Long VXX | Volatility Play | Associated S&P500 Chart Attached
Fellow Traders,
I'm looking to LONG the VXX, which is a ETF that tracks the short-term VIX futures. This is a volatility swing trade and might take weeks or months to play out. Here;s what I see:
Fundamentals
1. For the basket of stocks that make up the S&P500, we are seeing less and less of them making higher highs on a 52-week average
2. Tim West does an excellent summary of the factors affecting the S&P500 here:
Technicals
1. On the monthly chart, the S&P500 is hovering around the upper parallel of the pitchfork dating back to 2003.
2. On the daily chart, price was rejected off R1 and did not manage to hit the blue upsloping trendline. This shows weakness.
3. When volatility is suppressed, it decreases marginally lesser, when it expands, it accelerates at a faster rate. This asymmetric behaviour is a primary reason for taking on this trade.
4. Lowest low on the VXX sits at 25.5, giving strong support for this 2.7:1 reward to risk trade.
Trade Details:
Entry: 27.7
Stop Loss: 24
Profit Target: 37
I suggest risking no more than 1% per trade by adjusting your position size accordingly.
Luke
Check out my performance record of all published trades on TradingView: tinyurl.com/klkd2vr
Update - 8 Apr
Changing stop loss to 22
I'm looking to LONG the VXX, which is a ETF that tracks the short-term VIX futures. This is a volatility swing trade and might take weeks or months to play out. Here;s what I see:
Fundamentals
1. For the basket of stocks that make up the S&P500, we are seeing less and less of them making higher highs on a 52-week average
2. Tim West does an excellent summary of the factors affecting the S&P500 here:
Technicals
1. On the monthly chart, the S&P500 is hovering around the upper parallel of the pitchfork dating back to 2003.
2. On the daily chart, price was rejected off R1 and did not manage to hit the blue upsloping trendline. This shows weakness.
3. When volatility is suppressed, it decreases marginally lesser, when it expands, it accelerates at a faster rate. This asymmetric behaviour is a primary reason for taking on this trade.
4. Lowest low on the VXX sits at 25.5, giving strong support for this 2.7:1 reward to risk trade.
Trade Details:
Entry: 27.7
Stop Loss: 24
Profit Target: 37
I suggest risking no more than 1% per trade by adjusting your position size accordingly.
Luke
Check out my performance record of all published trades on TradingView: tinyurl.com/klkd2vr
Update - 8 Apr
Changing stop loss to 22