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iPath S&P 500 VIX ST Futures ETN Message Board

  • vikashpatel2 vikashpatel2 Jan 28, 2013 10:10 AM Flag

    All Signs Point to Market Crash

    The stock market is preparing for one good last leg upwards before it takes a major fall. If you chart the RSI (undervalued/overvalued) indicator for DIA, QQQ, SPY, etc., you will easily see that all of these major indexes will touch overvalued territory.

    Once they do, the drop will come shortly afterwards and I personally believe the drop will come in the form of a market crash within the next couple of months.

    Basically, if you are long VXX, you may want to stay long until after the market crash. If you aren't long the VXX, you can probably wait for a couple of weeks before going long and then go long after SPY, QQQ and DIA cross overvalued territory.

    I have been daytrading over 25 years. I know how to read the charts and am now more right than I am wrong in predicting market direction.

    Sentiment: Strong Buy

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    • Feb will be a corrective month but not a crash yet

    • Technicals mean nothing in a Fed-manipulated market... If technicals did mean something, then this market would not be sitting over twice the 2009 lows. I haven't been trading 25 years, however, I know not to mess with the Fed. In a bull market, the market can stay in overbought territory for quite some time while still climbing higher. Yes, we may see some pullbacks, but the Fed is not gonna let this market crash. That will be up to the politicians when the debt ceiling deadline approaches and the Republicans and Democrats hit a brickwall again in their debates. Plus, TA doesn't account for all the sideline money coming in from retail investors and all the money sitting in risk-free assets such as bonds/treasuries switching over to risk-on assets..

      • 4 Replies to mistamandalay
      • There is a reason why the smart money is not invested in the markets right now and on the sidelines. We are kicking the can down the road big time and it will definitely catch up to us. Markets have been crashing hard every 4 or 5 years.

        The cycle will be due for another major downfall. What makes you think we will not repeat history again? All the stimulus money in the world can't stop the inevitable.

        Read the Apocalypse, read George Soros' thoughts, read why many billionaires are loading up on physical gold, etc.

        People who ignore numbers/charts and feed on media articles based on opinions and pushing their own agenda are the ones caught blindsided.

        If I could preach just one line, I would want it to be the one that follows:

        Numbers/charts don't lie. People do.

      • my barrons paper trend analysis comes to us with a major downside move around feb 21, maybe b4 or after but its close enough. Taking the p/c graph from the barrons striking price there is normally a bottoming process and it takes about 2 months if you look at it on page M11 of 1/28 edition. plus the skew are at low points too, not really appllicable but drops come from the low points of skew. on page m39 the MA of flow is now negative by billions. Pg M53 has the p/c ratio with a spike to the + side but this chart has been getting detached the last couple of months. lastly on m13 the insider buy/sell is choppingto the bear side. Certainly it could get moving up with the liquidity, but something tells me to stay away in the near future. maybe i'll buy some deep vix calls.

        Sentiment: Strong Sell

      • that's exactly what they want you to think
        it's called conditioning
        or br@inw@shing whichever you prefer
        once the FED changes direction the
        br@inw@shed will keep buying the dips until they are wiped out
        because they have been conditioned to believe the FED will save them.

        The FED is not your friend
        they are a crimin@l entity of b@nksters
        who have created every bubble in history
        and turned around and shorted it into the ground
        The head of Goldm@n S@chs was more that happy
        to confess that fact to Congre$$ and he has never seen j@il time.

      • a simple review of his recent posts contradicts his "25 years of trading" BS

    • Anyone who suggests "staying long" in VXX has absolutley no idea what they are talking about

      probably just another alter from a long time losing long from this board

    • I checked the charts and your analysis appears to be accurate.

      When do you suggest buying the VXX because it is risky to buy unless you are hedging your portfolio for a downfall?

      • 1 Reply to coolstarsky
      • An article on Yahoo states that one big trader made over a 5 million bet that the VIX is getting ready to shoot up within 13 trading days. The article is as follows:

        Traders work on the floor of the New York Stock Exchange. REUTERS/Brendan McDermid/Fi …Since the beginning of 2013, the CBOE Volatility Index (^VIX) (the VIX) has fallen over 30 percent, and is now at lows not seen since 2007. But one trader believes that this could soon change.

        On Thursday, someone bought 100,000 VIX February 16-strike calls for $0.55 each. This is a $5.5 million bet that the VIX will settle above 16.55 (30 percent higher) 13 trading days from now. The trade occurred just before the VIX spiked from about 12.60 to a high of 13.50, before reversing again to close at 12.75.

        (Read More: Many Reasons for Optimism in This Market, Pisani Says)

        The VIX is a mean-reverting product, and this is a bet that it will revert off of its current, exceptionally low level, and back towards its long term average, which is roughly the 15-20 range. However, there is no guarantee that the VIX will move back to these levels anytime soon.

        For instance, during 2005 and 2006, the VIX rarely popped above 15, preferring to stay between 10 and 15, since the market was bullish and realized volatility was low. Not until there was major underpinning credit risk in the market during the financial crisis did the VIX take off, and it has since spent much of its time above 20. As the ramifications of the U.S. financial crisis fade and European debt crisis is resolved, the VIX could settle into its pre-crisis range of 10-15.

        That said, the trade seen on Thursday was likely a portfolio hedge, rather than an instance of pure speculation on the VIX. Why use the VIX as a portfolio hedge?

        (Read More: Here Are Some Stocks That May Be Overbought)

        Well, it has a lot of attractive qualities. First, the VIX typically moves up 4 percent for every 1 percent down move in the S&P 500 (^GSPC). When the VIX is at current low levels, however, it can become even more volatile. For instance, the S&P 500 was down 0.20 percent yesterday, and the VIX was up over 5 percent.

        Another reason it is an attractive hedge is that the implied volatility in VIX options is near all-time lows. If the VIX spikes, traders rush to buy VIX calls as portfolio protection. A long VIX call will profit from both a rise in the VIX, and from increase in the implied volatility of the VIX itself-making this hedge a good bang for your buck.

        Sentiment: Strong Buy

13.59-0.38(-2.69%)May 27 4:00 PMEDT