Santa’s VIX Buy Signal

Santa checked his stock portfolio yesterday and finally decided that he was done playing nice. Waved his magic wand, which strangely enough looks a bit like a switchblade from certain angles, and poofff – we suddenly got a VIX Buy Signal on the roster. Which is exactly what I was waiting for and represents one of the reasons why I took out a lottery long just before the EOS yesterday. Thank  you Santa!

And here it is in all its glory. We do have 1) a push outside the Bollinger, then 2) one lower and inside, followed by 3) an even lower close. Per the rules this usually produces a bounce within a week, so it’s of course possible we’ll see another drop first. Which of course is difficult to predict.

The second reason was the Zero signal near the end of the session. As you can see it started to flatten out after that first swap above VWAP. Admittedly not a perfect entry signal and thus I only risked a small position.

So far so good however and if it continues to hold and and breaches ESZ 2680 (Dec contract) then we may be on to something. By the way, I am showing the Dec contract above but you should already be trading March, so if you haven’t already then make sure you roll into that one sometime this morning.

Caveat

Remember that we are in the 2nd bearish week of the year historically speaking, so I caution you against any large long positions here. The odds of a clean resolution aren’t as good as they used to be in the past decade.

Market dynamics clearly have changed and this is not the same bull market we enjoyed between 2009 into late 2017. So easy does it and don’t let hopium or calcified opinions influence your trading decisions, that by the way always applies to both sides of the tape, bearish or bullish.

The soybean campaign is starting to look pretty good now but I’m keeping my ISL in place until I see progress to 1R MFE. There’s also a roll-over coming and I plan take care of rolling both at the same time.

The USD/JPY campaign seems to be playing out as imagined and I’ve now advanced to the 1R mark. Not ever having roll over is one of the things I really love about trading forex by the way. It’s also a very liquid “market”, assuming you are dealing with a decent broker, I always recommend ECN or at least one that doesn’t run its own trading desk. I put market in quotes as forex isn’t really run as one cohesive exchange, rather it’s a collection of islands of varying sizes (and qualities).

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By the way we do have some possible volatility head out way as we’re being served the ECB interest rate decision early tomorrow morning (before the NYSE open). Saturday Draghi is scheduled to speak, so keep that in mind when carrying any EUR crosses through the weekend.