Tuesday, April 16, 2013

Bounce back

We bounced back huge today in equities. Luckily, I was not on the wrong side of that trade. Last night's bond short worked out great, and I had SPY 154 calls, which I also sold for a decent gain, although not as much as I would have liked because I bought it yesterday when ES was trading around 1550.

I did not however get a chance to buy XIV under 22 like I wanted to yesterday. Huge gap up today means VIX got killed. Although, not to the extend that I thought it would. VIX shot up 43% yesterday, and only retraced about 20%, so VIX is still overbought. However, going back a few months, VIX is in a descending wedge pattern. So it might shoot up big on a break above?

However, this 20% loss in VIX today means it closes back inside the upper Bollinger band, which is a VIX buy trigger according to Cobramarketview - http://stockcharts.com/public/1684859/chartbook/179178685

One another caveat however, when VIX drops 18% in one day, there's 82% odds of the next day closing in red.

At this point, I have no edge, so I'm going to try and do as little as possible with the equities.

Euro rallied again today making highs. Ashraf Laidi wrote an article about this - highlighting this fact:

"In recent EUR/USD history, the 55dma has been an important trigger. In the previous 4 instances following a close through the 55dma, the average gain/loss over the following five days is 145 pips. In 3 of those 4 instances the gains/losses over the subsequent month were substantially larger."

Chart below. Does this mean there's a lot more upside for EURUSD?

Tomorrow, I'm focusing on corn as well, since its approaching the key 666 level (may corn). I however am looking at July corn and will look to sell 646ish. I mentioned this in my weekend post as well.

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