Watching for a VIX Breakout

Updated

At the moment, it is a great time to technically go long. The VIX tested the rising wedge resistance, and is now doing so again. (As it often does before selling off once again) The bigger picture here is once that trend breaks, the next line of resistance for the VIX doesn't come for quite some ways....A sell-off seen much like in 2016 and early 2018 would likely ensue if it broke.

Assuming its a quick 10 pop sell-off, we plotted a few possibilities. The red line being if the trend were to break very shortly. The problem with the drop happening now, opposed to a few weeks from now is where the 200 day ma will be.

A breakdown right now would likely see a sharp sell off down to the 200 ma which currently sits below major trend line support. (The previously broken megaphone and the previously broken trend that has lasted this entire bull market). Which could lead to further deterioration.

Meanwhile if the vix stays within resistance, and market makes new highs; the eventual sharp sell-off could then find support on the 200 day and previously broken long term trend (white arrow)

Looking long until we see a break of VIX 19.

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Vix updated:

Still waiting on VIX 19 to indicate the worst is to come.
Gonna take a big rebound to avoid it this afternoon I think because there wont be anything saying "gap up on Monday" about the virus news that comes this weekend.

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Vix update
Vix held the upper trendline
Remains broken out of shorter term resistance (white)

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Still holding....
Still at high risk to enter long here...would feel a lot better with a break down below 14 and hold.

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Again hypothetical support zones. I'd expect a "contained" spike to find support around 320, a vix breakout out could see things get nasty.

- And of course...a VIX break down below 14 would likely simultaneously occur as the SPY breaks above the yellow resistance. Where a further impulse higher on the SPY would likely ensue.

Next couple days should be very interesting.

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Another next to perfect hit.....

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Notice how SPY just broke down to lower lows, but the vix did not make higher highs.

Signs of a "controlled" sell-off.

JTI96

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