Okay, time to reverse course....no more buy and close eyes, time to open them up, and begin to sell into this run away train. Not advocating shorting here, that is way to dangerous, but you have to think your upside is limited to a few percentage points, while downside may be substantial. At the minimum, buy some puts, sell some calls or use some bear etfs to hedge.
blow off tops need volume to confirm the "blow off". There are still huge amounts of sideline money looking to pour into the markets.....with bond yields so low, commodities and equities will be the asset classes of choice. Rising equity prices and the accommodation of global central banks will suppress volatility. Barring a short term trade here and there you should be shorting volatility while the fed debases.
Market doesn't care about last quarters earnings, it cares about the next 3 quarters of earnings. All positive news has cooked into the market, now money is guessing what the economy will look like in August.
Do not set your price target on VXX, but use the spot VIX as your guide. Because of contract roll yield, and contango, the price of VXX will depreciate over time, regardless of market conditions. So you can not say that VXX was 32 when the S&P was at 1426, and expect that price ration to remain in tact. Instead, look at a spot VIX chart, and arrive at a target and set a stop, based on that. For example, I will be looking to sell my long position and get short if the spot VIX goes below 16. I am taking longside profits at VIX 20 and looking to get short if we get a one day spike to 25....where ever VXX is when VIX hits these points should be your targets, as there is no way to correlate values when taking into account the futures contracts that are rolled every month.
Watch that 16.....a close above 16 would be bullish for volatility and bearish for equities. I would be nervous if in a substantial position either way here. Longs can see a rapid decline if it heads south of 16 into the close, while shorts may be squeezed if you have a market breakdown this afternoon sending this into the 17 range on the way to 20.
Pay attention to the CBOE spot VIX.....todays break above 16 was a big move....the next level to watch is 20....where ever VXX is when that 20 level is approached is what to watch for.
160 is where this is going, cleaning out all the smart people buying puts thinking they can call a top.