Tag Archives: Elliott Wave VIX

VIX Daily Chart: VIX Bear Trap Review!

The amount of time the VIX has been correcting just about puts it into an Intermediate degree position. It’s still a VIX bear trap any which way you want to look at it, as it is only a matter of time before the fear gauge starts to crank up again. The Death Cross finished about a month ago but the Golden Cross will still happen. The commercials are net long while those hedge funds or speculators are betting with net short positions. One group is always wrong and it sure isn’t the commercials. Combine that with a wedge and you have a deadly chance of the VIX exploding to new record highs by the end of this year.

Fear is going to come back regardless, after which the commercials will be turn net short again. Deflation is the main threat as we come of the most inflated asset world in history.  Another quick flash to the downside can still happen, so we have to be aware of that.

Hits: 4

VIX Daily Chart: All Gaps Closed!

I think this VIX has been in a long choppy decline, and just recently closed the two open gaps. Maybe we’ll get another low, but not a record new low. That January bottom should hold if the bull market in the VIX is going to perform for us.  The next ride up in the VIX should be bigger and better, but sold out if it makes a very vertical move.  Commercials are net long the VIX as the speculators are betting on the VIX short side.

They both can’t be right, and most always it is the speculators or the trend chasers that are in trouble. Any long positions in stocks would also crumble due to the long positions of  the VIX commercials.  Since all stops are closed, then we can look for  and find fresh gaps a bit easier

 

 

 

 

 

 

Hits: 6

VIX Intraday Calm After The Storm?

In the last few days the markets suffered a bear attack send the VIX to new intraday record highs. Two of my unfilled gaps were  filled in a hurry, but we have two big open gaps below present prices. All the markets need now is a little effort by the attacking bulls and this VIX could drop like a rock filling the two gaps below.  Any gap has a 90% chance of getting filled, with the only question remaining is, “when”. Sometimes a gap will remain open for years (like gasoline futures) but eventually they will get filled.

There was nothing impulsive with this VIX run as these are typical diagonal wave structures. We are also one day away from a full moon, which can at times be very bullish for stocks. Maybe some calm will return before the next fear storm hits. Both gaps could get filled first, before another leg up in the fear gauge may happen.  The bottom gap would also be a great support area as VIX reversals can be pretty violent.  The vertcal move that the VIX did make should always be respected, as it is impossible for the masses to keep fear levels permanently elevated.

Diagonal wave structures dominate the entire VIX life cycle, just like they dominated and still dominate  the entire  Submillennium degree wave 3 still running today.

Hits: 9

VIX Intraday Crash Update

So far the VIX has crashed and we can make the argument that the VIX has gone lower than $12.29. That would make the late May rally another bear market rally.  3 wave zigzag crashes are pretty normal in diagonal waves, and this decline could fall even further.  If a newer low becomes true then the May and June pattern cecomes just another wave 3-4-5.  The big open gap is now closed, but there will be no rest for the VIX bears as 2 more gaps are now open above present prices. These gaps will get filled, as all gaps have a 90% chance of getting filled.

It may take all of June for these gaps to get filled, and it could be another violent move once the VIX bears realize they are in a VIX bear trap! A VIX “bear trap” means a stock market “bull trap”.

Hits: 5

June, 1, 2018 VIX Intraday Crash Update

We are getting close to a VIX bear trap as the big gap is just about closed off.  Wall Street calls the VIX the fear index and as the VIX crashes investors become oblivious to the trade wars that have started to erupt in 2018. All the bad news in the world doesn’t seem to phase the bullish investor at this time. Of course that can change in a blink of an eye as we now have 2 open gaps above present prices. These two gaps will get filled so, I’m confident in saying fear is going to come back into the markets for June.

At $13.40 the big gap will be closed after which it can develop a base and then soar again.  Stopping well short of a new record low would be ideal.

Hits: 22

VIX Gyrations Update!

As much as I would like to see the VIX soar, I cannot ignore the gap that is still open directly below present VIX prices. This gap should still get closed off and even travel closer to the $10 price level. The VIX should not crash to new record lows, if what we have is a potential VIX, 3 wave correction.  Some traders were very well positioned to take advantage of the February spike with call options.  A trader named ’50 Cent’ made a huge bet and others did as well.  I’m sure that many others will see another VIX bullish set-up as this cycle keeps repeating itself.   Once the VIX starts another leg up, another spike to the upside can happen. It’s pretty hard to control our emotions to do the opposite of what the crowd is doing, but you have to remember that the ‘crowd’ can never benefit from the very same crowd.

Hits: 7

VIX Daily Chart Review:

The VIX is one place that trend lines and wedges can be useful. When I talk about a potential bear trap in the VIX, then you have to invert that thinking when looking at the general markets.  As we can see there are many spikes to the upside and also many spikes to the downside. Our recent large spike to the downside made the pattern look great as a correction.  I’ve seen these spikes before where the VIX wanders down the entire spike and matches the end of the spike, or even goes a bit lower.  In this case, $10 could get hit again, which inversely means that stocks can still see some upside for s few more days.

So far another falling wedge can be drawn, which also means that the VIX could be setting up for another surprise bullish move.

Hits: 3

VIX Intraday Plunge Review

During the night the VIX executed a $5 swan dive, but it didn’t hit the water, but bounced off a trampoline and blasted right back up.  These things do happen with regularity, but it did not show up in line type settings.  For the fun of it, I call these computer algorithms gone wild! The speed they drop and return back up is just to fast for a super mouse clicker to generate. It seems that investors are so accustomed to low volatility, that they freak out when volatility shows up!  From my perspective volatility in an asset class is a sign of a trend change in progress. In the case of the VIX it could be a bear trap as the VIX bearish phase could completed.

This could be a wave 2 low as not the daily charts look like a decent correction.  Get ready to adjust your sails, as the wind is going to change direction soon.

Hits: 3

VIX Daily Chart: Falling Wedges Are Bear Traps!

 

 

 

I have been using different descriptions for basically the same pattern. They call them “Falling Wedges” and they produce powerful bullish reversals. From an Elliott Wave perspective, they are also called Bear Traps.

The bottom of the VIX wedge took about 6 months to build up before it exploded and has now been settling down in the last month or so. I had to switch this VIX chart to line type which took out many of the erroneous spikes and cut or peak price to $37.

I think there is a very good probability that the VIX may be in a wave 1-2 pattern, but the VIX may still need to fall to $13 or below. I have a little 5 wave sequence that soared, but now has just about been completely retraced. If the VIX drops below $15 then that single set of 5 waves didn’t go anywhere!

The reason those Subminuette degree 5 waves didn’t go anywhere is because it belongs to an expanded pattern which is sure starting to look like a zigzag correction so far.  Zigzags do cut short but I treat them like running zigzags, not as a truncation.

Many are using the VIX to explain how bullish for stocks the falling VIX really is!  Sure, that would be true if the VIX topped out at a $100 or so and has just started to fall, but we are looking at a potential huge double bottom. At $9 we also will have a huge Head & Shoulder pattern, which is also very bullish.

Since the 2008 peak in the VIX,  we can see a huge falling wedge that has a 23 year long bottom. Even on the weekly scale we can see falling wedges.  It’s not just one wedge, we have multiple wedges. Once I look over the VIX COT reports after Friday, I will know more which way the traders are leaning. Short term the VIX is still bearish, but I sure wouldn’t trust it to keep being bearish for very long.

Hits: 5

VIX Intraday Update: Calm Before The Storm?

When the VIX is declining,  the excited bullish stock herd start to calm down, from the mini panic spike in late January 2018.  Before the big spike, VIX players were in a trap with a small inverted Megahone pattern also showing.  Inverted Megaphones are more open ended with the open end facing to our left on the charts and with the cone pointing east. A normal Megaphone would always have the wide mouth facing east (right side) and the cone would be pointing west. (Left side)

We still could see some dipping in the next few days, but no new record lows should happen.  The VIX has wild and choppy wave patterns, but this is the real world when it comes to diagonal wave counting.  Complaining about volatility will get us nowhere, and all I can say is, “Buckle Up”, as this roller coaster ride will start to get going again.

The COT report that comes out every Friday will give us a better idea who is still net long or short the VIX.

Hits: 3

VIX Intraday Crash Update!

The VIX rocket move perfectly reflects the fear that was present in the SP500 and the fear gage is starting to dissipate for now. Of course, if the bigger bearish scenario is alive, then the VIX should find a bottom, followed by another leg up.  This leg up could produce another complete set of 5 waves up, but not before a good correction has taken place.  This may not happen until the VIX settles at the previous bottom of the 4th wave position.  Just below that is a big gap that is still open, so this open gap has a good chance of also getting filled with this trip down. Just under $15 would close the gap which can repel the VIX to soar again.

Higher lows also have to dominate as well to help confirm that the VIX is still in a bull market.

 

Hits: 8

VIX Futures Intraday Bullish Phase Update

Just before the end of February the VIX bottomed and now has to proceed back to its bullish phase. I think the entire VIX correction is a flat, as I count 3-3-5. Change this same pattern to a Primary degree flat, and we can use it for the DJIA Cycle degree correction.

Many VIX spikes that show in bar type charts, do not show up when switching to line type charts. This throws any wave count into constant disarray. We can see how explosive the VIX can be and I’m sure many new players have joined the VIX bull market.

Eventually all the contrarian indicators will pile up against this VIX bull market, so those VIX investors find themselves in a bull trap! VIX bulls will get slashed by the bears if they think they can “invest” in the VIX.

Our last price peak was about $50, so any bullish phase should surpass this price level by a large margin.

Hits: 9

The VIX Crash Daily Chart Update

The VIX spiked up to 50 after which it turned south with a vengeance.  It was an ugly correction and if I’m right,  then another leg up in the VIX will happen. We can see that the VIX  developed a “wedge”  which every technical analyst is taught to recognize, yet they never saw this explosive VIX rally coming.  Everybody on this planet was betting against volatility, but in doing so the VIX bears painted themselves into a bear trap.

Yes the commercial traders ended up becoming net short the VIX, but that can all change dramatically in a very short period of time.

One thing we can always depend on and that is investors can easily get into a trap, and recognizing this fact before it reverses is very important. The VIX is a world full of diagonal wave structures so don’t expect some perfectly formed impulse waves to develop. It isn’t going to happen,  no matter how much we wish any pray for it to happen.

In late 2008 the VIX had already peaked out at 90, yet the bears persisted in forecasting lower lows in stocks.

Insiders were buying stocks in late 2008 already, so the VIX bull market was doomed at that time. Will this happen again?, of course it will, nothing will stop it. When the public and the VIX are in general agreement, then the VIX will see a dramatic reversal. This will not be easy to catch as the VIX may have to score 100+ before a big reversal becomes a reality.

Hits: 6

VIX Explosion Update

The VIX has demonstrated what it can do after it is boxed into a corner or a wedge like condition. To the majority this was a surprise move that they never saw coming, but there are the few that did see it coming. The commercial traders sure saw it coming as they were net long for sometime already. Of course the non-commercial speculators were extremely bearish towards the VIX. How can you lose on a sure trade betting against volatility?

It’s easy if you owned a bunch of XIV shares and don’t know how to read charts. Of course, someone will always get blamed for, “taking down the house”.  In my experience, it’s always the speculators that get into traps. The speculators, trend chasers, or managed money people, is always the group, being quoted in the financial news. When they are quoted,  they are just about always in a trap as well.

The XIV will disappear as it sounds like they will stop trading in XIV by Februray, 20, 2018.

Last Friday they posted the COT report in the VIX. We can see a massive change by the commercials to a point where they are now in a net short position by about 45,000 contracts. Of course the speculators panicked and did the exact opposite.  In other words, they are chasing the VIX bull market. Eventually the speculators will get into a bigger VIX bull trap and the markets will force another reversal.

There is a good chance wave 2 in Minor degree has finished with waves 3-4-5 still to complete. After these 5 waves up in Minor degree have completed, then we should see a massive VIX crash that will shock the majority again.

The VIX peaked at $50 and eventually the VIX should cross the $90 price level. The VIX may not do it on this trip, but by the time this bear market is finishing I’m sure the VIX will far exceed $90

Hits: 3

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.

Hits: 12

VIX Impending Correction.

The VIX sliced through the top trend line before it reversed. This trend line sure seems to give any VIX bullish phase some pause, but eventually the VIX would have to clear 5 of the biggest spikes, by a wide margin.  The VIX could dip down to the $11 price range before it bottoms and soars again.

Hits: 3

VIX Intraday Update: Another Leg Up?

Since early January 2018 the VIX has created a bottom after which the VIX charged up.  There is a high probability that the VIX correction is over, and it should add on another leg up. I will stay with the diagonal wave count as that is the main pattern of the VIX as well. The commercial traders are still net long by a long shot, and if the VIX continues north than this ratio should start to change as well. That won’t happen overnight, but we are assured of some violent moves in both directions.

We do have 2 open gaps below present prices, but they may not get closed on this trip. Even though the SP500 is still breaking new records,  fear is creeping back into the markets.  Right now the $14 price level could give us some stiff resistance, but if the bigger run is in the cards, then that $14 price level well get retraced by a wide margin. The $17 and $21 price levels, should be next to get hit if this run has any legs at all.

Hits: 3

December, 13, 2017: VIX Intraday Crash Review

In early December the VIX spiked and then reversed and crashed. Vertical moves like this can never be maintained as they are also the fastest moves we can have.  $14.60 seems to be the price to beat and if my zigzag decline is correct,  then this $14.60 price level will get retraced.  We have an open gap just dead ahead so that could provide some resistance again, but at the same time could supply support, for a much stronger VIX move. 

The markets are at euphoric bubble highs with the VIX at record lows.  The VIX is where the real fear is shown with charts, and at this time investors show no real fear, just yet.   The fear will come back into the markets as bullish record highs always traps the majority. Thinking that good times are still to come,  always means  the end of a bull market, not the beginning of one.  

Hits: 9

The VIX Intraday Spike Review

With this bar type setting the VIX produced a sharp spike to the downside. I like to see this happen towards the end of a long decline, but this spike was computer generated as it corresponded with Black Friday as well.  The spike back up, still has a small gap in it which should still get closed off.

This spike does “not” show up when I switch to a line type of a chart. Technically speaking the VIX would still have to drop to the $9.00 price level before all the gaps are closed off.

There are a few gaps still open well above todays prices so these open gaps work like a magnet, drawing prices to them.

That $8.60 bottom represents a huge VIX bear trap, which is the opposite to the SP500 bull trap!

Hits: 3

VIX Intraday Crash Review

The VIX shows how violently it can move in both directions. It may travel to new record lows, but it is best to keep alternate bottoms just in case no new lows develop.  It also shows has fast the VIX can drop once a vertical spike has developed. On the larger scale the VIX spiked in late 2008 well before the stock market hit bottom in early 2009.   Steven Jon Kaplan called the end of the VIX bull market in late 2008, and he was right on the money. 

There is a small gap that opened around the 11.30 price level, so we know that a VIX bounce is coming again. 

Hits: 4

VIX Intraday Bullish Phase Update

The VIX has been reacting like it should, which is a visual representation of fear in the market place. Many don’t care about the VIX  as they think the lower it goes the higher the bull market will go.  It also means that more and more investors were caught in a VIX bear trap.  All gaps below have been closed off, and one big gap in early September has now been closed off as well.   Since today was a very steep rally we should expect a correction, but not break new record lows again. 

Hits: 3

VIX Intraday Rally Review

The VIX has been on a bit of a rally, but a wide open gap formed on the way up. I call this more like a Scalene triangle with an open end. Pattern wise it could be a diagonal 5th wave, but if this is the case, then the VIX should see yet another record low.  I would love to see this gap closed before the VIX pushes higher, but there is never any guarantee that this bottom gap will get close anytime soon. 

There is one big open gap above present prices, which will get closed, but it also could produce unexpected resistance. In early October there were many gaps that opened up,  which now have been closed. Even when they are already closed off, they can supply a strong support price range. 

The VIX has been rolling around record lows just like stocks have been rolling around record highs, so in that respect there is good inverse synchronicity. 

Hits: 5

VIX Intraday Gyrations Update

One thing we will always get are wild swings in both directions, which forces many of the simple impulse waves to overlap at critical points. The only way we have a chance to wave count the VIX, is to make sure we count the waves all as diagonal waves with only small runs of simple impulse waves. VIX is one world where diagonal waves rule with no exceptions.

Silver is another one of those diagonal asset classes which has persisted since the 1993 silver bottom. The above chart looks like another zigzag is forming, but a bit more downside can still happen. The VIX can hit $10 which takes us close to the previous bullish phase bottom. 

My starting Minute degree level may be a bit too high, but this can be adjusted on the fly if need be. In this case we should not see a new record low before the VIX cranks up again. 

Next Thursday will be the end of the month and several jobs reports will also come out by Friday. This could make for some wild moves so we should always keep that in mind. 

There is one small open gap above todays prices, so this will be the first price target that should get hit again. Many analysts got a real thrill when the VIX jumped 30% in one day, but that may not happen again for some time. Maybe it will jump 50-60% instead.  😉   Of course that may also be wishful thinking on my part. 

We have one small open gap at the $23 price level so that would be the next big price target I would like to see get hit! 

This may happen this year or even closer to the 1987, 30 year anniversary date.  Years ending with a 7 have been disasters for the stock markets in the past, so this year could also bring us some surprising results. 

Hits: 1

VIX Intraday Rally Update

It seems that the VIX bear trap has now come and gone, so the next thing we would have to look for is a VIX bull trap. The decline sure looked like an impulse which means that a potential “B” wave VIX bull trap can still happen. All gaps below have been closed, with one big gap only about 50 cents away from being filled at $15.50.  A fake “B” wave run could send the VIX right back down, even to the point that a new record low can be achieved.

Stocks would have to make a violent comeback for the VIX bearish scenario to play out.

Wall Street’s ‘fear gauge’–the VIX–jumps 24% amid tumbling Dow, Barcelona terror attack – MarketWatch

There are plenty of fundamental reasons that the majority of analysts uses to justify the market decline, with most of them just “parroting” another analyst’s opinion. Fundamentals which analysts get from the news is a lagging indicator at best. They ignore the fact that the markets have seen record bullish highs, which has created an extreme overbought situation. 

Technically speaking, eventually the VIX should match or surpass the 2008 peak of the VIX. It may take 3-4 years to get there, which still seems a long way off.

When we start getting open gaps as the VIX soars, then we have to be aware that the VIX can crash right back down and close a few of these potential gaps. 

Hits: 2

Quick VIX Bearish Decline Review

We had a great little rally with the VIX, followed by what sure looks like a near perfect five wave impulse. This could be a bear trap all the same, if another small zigzag decline develops.  That would allow the perfect decline to fit into a zigzag and produce an earlier bottom.  During what I have as a 4th wave,  2 gaps opened up, but now both gaps have been closed off.

 One big gap above remains open which makes a bullish run still very likely. It may take its sweet time to close that top gap, but it will get closed. The $17.25 price level will now be the  next new target for the VIX to retrace,  

Hits: 1

VIX Intraday Crash Update

Late last month the VIX bottomed and then proceeded with a violent move to the upside. Violent moves’ like this are commonplace with the VIX. The VIX  world is the world of diagonal waves. If you want lots of practice counting diagonal waves, then the VIX is one place you will get  your belly full of choppy waves.   Silver is another asset class where diagonal waves seem to rule. 

The bottom trend line shows a potential higher low, which is the general description of a bull market. The last thing we  want is a new record low, as the indices would then have to give us a new  record high as well.  The $11.50 price is where a small open gap sits, but a big gap opened up on the way down.

I’m very confident that the big open gap will get closed off, if this present decline contains another zigzag. I show a zigzag decline which should turn, but we have to keep our options open just the same. This is very early in any VIX bullish move. as much more should come in the coming weeks and months. 

Gundlach is set to make a killing as market ‘fear gauge’ soars to Election Day high – MarketWatch

Gundlach seems to know how to play the VIX as it can be traded as a futures contract. It would be a massive understatement if he does not have the staying power, to wait for a few more legs up in the VIX. 

Hits: 4

VIX Bull Run Rallies To $17

From a bear trap, to a mini bull trap all in a few short days. The last little gap from the bottom up, is close to the horizontal line. The move up in the VIX was dramatic and near vertical. It is impossible for investors to maintain this level of fear, because if they did, sooner or latter the guys with white coats will have to subscribe some drugs to calm investors down. 

In the end, if the bigger VIX bullish phase has started, then the VIX should not crash to new record lows again for a long time. 

Of course they always have to find a reason for any market move, so blaming President Trump for the decline in stocks is the natural thing to do. 

The ideal move would send the VIX much higher, as we do have a hidden gap at the $27 price level.  Any gap always has a 90% chance of getting filled, but how long it can take to fill any open gaps could take many years. 

Hits: 3

VIX Intraday Rally Review: Killing The VIX Bear!

Applying a wave count to the VIX may be a futile effort, but it is a way to communicate any potential move, as long as we understand that diagonal wave structures are the main wave types in anything related to the VIX.  

Any VIX move to the upside shows that fears about the stock market is rising. There are also spikes in the VIX that don’t show up when we switch to line type, so we have to ignore that single plunge below $9.  

The starting degree level may be too large, but that is not an issue when at this time.  It must be reviewed once this all starts to advance in a more obvious move that the mainstream starts to report on. In the short term,  I wouldn’t like to see this VIX hit another record low, but would rather see a new record high. 

There have been no gaps that opened up,  so that is a good thing at this time. Tracking any open gaps that may develop is very important as gaps supply potential turning points.  We do have a gap at about the $23 price level, so longer term this could provide some resistance. 

Waking up the VIX bulls is the same thing as waking up the stock market bears, so if you choose to ignore the warnings, the stock bulls may find themselves sliced, diced and cooking on the barbecue this summer.

 A third of millennials think now is the time to jump into the market – MarketWatch

When I read the link above it tells me that this age bracket has learned nothing from history, and when we ignore history we are certainly doomed to repeat it.  Don’t worry as all generations have made that same mistake over and over, and no amount of screaming  doom and gloom scenarios will change that. Getting into a market before solar cycle #25 has started is a recipe for disaster.

Hits: 8

VIX Intraday Bear Trap Review

Yesterday the VIX created a wild move to the downside just above the $9.04 price level. This has a very good chance of being a false spike as it does not show in a line type chart.  High speed computer trading or algorithms running amok are the main source of these erroneous  spikes. No human can react this fast to produce some of these spikes.

What looks like a great start to an impulse, but diagonal waves can change that idea very fast. All the same we have a great looking spike, and we need to see the VIX keep right on going if the bigger bearish move is here. No gaps opened up by this move to the upside,  so I consider that a good thing at least in the short term. 

Hits: 3

VIX Intraday Wild Swing Update

I applied a few wave positions this time, but we have to be aware that we are dealing with extreme diagonal types of waves. On June the 9th the VIX had its last major low,  which has not been exceeded at this time. This has produced a higher low which is the conventional description for a bull market.  

 A massive spike up, and then this morning we had another spike to the downside.  This downside price spike, is what I would like to see hold.  

I mention before that the VIX could see the $15 price level, which stopped close to my invisible top trend line.  The VIX has to crush this $15 price level, if a larger VIX bullish phase is already in progress.  I’m not a big fan of the trend lines being used in the markets, as they have abused trend lines to a point that they no longer make any sense. Besides, any kid with a ruler can draw trend lines, once they know how to join 2 or 3 peaks together. 

I switched to use two parallel lines, as that can work for 3 wave zigzag moves and 5 impulse waves as well. When the markets break away from two parallel lines, chances are good, it’s a correction or a diagonal.  

Hits: 2