Wednesday, April 28, 2010

VXX Buy Signal

Yesterday's sharp decline was sufficient to generate a reversal from Short to Long on the VXX Daily Trend Model:


VXX is an exchange traded fund that emulates the VIX, a market volatility measure.  As VIX rises, equity prices decline and as VIX declines, equity prices rise.  This is evident from the decline in VXX shown in the chart, coinciding with the market rally of the past two months.

Early trading indicates a bounce-back rally, that coupled with a Fed announcement later today makes anything possible.  But what this chart tells us is that something is different for the first time since mid-February.  Modest new market short positions are suggested, pending confirmation of an intermediate term sell-off in the next few days.

5 comments:

Anonymous said...

Allan,

What is happening to the markets today?

Euro going down....

NNVC going down...

I am not cool today!

Liam

Allan said...

Liam:

NNVC did warn us with a Sell Signal last week;

as for other things that are working:

SPX and QQQQ Sell signals

FAS_short and FAZ_ long signals from Apr 16;

GOOG_short;
GS_short;
JPM_short;
TEVA_short;
HGSI_short;
TASR_short;
YHOO_short;
X_short;

just to name a few select trends that are working.

Plus, the big trade of the year is still ahead of us, although its beginning to look like we may be closer then we thought.

A

Anonymous said...

Allan,

I am sorry, I wish I were as cool as you. I am trying.


The big trade of the year is NNVC, you said by 2014...I hope you are saying it will be closer. I know the signals on NNVC said it will decline, but I did not sell, I believe and hold my shares close.

You still give me hope..since I have found this site, I am trading better.

Is TZA a good buy?

Forgive me for my emotions.

Liam

Allan said...

Liam,

First of all, you have nothing to apologize for, emotions are part of this vocation, which is one reason why taking cues from an unemotional, objective, algorithm provides an edge;

As for TZA, it is still in a Daily Sell mode, but is getting very close to it's reversal Long price. If it closes above that level (it is in last night's trend tables), then it becomes a Buy.

Al said...

Allan,

I am new to this blog and enjoy your posts here.

Regarding your recommendation of VXX, how do your feel about buying options on the VIX? (VXX is buyable, but has no options).

Alan