Tvix sp500Tvix is almost out of room in this descending triangle. I obviously don't need to talk about being oversold on the Vix and in a long long rally in the market. I see some analysts are talking about no sell off until after the 1st of the year due to lower taxes under Trump, just like I had suggested a few days ago. Only a few more days to prove that theory wrong or right. So I put a few arrows where I think the price movement will possibly go in the next few day. Including a gap up out of the wedge next Tuesday. So I will probably give it a go once again in Tvix and buy in in the next couple days. Probably before the weekend.
XIV
SP500 Christmas Time2HR Chart
At this point I do not believe that we will get a sell off before the end of the year. I know that usually happens for tax purposes but I have an alternative theory. I think a lot of people will not sell until after the 1st due to not wanting to have Obamas high tax rate affect them versus Trumps tax cuts next year. I think it will be difficult to get past the 2285 area as I just don't think it will break above the long term channel line. Tomorrow may show us the way as it appears we are in an ABCDE bull pennant. And the way it is set up suggests that the break out of that pennant will be a short lived push up. I am not sure about the holiday trading days but I will be trying to figure out a good entry for a short term trade on the VIX.
SHORT VIX DERIVATIVE PLAYS: GIVE THEM TIME TO WORK OUTAn interesting article on shorting the VIX and VIX derivatives: www.marketwatch.com
In a nutshell, backwardation occurs (which only applies to VIX derivatives, not to the VIX itself) and this can "derail" a short VIX derivative play that is not given enough time to play out and for contango to kick in and start its inevitable erosion of the underlying, whether it be VXX, UVXY, XIV (inverse), or SVXY (inverse).
And although this only shows contango/backwardation for the years 2007-2012, one theme is evident and that is that the market is in contango the vast majority of the time (on average, >75% of the time): www.cboeoptionshub.com
In essence, then, the caveat to shorting VIX derivatives in reliance on contango being a constant on top of VIX mean reversion really should be a caveat against shorting and assuming that it will work out "immediately" or even "fairly quickly" (relative terms, I know).
The practical crux of this is that if you short VXX* during a VIX >20 spike with, for example, a short call vertical, and it doesn't break your short call as you approach expiry, well, roll it out for duration to a later expiry and give it more time to work out. After all, history says that for >75% of the time, contango will be on your side, even if you have to wait a little longer than you'd like for it to have the desired effect ... .
* -- Alternative plays would be to short UVXY with a short call vert, long SVXY with a long put vert (it's an inverse), or go long XIV (it's not optionable; you'll just be stuck with stock). With XIV, since you'll be holding long stock, you're only option is to "wait it out."
SP500 SPX TVIX Rate Hike ThoughtsTVIX Daily Chart
SO I decided to start off with the TVIX chart. I measured the price movement of TVIX during the last rate hike which equaled out to approx. 150% which I measured on this chart from a starting price of $10. Then I measured the flash crash that occurred before that which equaled 250% which I posted. Some interesting things (maybe wishful thinking). The Fed still raised rates a quarter percent even after that flash crash. The difference this coming week is that we are in rocket ship mode in the stock market. My hope is that the Fed says to itself, here is our chance to do a half point rate hike. That would be a bit of a surprise for the markets and then maybe just maybe we can reach the 200DMA for the TVIX chart which as you can see would also be near that 250% move.
The other thing I posted on this chart is a yellow circle that says "Approx target for the weekly BBand head poke". I will post the weekly for TVIX after this and show you the two head pokes above the BBands for both the flash crash and last years rate hike. SO I thought that is significant enough to through that on this daily chart of where I think that head poke range would be is there happened to be any consistency in that regard.
And no, I do not think we can possibly reach the 50MA for the weekly. Just a dream.
SP500 Italy Vote WeekendNothing too difficult here. I think that Italy will vote to leave the EU and we will have a little correction. BUT, I just don't think it will be that great. I am aiming for the blue box. In other words, a retracement to the 38% to 50% then bounce right before the rate hike. I do not think this vote will be as great as the Brexit because it appears to have been talked about sooo much that it is partially priced in, IMO.
I bought into TVIX for a short pop. I will post the chart as I see this playing out.
XIV CRASHAfter the elections, the stock rose back to 40$, the same price it was about a month ago. The stock was denied to go higher and is now going back down. If you look at the RSI, it's making lower highs even though the stock is back up at 40$. The markets rose after Donald Trump's election and that was really weird, i think it was a bubble and it's about to pop.
SHORT ITIf the stock breaks below the 100MA, there is nothing left to support it. My bet is that it's going to go in the 31$ area. On top of that the elections are coming very quickly and this creates a lot of fear in the market. So if it breaks below the 100MA, I will be buying TVIX and VXX
XIV important breakoutThere is an important resistance level in the area of 40$ and the stock can't seem to break it. It tried many times but it remained unsuccessful. On top of that, we can see an important RSI divergence which can give us a hint on which way the breakout will be. The fear of the elections will also drag the price down below the triangle.
S&P 500 and possible VIX play4 hour chart for S&P 500
So as promised, here is my take on the S&P 500 and where I see things moving in the next two months.
I feel very confident that we have just completed the 4th corrective wave of this 5 wave impulse. As you can see, this 4th wave is shallow and complicated. And the 2nd wave (Brexit) is deep and cleaner. So all that is left is the 5th wave. I placed OI options price targets in the chart. I also measured what 50% and 75% gain of the 3rd wave would take us as far as the 5th wave is concerned. For the 50% growth price target, we would reach 2215-2216. For the 75% growth price target, we would reach 2240. However, price action will dictate the final outcome. I also measured the amount of time in days and bars for wave 3.
So what my analysis is pointing to, and what I am leaning towards, is a micro 5 wave growth, topping around the 2215 range (red line). I just don’t think we go much higher because it seems too steep for those OI price targets. Either way, it appears that we will make all time highs. (blue line signifies the last high) ATH’s will help solidify the Feds decision to raise rates as they would not raise rates if the market showed weakness like it has this last couple weeks. It appears we top around the end of November and start a steep ABC correction, with C being the big one that would coincide with the Interest Rate hike.
Unless we get a black swan event that triggers this fall (doubtful) I am pretty sure they raise rates in December. So I will be playing the VIX at the end of November. If anything changes then I will update this post.
And just to touch on Yellens latest comments. Of course she and others are going to start to be Dovish. They want the market to go up so they can raise rates. Talking like she is uncertain is BS and helps kick start this 5th wave.
So there it is, short and sweet. Hope you like it and hope it is helpful.
VXX - VXX and 20MA!In almost every instance that VXX closed above 20 MA, market sold off and VXX had ~20% gain.
Success probability of the trade is really high.
Having said that, today's market price action was not in favor of this trade!
SP500 bottom estimateMy estimate for the bottom is on the chart. Then up up and away until December or January Fed rate hike
XIV - How much further VOL can be crushed?XIV has a IHS forming and already the pattern has broken out!
VXX should tumble while VIX should see $9 mark!
Inverted VIX: Ominous signalThis might be an interesting pattern to monitor. Lately the SPY has been outperforming inverted VIX, unlike what happened at the start of the 2016 uptrend, where we observed a shift from outperformance to underperformance.
The inverted VIX daily chart shows a daily downtrend is ongoing and suggests we'll see a 22.88% drop (22.88% jump in VIX) over the next few days. Considering NFP on Friday, this might not only happen sooner than forecasted, but might be a conservative estimate.
I'm holding SPY shorts (among other trades), and looking to hold for an extended period of time if we break under the monthly uptrend mode support in SPY. Keep close watch of this chart, and remember to keep position sizes safe, if you're holding trades over the weekend like I'm doing (considering NFP Friday).
Check out my updated track record here: pastebin.com
If interested in my real time whatsapp alerts and swing trading newsletter, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year.
Cheers!
Ivan Labrie
Link to Tim West's chatroom: www.tradingview.com
We discuss setups like this often there. Feel free to stop by and subscribe to his indicator pack. If you have any questions ask.
Risk disclaimer: My analysis is provided as general market commentary and does not constitute investment advice. I will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
SPX looking to pull back after July 4th Weekend.Hi, this is my first published chart on the site. Keeping it simple this is what I'm seeing after the last brexit week recovery. To me it looks as though there is enough information to warrant the creation of a new downtrend channel based on the lower highs after 6/8/16. I don't know if SPX/ us markets will open higher on july 5, but I currently think a market pullback will be the next move. Good luck and any comments and feedback are appreciated.
S&P reversal to new highs soon. Notes on the chart. For a long time I thought a big correction was imminent, but I now think this market is ready to move up to the next level.
SPY - Analysis, What to watch for, Potential opportunity1W:
1M;
Since end of May, there has been bullish price action, however it was with relatively unimpressive volume. Light volume = Low conviction. Even though the bullish price action lacked conviction, it still was note worthy. One not worthy point is making a new HH and breaking a key resistance. Since making the HH, volume has substantially increased as prices have pulled back. Purely based on price action, yesterday was an important day because the day before was a high volume battle where neither the bulls or bears could gain control. That made yesterdays bearish candle carry more weight than it would have on it's own.
What to watch...
- For the bulls to continue to advance, they need a HL following 6/8's HH
- Two things would add credibility to a bull bias
1) we get bullish candles in the next day or two
2) the volume increase on their next push
- For the bears to regain control, they need a convincing close below 202.7. "Convincing" would be high volume and big bodied bear candle.
If the bears regain control in a convincing manner, price could retest the ~182-180 strong support zone.
Opportunities:
- I'm buying XIV if there is a strong rejection candle or bull candle around 205 - 202.8
- If that occurs, i'll also adjust some of my short positions
- If 202.7 support zone fails, i'll have to look at risk/reward of additional short positions. I want to be selective and wait for favorable conditions. This could be rangy.
SPY - Bullish Move...Is it for real?1M:
1W:
The break above light blue trend line was very bullish, even with moderate volume. The bears could not take control to break even relatively week support areas. Are the bulls gaining momentum? This recent price action could be a signal that the May 2015 high could be tested and surpassed. I still expect further volatility in 2016, but a push higher could establish a new trading range. It could also indicate my hypothesis for 2016 has been incorrect and the bulls will remain in control.
I sold a credit/bear call spread earlier this week. Normally i would take advantage of the rise and sell more without hesitation. My breakeven is currently $210.20. I still will probably sell more &/or raise my breakeven closer $212, but I am carefully weighing my options, the R/R, the timing, and ensuring I have will still have future flexibility.
IPO's underperform in market volatilityThere is a growing queue of IPO's which have not gone public, they cite market volatility. Looking to the IPO ETF we can see those who have IPO'ed into the volatility have underperformed considerably
Volatility risk premium less stable source of Alpha through XIVAs volatility is becoming more violent and frequent and generally on the rise, the source of alpha through XIV ETN products which shorts second month VIX futures to buy front month futures back is becoming less stable.
Whist the VRP (Volatility risk premium) remains technically, the period of rough water will err on the side of the statistically unlikely in terms of XIV returns. Held long enough it should remain its upward trend but due to -1x leverage and associated convexity (Volatility drag) will further eat away at its performance.
I would suggest avoid playing roll yield or VRP through ETN's whilst the water is rough, stick to futures / options / proxy plays - not because one cannot continue to do this successfully, but that there is a growing chance of continued underperformance.
SPY Call Credit Spread (Short at $208)May credit spreads expired. Good R/R on August options (for a credit spread)...close to 1/1. My break even is at SPY=$210.20.
While my hypothesis has been evolving, I still see SPY as volatile. The August options provide some flexibility to adjust if prices go up to $208-212 range and continue to profit if SPY stay in current range.
1W:
1M:
SPY - Evaluation EvolutionMy opinion, if you objectively examine the charts, I don't see how you can be an "All In Bear" or an "All In Bull" regarding long-term projections.
The RED Line is a key resistance. Even testing it is bullish the long term even if it holds.
1M:
On 1M...Candles long shadows (pinbar) demonstrating strong bullish bounce off the key support each time it has held. Technically, we have had LH & LL since 5/2015. However, the repeated price action at the 182-181 support makes it difficult to count on continued LLs without clear confirmation.
A case can be made for both a Bear and Bull bias. It was more difficult to make a case for a Bull bias a few months ago and now it is getting increasingly more difficult to be a all in Bear.
My stance...I'm still expecting a ranging market. A break above $214 or below $180 would force me to re-evaluate my bias.
