VXX... update on swing position taken yesterday

SUMMARY

The VXX could see more downside or whipsaw, but I expect a powerful move up as the bullish divergences in both the daily (stronger) and 60 minute charts manifest themselves. These divergences do take some time (with 60 minute acting faster), and lower prices could come before the move up.  I will likely add MORE VXX when the charts suggest that the move up is verified.

VXX targets 2927 2971 3023 3133

Last VXX:    28.75
Entry price:   29.33
Stop:             26.08 (for now, I will raise it later).

VOLATILE
The VXX is a very volatile instrument, which makes large moves (both up and down).
For example, at one point today, the vxx was down 2.7% vs tza down 1.45%..... and tza is a 3x inverse etf... shows how volatile the vxx is. The Russel 2000 was down only 0.48% with the VXX down 2.7% !!!  The SPX and Nasdaq were also down only about 0.48%. That is, the VXX was down 5.6 times (560% of) the Russell 2000 / SPX. However, unlike an etf like 3x tza, the VXX percentage and volatility will vary, not always being 560%.


At the Dubai incident, the DOW dropped about 230 points, or about 2%. However, the VXX shot up an amazaing 30%. WOW... crazy volatile but so much fun.


DAILY CHART
I entered the VXX swing yesterday based on the breakout of the wedge, and a backtest that appeared to successfully hold. I also based it on candle patterns (an unconfirmed bull morning star or island reversal), as well as the bullish divergence between price and RSI / MACD.  These divergences on the daily charts often take some time to manifest themselves, and today we saw the VXX make lower prices. However I remain long the VXX, recognizing that this is a very volatile instrument, and therefore sizing the share size accordingly.

Note the intersection of the channel line and the wedge line. This gives added support, although it's down around the 28.02 area.


Daily Chart below.





60 Minute Chart
The 60 minute chart shows yet another wedge that could cause some further price decline in the VXX before it accelerates back upward. However, note the very strong bullish divergence between price (blue line lower support) and the RSI (blue line in RSI) as well as MACD hist. Prices in the 60 minute chart made a LOWER LOW but the RSI has put in a HIGHER LOW.  The divergences in the 60 minute charts manifest themselves more quickly than daily divergences, but the magnitude of the 60 minute manifestation is less than the daily realization.

So, more whipsaw or downside in the VXX is possible, but I still expect a powerful move up in the coming days.

I will probably add more VXX when it begins to turn up.

60 Minute Chart


* ChristopherStockGuy is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. For details, see the post from SATURDAY, AUGUST 15, 2009 titled "Disclaimer".