Friday, 1 August 2014

TVIX, UVXY - powerful weekly gains

With the sp' breaking <1960, the VIX built strong gains this week. The 2x lev' bullish VIX instruments of TVIX and UVXY saw the first major weekly gains in some months, higher by 29.2% and 30.3% respectively.

TVIX, daily

UVXY, daily


*first, an update on the VIX, which gained 34.2% across the week.

Most notably, the VIX is making a play for the weekly 200 MA. This week was a marginal miss.. but there now looks to be a very real chance of an August weekly VIX close in the 18s...or higher

If that is achieved.. it will be the first real sign that a broader trend change is underway in the broader equity market.

As for TVIX and UVXY, it was indeed the first significant net weekly gains since early April. As ever, both will be highly susceptible to a few days of 'cool down' in the VIX.

What now for the VIX?

I'm seeking a back test of sp'1955/65 next week.. which should equate to VIX cooling to the 14/13s.

From long as SP' does not break 1970.... VIX long will be a valid trade in August.

First major upside target would be VIX 22 - which would surpass the 2013 high of the 21.90s. 

Personally, I have no intention to trade long VIX in the current equity down cycle. I would only consider picking up some VIX calls in September. Certainly though, the past two days have changed things, and I will strongly consider shorting the equity indexes on the next 2-3 day bounce.