r3anand

VIX poised for a sharp breakout

Long
TVC:VIX   Volatility S&P 500 Index
1. As can be seen VIX has once again formed a bullish wedge which is ready to breakout in the very near future

2. Another way to look at this is by combining the 2 wedges which is forming a triangle ( see attached line chart). This is also showing signs of a breakout.

3. 50d SMA for the PUT/ CALL ratio is at EXTREME lows; last seen in 2009 ! This is reflecting extreme complacency and it can almost never end well; a sharp correction is a given (see chart below)


4. What would the catalyst be ? who knows... could be the FED meeting or something random that the market will conveniently choose to react to

STRATEGY: bought sept contract bull call spread (25/35)

Comments

I think it goes and fills the gap around 18 first
+1 Reply
r3anand AlgoHunter
@AlgoHunter of course anything is possible. Until 23 isn’t violated I’m holding this position
Reply
Confusing; you bought a bull call spread? You mean Long on VIX? With P/C ratio at lows that would make sense.
+1 Reply
Nocturne83 DaddySawbucks
@DaddySawbucks, Yeah, confusing, wouldn't you buy a put on the indecies with the VIX being bullish?
+1 Reply
r3anand DaddySawbucks
@DaddySawbucks yes that’s what I meant. Bull call spread on VIX.
Reply
r3anand DaddySawbucks
@Nocturne83 Instead of buying puts on the index I’ve bought a bull call spread on VIX.
Reply
Nocturne83 r3anand
@r3anand, OK, makes sense :)
+1 Reply
@r3anand, i've been watching this pattern form for the last 2 months. I believe we have a correction coming that brings the s&p down to the 1850 area if the trendlines out at 1 month hold
+1 Reply
r3anand DaddySawbucks
@bearbones10 yes this could be coming soon.
Reply
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