I'm watching VIX closely here. We might get a buy signal as soon as we hit 17.2. Additionally, there's a time and price target for VIX, that if not met in time, signals a buy opportunity in the S&P500. The signal consists of the following: If 18.5 isn't hit by Friday or sooner we will get a bullish signal as soon as VIX makes a new daily low after Friday's close. So, keep an eye on VIX in the next few days, very critical spot right now. To go long, we'll need more confirmation, if these two buy signals were to materialize, but I'll leave those cues to my students and clients.
Good luck,
Ivan Labrie.
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Now that the VIX spike has reached the first target, we need to see how it behaves during the market session later today.
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We might have a pullback in SPX if the recent high isn't broken in VIX.
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We had the pullback, VIX flashed a confirmation to long when SPX was around 2125. In the short term, now, if we don't hit 18.5 today on close, if Monday sees VIX make a new daily low, that's further confirmation for longs. After that, if VIX hits 13.6, it'll confirm that the smart money bought the dip, and give us information about key levels of support/resistance from here onwards.
I was looking at this yesterday and was convinced to go long. The key factor being it can't go much lower. If I open a £500 position, £32/point I only stand to loose £500, yet if shit hits the fan and it roars upto even 75 I stand to make £2000. 2008 high was 95. Seems like a good buy and hold hedge to me especially at the levels we currently see. Historically it spikes sharply then falls, a 10 point trailing stop would lock in those peaks...
Would love to know your thoughts on this strategy...
IvanLabrie
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I'd reccomend trading it with call options.
But the VIX signal is to long SPX when it bottoms here, not to long VIX.
(see my VIX long call idea in related ideas)
JRFreeze
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Do you mean VIX: Options Play?? Apparently it "violated house rules" and so is not available..
IvanLabrie
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Ah, yes, forgot that one. Well, I had reccomended buying VIX calls and they hit the estimated target to exit in great profit quickly. That was a great trade, but sadly they hid the idea due to advertisement or something.
JRFreeze
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It makes lots of sense. I have very little experience about trading Calls though. My broker IG doesn't even list them...
IvanLabrie
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IG has options as far as I know but not sure about VIX options.
It's normally safer to trade SPX or individual stocks and use VIX as an indicator. But, long VIX using calls can be used to replace an SPX short.
Would love to know your thoughts on this strategy...