We got a monster intraday move off the gap down yesterday and it seems like quite a bit of short covering when we hit new all time highs, ahead of Janet Yellen today. Eventually it will be a surprise when the Fed doesn't pump the market, but it still seems to catch bears off guard and make bulls bolder. I am now itching to go short for a swing trade, something I haven't felt like since August.
First there is the psychological barrier of 1800 just above, and the complacency of the crowd. Second, long term yields are rising, which will keep a lid on interest rate sensitive sectors. Lastly, I am seeing Europe starting to lag, at the same levels as when the debt ceiling deal was announced, almost 1 month ago. In the meantime, the S&P is up 50 points.
ES 1790 will be a premium short entry, and one that I will take if it happens by Friday.
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It has started. We will get a small consolidation until Tuesday of next week, then a sharper rise, no one expects it.
"Permaneutral" I am long March 26 27 30 VXX2 and VXX 92 calls. ( did cut my TAN longs half and will keep the rest) As you described earlier I agree. Market is topping. Budget/debt ceiling issues should help to move market significantly lower.
I don't think VXX is a good vehicle for making a play on a market moving lower. You have to have a big move lower in order to overcome the contango in the VIX futures curve.
I prefer just buying SPY put spreads or just going short ES.
I also see good potential to capture downside by shorting FXI or DXJ or by buying put spreads on those ETFs. I always prefer to short the weaker global equity indices rather than the beast which is the S&P 500.
"Permaneutral": I experienced when VIX futures were moving into backwardation after bought calls on backmonth VIX options.The VXX back month calls behave a bit differently When comparing front and back month volatility curves using Livevol Pro volatility charting on VXX backmonth spikes along visibly. VXX is a bit more like single stock when looking at its options I'll consider put spreads and the rest. Thank you.
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