Friday, July 30, 2010


Here is a chart of the VXX_240 Trend Model.  A friend of mine trades VXX exclusively because of what he considers it's very predictable behavior characteristics.  You can see the potential on the chart, three very good trades just using this model:

Notice the spikes higher in recent days, all followed by sideways consolidation, with each spike up making a new high.

If an extended back test supports it, I'll start reporting on this model in the subscription service.  An edge is an edge, no matter what the symbol.



Anonymous said...

Took a long position on the VXX earlier today with a reversal at 22.42 on the 240 minute model.

Lets see if this will be another big winner?

Stan Trenton said...

On shorter time frames, day or less,
my regression channels are pointing down.
However, on the weekly and monthly, my regression channels are pointing up.
Looks like the perfect setup for a developing base on VXX..

t said...

Is there an inverse ETF for the VXX that I can play,since my account is an IRA I cant short ,so I need an inverse ETF. thanks.

Stan Trenton said...

"Is there an inverse ETF for the VXX...I need an inverse ETF"

There is none.
By the way, the VXX is an ETN, not an ETF.

Digger said...

Thw new XXV is an inverse for the VXX. Even if you could short the VXX the unlimited risk doing so might make XXV attractive as an aletrnative.

Anonymous said...

Help me understand how being short the VXX has unlimited risk, but being long the inverse (XXV) doesn't. a

Digger said...

Theoretically, there is no limit on how high the VIX, VXX or VXZ could go. Your guess is as good as mine on the practical upper limit, although that may be the least of our worries if the VIX started getting into triple digits.

If you are long any of those or the XXV the risk is limited to a move to zero. The risk of overnight or weekend gaps is certainly there but the bigger risk is another discontinous event that closes markets for longer than a long weekend. Hope this is clear.

Some recent articles on hedging tail risk that may be of interest: