Daily Archives: February 8, 2018

The Explosive VIX Review

The VIX had one of its biggest one day price jumps in its entire history, which the majority was betting on that it would never happen.

The dumb money or (managed money) were already in a massive bear trap, while the commercials had built up huge long positions.

Those investors that think they are investing will always get fried as you don’t invest in anything that is extremely leveraged and a futures contract that is all about volatility in the first place.   When you are playing with fire, you can’t expect to not get burnt, but these emotional traders will blame others first for their mistakes.  Being complacent in a violent and volatile world is the biggest mistake we can make.

The commercial reports don’t come out until Friday, but we should see the commercials closing off their long positions, but could also be building up their net short VIX positions.  This doesn’t happen overnight, but can be a long  process.

The VIX spiked to the $50 price level, but the $90 price level is the number to beat as that is the 2008 peak in the VIX.

Mini DJIA 30 Intraday Bull Rally Update

The counter rally has now already played out and is now resuming its decline. There is always the potential for this market to turn, but this correction should still go deeper before it is ready to do so.  Not until, this bullish counter rally is completely retraced will I be satisfied that the bigger bearish phase is in progress.  Hopefully we will know by next week sometime as a wave 3 decline can be pretty devastating.

The entire January bullish phase has been wiped out already devastating  those investors that thought they were “safe” investing at an extreme high.  What very few investors understand is that “Bull” markets, are the breeding grounds for bear markets and they only money flowing into this market is the dumb money.  Not a single contrarian, I respect would buy into this peak as they are too busy setting up their short positions. At the extremes, fundamentals will always tell you the wrong things and this time it’s no different.

Close to a 9 year bull market, many wave analysts keep raising their degree levels as they falsely think that the bigger the bull market the higher the degree levels should become. It works exactly the opposite way as the higher the market goes, it’s the smaller degree levels that are extending, which you would never see in the weekly and monthly charts.

From 1929 to 1932 was a SC degree correction so our present Cycle degree correction should not last much longer, There is no 600 year bear market coming so you can put those bearish thoughts out of your mind.  Sure, chances are very high that a recession is also going to arrive, and when the mass media recognize that fact, then the recession will be over, and a huge new bullish phase will develop.

Euro Bull Market Daily Chart Update

Since the beginning of 2017 the Euro has been in a bullish phase, that has been running inversely to the US dollar. I think a correction is completed, which means another 5th leg up in Minuette degree,  should play out. 5th waves are notorious for extending so we don’t want to call an end to it too early.

Once this set of 5 waves in Minute degree has played out, then the Euro could suffer another serious setback (correction) but the final 5 waves up in Minor degree should still happen.

The commercials are net short already which is the smart money.  The non-commercials or speculators, is the dumb money, which is the group that the mainstream analysts always talk about.   The speculators are the ones that always chase the trend as the commercials never do chase the trend, as they do the opposite. When the commercial traders are overwhelming net short then the bull market in the Euro will come to an end.

Right now the speculators are chasing this Euro bull market and they have about a net 2:1 long Euro positions. What they call smart money is already painting themselves into a corner, as they build themselves into a bull trap.

This will not happen instantly as it takes a long time for these net long positions to develop.