Friday, February 19, 2010

VXX Major Bottom

Below is my Elliott Wave chart on VXX, discussed before in various posts.  In summary, the VXX is an ETF that follows VIX, the measure of market volatility which inversely follows the market up and down.  VXX is making new lows today, but as the chart below shows, by doing so it has created a major divergence with the Elliott Oscillator, indicating an impending reversal of the downtrend.  Adding to the evidence, my Advanced GET EW software is labeling this latest drop as an ending Wave 5.  Only the support level (blue horizontal line) allows for marginal lower prices before a major bottom is seen.

VXX Daily

Note how the peak in downward momentum occurred right where orthodox Elliott suggests it should, at the bottom of Wave 3 of 3 down, around the third week of October.   

Note also how well the VXX Daily Trend Model caught most of the entire shown decline.

Is it time to be long the VXX and start heavily shorting the stock market?  No, that's not how we trade.  We can anticipate the reversals but not act upon them until they occur.  That said, email subscribers know where the SPX Daily Model reverses Short, as well as where the SPX Weekly Model reverses Long.  Upon either of those events, everything will change.

A

7 comments:

Anonymous said...

Allan
You are so wrong why don't you just shut up!

Allan said...

Thanks for your kind words.

I welcome your own ideas on this market, especially why we should ignore a major divergence on one of the markets most reliable "tells."

Stan Trenton said...

If Allan is so wrong, why don't you do us all a favor and post specifics?
It does no one any good at all for you to post an unsubstantiated comment.
Thanks,
Stan

Anonymous said...

Checking in from New Orleans.

Anonymous #1.

Count yourself in the handful of other idiots that continue to bash Allan on his insightful analysis.

His best advice for 2009 and 2010 was NNVC. All of the information was disclosed on the blog. I have a cost basis of 70 cents on the stock. The current price is $1.20. That equates to a 70% return.

I am trading his Trend Model on metals with great success.

His paid service is a real bargain. His pivot points are given to subscribers throughout the day. Check the backtested results and the trend system. It is there for everyone to see and make their own judgement.

Otherwise, show us your cards and let us all know your predictions. We can then determine who should shut up!

Anonymous said...

ECCENTRICITY

In mathematics, the eccentricity, is a parameter associated with every conic section. It can be thought of as a measure of how much the conic section deviates from being circular.

In particular,

+ The eccentricity of a circle is zero.
+ The eccentricity of an ellipse which is not a circle is greater than zero but less than 1.
+ The eccentricity of a parabola is 1.
+ The eccentricity of a hyperbola is greater than 1.

Any trader has witnessed the parabolic form--as the rhino horn. But he might not know, elsewhere, that the reason he has difficulty drawing ellipses using Microsoft 'Paint' or Photoshop is that he is mistakenly presumes he is manipulating the elliptical curve, when instead he is manipulating a point on that curve relative to its two foci and not its center. And so, he never quite gets it right as he is either mistakenly attending to the center point or the curve itself and is ignorant of the foci which govern the elliptical form.

He is to be forgiven for the transference of his familiarity with circles (which do depend upon the center only) as well as to be excused for his wont to be perfect in his analysis. But he is to be chastised for relying upon experience instead of attending responsively to the matter at hand--namely, the ellipse.

This, of course, is germane to technical analysis. One example is hidden "pivot points" to which the chart is responding.

More than this, the key is to examine one's perceptual assumptions (apparatus) so that one is not intent upon the ostensible formal structure, but how what is.

Archimedes (287–212 BC) is said to have said: "with a lever and an immovable place to put the fulcrum, one could move the world". But this fundamentally misappropriates the of moving a world, for it applies a solution from inside the world, to the world outside itself.

the Tibetans know

"How do you know me?" I saw you while you were still under the fig tree. ... You believe because I told you I saw you under the fig tree. (Jn 1)

Anonymous said...

Allan, you have put together a peaceful respite from the noise and ugliness out there on other financial chatboards. Here one can still share some ideas on the market like a gentleman. Poster #1 must certainly understand this. Why does anonymous posting bring out the worst in some? Who knows. Keep up the good work. Tom.

Anonymous said...

SAMUEL TAYLOR COLERIDGE (1772-1834)

an American pathology

"It might be used to refer to the willingness of the audience to overlook the limitations of a medium, so that these do not interfere with the acceptance of those premises.

"According to the theory, suspension of disbelief is a quid-pro-quo: the audience tacitly agrees to provisionally suspend their judgment in exchange for the promise of entertainment."


[this also accounts for the gullibility of almost all Americans in the face of rampant Federal Reserve thieving & lying--they all are in for the promise of legacy benefits]

Rime of the Ancient Mariner

Dante:

"Tu stesso, ti fai grosso
You yourself, you make yourself ignorant/rough/gross/stupid

Col falso immaginar, sì che non vedi
With false dreaming, so that you do not see or - By imagining what isn't, ...

Ciò che vedresti, se l'avessi scosso."
What you could/would see if you would have shaken off [that dreaming, or shaken yourself awake, or could shake it off].

Heart - These Dreams