35 replies to this topic

[MikeyG]

I don't have any stats. Mine is simple charting. And I am just following the trend here. It may seem illogical to follow the tail (VIX) and not the head (SPX or indices) but the head is also pointing down. Anyway, since the thread ia bout VIX, I am presenting a simple basing of this derivative and about the roar to begin.

What will happen tomorrow or this week? This chart may not tell you such things as what to do tomorrow as it is a weekly chart but on the weekly chart timeframe, the direction is clear until it is not. The market trend is down until it is not! If I was short volatility, I would bail out on any market rally. My 7 cents, adjusted to inflation.



The indicator is simple MACD. But, it clearly shows the momentum improving while the price is basing and waiting to go.

I like it...

I like to keep it simple as well...

I still use volume, indicators, internals, fundamentals, derivatives, etc, etc, etc...

But, I found that after years of trading, that sometimes it just best to have price and price alone on piece of paper in front of you...

That's it, just some squiggly lines and nothing else...

[NAV]

VIX isn't exactly a derivative of price. Its more of a sentiment indicator.

And you are using RSI on sentiment ?

[ogm]

VIX isn't exactly a derivative of price. Its more of a sentiment indicator.

And you are using RSI on sentiment ?

Yes, relative spike in sentiment. Sudden urgency to pay up for protection/ speculate on the downside. Makes perfect sense to me. Once again, I've posted the statistics, you can take a look at the charts and see for yourself.

As for backwardation re DrSp's post ... since 2004 80% of cases in VIX backwardation have lasted less then 6 days.

[ogm]

VIX futures contango vs backwardation. As I posted above, 80% of the backwardation cases in VIX futures resolve to their natural state of contango within 6 days. Actually almost 40% resolve within one 1-2 days. Notable exceptions were 2008 and 2011. ( I don't think we are anywhere near comparable levels ) Backwardation in VIX futures is rather rare, and contango is the natural state ( second month premium is higher then front month ) As it should be, as uncertainty of time requires higher risk premium. It all depends on the nature of the crisis the market going through at the moment. 2008 was a helluva crisis. 2011, certainly was higher magnitude crisis then average with sovereign debt default threats all over Europe and first time ever US debt downgrade. I don't think "fiscal cliff" is comparable in magnitude to any of these events, as most of it will likely be mitigated and backpedaled even if it goes off. So I expect the VIX futures to revert to their natural state of contango rather fast.

[andiron]

NAV, i take it that you must be short given your pivot was taken down and then some...

[NAV]

NAV,
i take it that you must be short given your pivot was taken down and then some...

Yes. I already mentioned that in my previous thread. SPX 1406 was my sell signal.

[ogm]

I think Republicans will take the deal today. And they would be foolish not to do so. Current offer is to extend tax breaks for everyone under 400k. If they wait until reset tomorrow then it will be 250k, and it will be very hard to claw it back without any more concessions. Plus all other taxes will reset. So they better take it while they can get something.

[andiron]

NAV, that was 20 point reversal...what's the stop loss?

[TTrader47]

I think Republicans will take the deal today. And they would be foolish not to do so. Current offer is to extend tax breaks for everyone under 400k.
If they wait until reset tomorrow then it will be 250k, and it will be very hard to claw it back without any more concessions. Plus all other taxes will reset.
So they better take it while they can get something.

While I disagree with almost everything you say politically, that UVXY of yours has been spot on. I have taken a break from trading to clear my thoughts and focus, but really wanted to jump back in and short the living daylights out of that UVXY. I am not sure what your dollar cost average is, but you have to be sitting with a nice profit today

And if there is any kind of deal tonight, I expect will see a nice pop towards the 13 EMA's.

[ogm]

I think Republicans will take the deal today. And they would be foolish not to do so. Current offer is to extend tax breaks for everyone under 400k.
If they wait until reset tomorrow then it will be 250k, and it will be very hard to claw it back without any more concessions. Plus all other taxes will reset.
So they better take it while they can get something.

While I disagree with almost everything you say politically, that UVXY of yours has been spot on. I have taken a break from trading to clear my thoughts and focus, but really wanted to jump back in and short the living daylights out of that UVXY. I am not sure what your dollar cost average is, but you have to be sitting with a nice profit today

And if there is any kind of deal tonight, I expect will see a nice pop towards the 13 EMA's.

I started a little early and added some at 28 and 31. Lets see how it works out. Not celebrating until I cash it in

But it has very good potential of falling back into the teens, so I'm not in a big hurry to close it out just yet.

Once contango is back in UVXY erodes at 98% annual rate due to natural forces. So I'm being patient. Tradestation rarely has it available to short, so might as well take advantage of the opportunity.

Edited by ogm, 31 December 2012 - 01:17 PM.