AMEX:VIXY PROSHARES VIX SHORT-TERM FUTURES ETF
VIX as one of my favorite indicators since it is real money and it is not able to be manipulated or distorted. There is no time lag to collect advisory opinion or to wait for open interest reports the next day. But the more you learn about any indicator, the more you will realize you can't have a "Holy Grail", but you can at least wait for the odds to stack up in your favor for trading so that the "path of least resistance" comes a bit more into view. If you really want to be long Volatility, you buy puts and calls on the underlying index. Time decay, or "theta", will eat away your capital every day. Theoretically, if you BUY and HOLD this , you will lose all of your money in the long run. So don't marry this position. I see we are closer to support and think the market is overbought at resistance. This may be the lowest risk way to play a move down in the market. Cheers. Technical Tim, Monday, Jan 23, 2012 12:21PM EST
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You are correct. I didn't wait for a specific multi-day pattern to initiate this position, rather, I waited until the upside potential outweighed the downside risk to a proportion great enough to make it a worthwhile proposition. Perhaps I will highlight this chart again once it makes a more specific price pattern, such as "no new low in 5-days" or "inside day" or "trendline broken" or some other such "lagging" indication of trend change. I also felt that since we are more than 50% of the market cap of the S&P500 through earnings season and it has been the weakest in two decades and that we have rallied into "expiration resistance" as noted on another chart I published last Thursday, that I concluded it may make sense to get a tad defensive. Thanks for the comments. Cheers!