Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market VIX Explodes and XIV Puts In A Top

Stock-Markets / Stock Market 2017 Aug 13, 2017 - 03:59 PM GMT

By: Submissions

Stock-Markets

Mike Golembesky writes: The XIV fell over 13% on Thursday, August 10th and is now down over 23% from the high that was struck on July 26th. Additionally, the XIV has firmly broken through all of shorter term price support levels that I have been mentioning now for several weeks. The break of these support levels is, therefore, making it highly probable that a larger degree top has been struck in the XIV.


The shorter term move down off of the 8/8 high and into the 8/10 low was very clear and followed all of our Fibonacci Pinball targets almost perfectly. This adherence to our Fibonacci Pinball targets allowed for some excellent trading over the last several sessions. We are now at a fairly important inflection point on the XIV. The price action over the next several trading sessions should give us a better idea if the path down to lower levels will also be clear and predictable or if it will involve a more complex pattern that involves more twists and turns.

As I have been writing about for several weeks now the VIX has been at historically low levels for several months. I noted last week that the VIX had closed under the 11 level for a record 18 consecutive trading sessions. This streak was extended into this week as the VIX closed under 11 for the 21stconsecutive trading session on Tuesday, August 8th.

On Wednesday, August 9th the VXX finally began to show some signs of life and finally closed over the 11 level with a close of 11.11. The real fireworks, however, did not occur until Thursday, August 10th as the VIX closed at 16.04, 44% higher than the previous days close. This massive move in the spot VIX index, in turn, caused the VIX futures to see very large moves to the upside thus driving the price of the XIV down along with them.

Last week I wrote that the XIV was hanging on by a thread and it may not take much more to push it over the edge. That push came this week as the XIV broke down very strongly taking out all of the shorter term support levels along with it. The break of these shorter term support levels now leaves the XIV with a pattern that is highly suggestive that a top is indeed in place.

As I noted above the XIV has so far followed our Fibonacci Pinball targets almost perfectly off of the August 8th high and into today’s low. This is allowing us to place shorter term resistance levels on the XIV at the 79.48-84.38 zone. This is a very key resistance zone and will likely tell us if the XIV is going to provide us with a larger degree five wave pattern to the downside or a corrective pattern down off of the 8/8 high.

If the XIV can hold this resistance zone and then make another low it would give us a full five wave move to the downside off of that August 8th high.

Alternatively, if this 79.48-84.38 zone does not hold then we are left with what is likely a corrective 3 wave move to the downside.

In either of these two scenarios on the bigger picture, I still would expect to see lower levels down towards the 60.85-44.87 zone. The latter, corrective scenario, would, however, make tracking the action down towards those lows a bit more difficult. Whereas the former, five wave move, would then allow us to more accurately project retracement targets as well as the targets that should follow to the downside.

I am always on the lookout for tradable setups in the Volatility space. I do however plan to be very selective in any trades that I may attempt in the near term. When the XIV does provide us with a clear and actionable trade setup I will once again be ready to pounce. Untilthat occurs my guns are back in their holsters and I am left with plenty of powder that is dry.

See charts illustrating the wave counts on the XIV.

Mike Golembesky is a widely followed Elliott Wave technical analyst, covering U.S. Indices, Volatility Instruments, and Forex on ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2017 Copyright Mike Golembesky - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules