declining channel. As long as the VIX holds the 13-14 level.
Speaking of entries on wedge breaks, I'm always amazed that someone would go long a break above the wedge. Why not buy on the dip back to wedge support or even better, buy on a break of the lower wedge? Even though the pattern is temporarily broken at that point, at least your entry is lower risk so even if price declines, it is more likely to at least rebound to your low risk entry so you can get out at even vs getting out at a loss if you buy on a break above the wedge.
I agree Dink...
Why would you ever wait for a breakout on a mean reverting, non-trending underlying? The Mean VIX reading for the last two years and the last 5 years is 14. The absolute low was below 10. The recent low end of the range is either side of 12. Figuring out a long VIX strategy anywhere below 14 is the way to trade this. Patterns on VIX may be appealing, but a regression channel over the last 6-12 months gives a much clearer picture. Buy low, Sell high.