VXX had it's rebound as expected and right in line with its current trend. The rebound to $14.16 now suggests that the 20-25% drop will bring it to $10.62 to $11.33.
Currently trading at $11.72, fwiw. The previous bounce's maximum move was from the low of $12.19, so there was a good chance to grab a quick 10%+ if you timed it properly.
Naturally, one can play the XIV vehicle in the exact same fashion, on the opposite end of the bull/bear debate. My concern with XIV is that when the next market correction comes, it may come in a very fast cascade. The coiled spring effect coming into play. Since we have not seen anything resembling a coordinated move to the sidelines away from US equities in a VERY long time, the odds of a big move increase with each passing day.
I see little reason to expect a "sky is falling", chicken little move out of this market but they do happen. Completely discounting this potential is done at each one's own risk.
There are many reasons why the bull continues to stretch upward and I see a few things on the horizon that may eventually slow it down. However, short term, there's not a lot of red flags waving, imo. A few yellow ones as far as I can tell but nothing severe enough to suggest a massive drop in the market.
With this as my backdrop, I'd continue to look for VXX to follow it's pattern. With VXX being down 17% since it's recent pop upward, it's time to start looking for a short term bottom in the range stated above. These are solid numbers but I view the range as more of a guideline, a target to make one watch more carefully for short term signs of pause.
Message #5216 from The Ox at 6/9/2017 10:44:24 AM
Time to start looking for VXX to have another small rebound....although it's still early enough in this drop that it could go down another $1 or so....
While many are concerned about potential flash crashes and the like, most of the overall data doesn't suggest this is likely in the very short term. VXX is continuing to do it's normal dance and that is one of my main indicators (but not in a vacuum). Current VXX target is between $12.08 (25%) and 12.88 (20%) fwiw... (80 cents is roughly 5% +/- off the most recent pop to 16.10 -- the close on May 17th). VXX has been making moves that "generally" drop 20-25% before there's a short term rebound. Minimum downside target hit....now let's see how this plays out in the next few days (or hours...)? .
VXX low on 6/9 was $12.85, popped up to $13.91 later that same day, then slowly worked it's way lower and hit $12.19 on 6/27..... I'm comfortable thinking that the computers and algos are programmed to watch for (roughly) these same variables. |
