Monday, June 07, 2010

VXX

Here is an update on the Daily VXX Trend Model:



On the close-up below, notice how trend line support held prices on two occasions before VXX ran higher both times:



I've seen this trend line support work often enough to consider it a low-risk strategy.  In other words, for any symbol, initiating a trade in the direction of the major trend whenever prices retrace to near the trend line allows for an entry with a very tight stop, i.e. prices violating the trend line. 


A

5 comments:

Padre3210 said...

Re: NNVC, I sold half at 2.00, and currently, I have a "ridiculous" open order for several thousand shares at 1.35. I know this is not supposed to be a trading stock. Do you think it is a mistake to trade it this way?

Anonymous said...

Looking like the market is gonna bounce tomorrow?

Anonymous said...

Interesting chart Allan, you may be on the right side....but I agree with the last poster right now, having looked at the S+P chart,on short (10 day 10 minute time frame) clearly shows the completion of 5 waves down soon. Todays action was a wave 4 completing and turning into the wave 5 which you can also see on smaller fractals is developing a 5 subwave pattern,with the close of today left to be finished tomorrow. Todays close looks like a subwave 4 with tomorrow churning to complete 4 and a small drop to complete subwave 5 maybe in the 1045-1040area....which IF this happens, would show a completed 5 waves and a double bottom ,which at 1040 area would actually be a Quadruple Bottom from the february low.

Unless the government WANTS a full blown market crash right now ,I cant imagine they wouldnt pull out the Plunge protection team for a major stick save at 1040 and a reversal rally to start here.
or at least a worthwile bounce as previous poster suggested.

cautiously optimistic for a bounce maybe tomorrow maybe late in the day,or whenever price nears the double bottom zone and the 5 subwaves of the wave 5 is completed.

Anonymous said...

but what would you do now ,here,with such a bounce. do you look for heavily oversold stocks and buy some? Would you look to add more NNVC here? NNVC is at that 'bottom forming support zone' now at 1.50 area. (though 1.40 area is the next support )

other stocks,like ISCO are also in that bottom zone,ISCO near 1.19-1.10,and its neckline.

Precious metal miners were mixed today and oil + gas stocks were mixed.

oilers look like they are getting ready to hold at support ,finding bottom here.same with miners.

Allan said...

The trend models answer all of the above questions with a simple trend line. Be on the right side of the line and the rest is relegated to complicated speculation. Yes, even EW is complicated speculation, but, it has its place as a secondary indicator of potential momentum, i.e three of three.