XIV
Lg XIV (short time frame), Trade Journal XIV
Long XIV @ 20.50
- VIX futures are back in contango (currently 4.5% from F1 to F2)
- SPY broke through resistance validating double bottom (see chart below). Although there are some upcoming resistance, SPY has momentum behind it. My assumption is VIX futures will remain in contango as a result.
- Since 1/20 SPY has increased ~9.6% where as XIV has increased ~26.3% (35% since 2nd bottom on 2/11).
- XIV long entry after a VIX spike AND SPY strong support hold would have resulted in significant gains.
XIV is significantly more volatile. It is a reasonable conclusion XIV has the potential to generate much greater returns if SPY's momentum is at least sustained and the VIX is under control. It also has the potential for much greater loss with a VIX spike.
Instead of a short-term long SPY trade with potentially a ~4% expected gain, I am going long XIV. This is a higher risk trade that has the potential to generated much higher return.
1W:
1D: SPY CHART
Completes bearish Bat patternVXX with completion of bearish Bat pattern.
27-28 is a daily resistance zone. A close below 28 can expedite the reversal in VXX
Pattern completion - 29
$VIX - Wolfe Wave - Beware of Bull Trap... without full conviction, but but the VIX suggests another LL . The last week in February would be strange.
The situation on $XIV:
www.investopedia.com
Short SVXY durring high VIX periodsSVXY pays a price when VIX is high (>16).... even when SPY is increasing (see arrows). This is due to rollover but not to be confused with VXX decay due to contango.
Did you catch inverse volatility?I was observing $XIV for a while, only to fall asleep and watch the train leave!
VIX index still poised for oversized move higher this summer.Despite briefly dipping below 12, based on this chart interpretation the VIX is still poised for a rather large spike this summer. First trigger would be a move over ~14 then a push through major resistance ~19.50 - 20 would probably see a rapid ramp towards the low 30's.
This would roughly correlate to a 20-30% correction in the SPX.
Watch to see if the VIX can break and close above the 50 sma (currently 14.08) and then the 250 sma (currently 19.35) for confirmation.
