VIX/VIX3M Ratio Chart A favorite ratio of mine has reached the low end of its range.
The sentiment ratio which illustrates complacency and suggests a contrarian stance is warranted.
Like all contrarian metrics, betting on mean reversion typically comes to fruition eventually, but tells you nothing about when that will occur.
That being said, I try to be as 'timely' as possible though when I make alternative posts.
What's Going On?
The market is taking a leap of faith by investors who have a trust in policymakers to
maintain the flow of stimulus, and for things to return to some form of normalcy.
Investors are taking a leap of faith from here, clearing the chasm of economic realities.
Fiscal life-support measures, Stimulus measures, and investor faith that's stopping the
whole thing from unravelling.
What Should I Do?
Be mindful of these charts, and monitor the progression of them.. because if there's
any sign that the narratives supporting investor faith start to dissipate or disappear,
or that faith gets shaken, then we could get a bit of an unravelling here. In the mean
time, Central Banks have our back.
Best,
RH
VXX
VIX compressionThe vix has a history of forming explosive price wedges. It wouldn't be a stretch of the imagination to say we're forming a new wedge here. Also, I suspect that we're on the verge of a new upward wave in volatility from here- it might just be a lower high in a new wedge. The market has gotten way ahead of itself and there are just too many new traders piling into popular stocks. They are fish in a barrel and the cork is about to get pulled. The sentiment is absurd and we now have some of the lowest put:call ratio's I've seen in my years of trading (shorts squeezed out). I'm hoping for the market to retrace 50% of the last fed rally but I would be thrilled to see lower lows by Nov-Dec. Take a look at the other chart below on VIX weekly timeframe and notice the very clear cycle lows/highs with the sine wave on stoch/rsi indicator.. We're very close!
VXX/VIX - Looking for move above resistance today?To early to have the latest VX data for the day. However, looking at S&P and NASDAQ outlook for today I am going to say we get a good move to the upside today above the resistance line. If so, then this could setup a new support line and may indicate that VIX is looking for a larger break out later in the week.
VIX/VXX managed to stay above major resistance all dayThe VIX managed to stay above its major resistance level for the entire day to day. That is a very bearish signal that it is ready to make a move. I would assume it may be a large move to the upside given the major trend line, wedge pattern, and major resistance line from February. Too many things in one spot.
VXX/VIXX looking for a breakout tomorrow?Update on my last two VXX ideas. So far everything is going to plan. As I thought, VXX is showing a "double bottom" in correlation to the double top formations showing in the S&P and NASDAQ. Looks like a wedge pattern and consolidating for a breakout. Should be one more small correction overnight or tomorrow morning before it breaks out. Using yesterday as wave 1, then a wave 3 could see a nice 15% upside. No clue what happens after that.
FYI, this market likes to through a curve ball every time I think I have it figured out. I am feeling pretty confident right now after 1.5 months of predicting a down turn and looking a fool. So, time for the market to make me look foolish again ;)
Hope this helps.
VXX/VIX made a move to the upside as predicted BUT will it stickThe VXX made a nice move to the upside today as the wave analysis predicted. It is nice to be right once and a while. It has been quite a while since I made an accurate forecast for VIX.
Now the question is will it keep moving up or will things calm back down again? I personally think the S&P and Nasdaq are headed for a moderate correction over the next few days and that should drive the VXX up more. However, I would not be surprised if we see some form of "double bottom" in the VXX before a more serious move higher. The RSI is showing a bull flag, so that is promising. However, I have been fooled by that before.
Hope this helps and good luck
VXX/VIX Waves - Looking to make a move upNote that I did the waves in reverse for the Vxx since it has an inverse relationship (3 waves up, 5 waves down). If that is true, then looks like VXX/VIX is looking to make a move in the upward direction. Could be a trash idea as I never saw someone use wave analysis like this for VXX.
VXX - Back in Falling Wedge Failed Breakout? Building momentum to eventually break out? Not sure but back in the wedge, combined with the resistance the S&P500 just broke (island reversal from recent times negated), it’s looking like some gaps will be filled downwards. Still looking for 23-25 for a bounce.