TVIX, UVXY - near term floor?

Whilst the indexes closed Friday broadly flat, the VIX managed to hold onto gains of around 5%. Both the 2x leveraged bullish VIX instruments TVIX and UVXY responded, with gains of 1.0 and 3.5% respectively.


TVIX, daily

UVXY, daily

VIX, weekly

Summary

Is this it? The much awaited 'major wave higher' in the VIX, breaking 20? With a corresponding fall in the indexes, taking out the recent low of sp'1343 ?

If so, then both TVIX and UVXY will see massive increases in the week ahead.

However, as is ALWAYS the case, VIX gains are usually brief, and all gains in TVIX/UVXY are eventually outweighed by the statistical decay inherent in all such leveraged derivatives.
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Certainly, TVIX and UVXY are to be watched next week, especially in terms of trading volume. It could be an indication that some of the bigger trading houses are protecting against perceived downside risks.

TZA - ready to battle back higher

With the main indexes closing higher again, the 3x leveraged bear ETF 'TZA' closed 3.5% lower @ 15.12. This is the 8th out of 9 days lower, and its getting real close to flooring on any basis. The current wave lower would indeed correlate to a very natural 'wave'2 index bounce'.


TZA, daily

Summary

The Rus'2000 small cap was higher by around 1.15%, and indeed, TZA is acting exactly as it is meant to.

From a price perspective, TZA needs to show some sign of levelling out in the next day or two, or it will be in real danger of taking out the $15.00 low from earlier this month.

If my broad outlook on the indexes is correct - with a new index wave lower into Dec/January 2013, then TZA should show a decisive turn higher, but as ever...good stops will be important, in case the bull maniacs somehow manage to hold the market together.
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Clearly, the ultimate stop level for TZA is the QE low @ 13.35, although that is a good 15% lower from the current price.

FAZ - closing within a bear flag

With the main indexes seeing a very sharp intra-day reversal from the morning declines, the financials similarly recovered, with the financial bear ETF - FAZ closing the day poorly. The daily chart is presenting a very clear 4 day bear flag, and looks set for at least another one or two days lower.


FAZ, daily

Summary

The 3x leveraged short ETF, the 'FAZ' closed 1.3% lower @ 17.39, after earlier hitting 18.25.

This sort of swing is not that extreme, but for anyone who was happily long FAZ this morning, the closing level today has to be seen as a major disappointment.

*if my index outlook is correct, with the sp' maxing out around sp'1425 within the next day or two, FAZ should hold just above the recent October lows. We will soon find out if I'm right.