Friday, January 28, 2011

VIX Jumps on Egypt as Stock Market Dips

In the stock market carnage, particularly on Nasdaq, NFLX continued to go up. Oh well.

Other than the missed $400 additional gain if I held on to the option, my portfolio recovered some of the lost ground on precious metals (now that this punk trader finished liquidating his stupendous COMEX futures positions). He caused thousands of dollars of paper loss for me in such a short time, and I will make sure I'll have a word with him if I see him.

In the final minute of trading, I grabbed VXX, a very small position. It is an ETN on short-term VIX futures. Since this is an ETN, I didn't think it had options on it. Had I known, I would have just gotten the options. There is a scarier ETN called TVIX, that's leveraged.

VXX jumped 8% today with a huge volume.

The reason why is finally getting obvious to many people: Egypt.

Many inverse ETFs have been showing positive divergence lately. Here's what VXX looks like: a blip today after a long, long price decline as VIX was dying, but with positive divergence developing on MACD (the best indicator for me these days).

It's outside the chart above, but in May last year it went from $70 to $140.

Slow stochastics hasn't given a buy signal, but so? As Zero Hedge says, we're in one of the first "quantitative" revolutions. High VIX times, probably. If everything is dandy and nice again on Monday, so? It can simply collapse on Tuesday again. Who knows.

Be safe and do your DD.

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