Thursday, February 9, 2012
BUY TVIX @ $14.79
Towards the end of yesterday's session I took the plunge and loaded up on VelocityShares 2X VIX ETN (TVIX) @ $14.79. As the following daily chart shows, there is a smidge of a True Strength Index (TSI) indicator trend line break BUY signal as well as a strongly favorable positive divergence BUY signal in place. On reflection last evening I am fairly confident I took this position too soon and I will show you why on the third chart below - the US Dollar Index (DX).
I will also add that the TSI is reading -0.56 and that is much less than ideal. A far more promising setup would have the TSI much closer to the ZERO crossover - say at -0.20 or higher.
One of the details I forgot to include on the chart of TVIX (above) is the daily volume, which I take as providing a bullish clue. I made the following chart to show my thinking on this issue of volume.
The 'fly in the ointment' for me is the probable behavior of the US Dollar Index (DX) in the next few days. The previous intermediate cycle conclusion in late October seems to have provided a cookie cutter pattern for our current situation. That pattern includes a sharp drop, multi- day consolidation, a single day sharp drop, 3 days sideways, then a final terrorizing drop. We appear to fit this pattern to a tee at the moment and today is day 2 of the final 3 days sideways before the concluding terrorizing drop (i.e. next Monday).
You know, I wish it were this simple to figure these things out and believe one knows the future, but we all know that is impossible. I certainly do not have a crystal ball and anything, beginning the next 5 minutes from now, is possible. But these are my thoughts and I'm going to play whatever odds I surmise are in my favor (lol). Wish us all good luck.
My TSI Trading record has been updated.