Do yourself a favor and check out XIV if you are looking at VIX

To say that I think fear is coming to global markets very soon is an understatement.  I'm sure it is coming and sooner than many expect.  It could be a "walk away in May" year or it might start much sooner, but it's coming.  All the charts are telling me so.  Look at the way that money is coming into the microcaps.  It's a sure sign that the funds think that the major names are overpriced and so they are looking for relative value elsewhere. 

The more traditional fundamentals are screaming it too.  Look at the horrible results from global banks including Deutsche bank which just reported a $1 billion loss.  Look at China's stock market  sitting at 6 month lows.  Also look at China warning that one of their Wealth Management Funds is going to default in just 10 days.  Look at the way BBY was recently taken out back and shot in the head.  This smells a lot like the final days of dot bomb to me.  Earnings misses will no longer be overlooked and people will no longer leverage up to the hilt with margin debt without using any put options to catch them should they fall.

The XIV is the reverse ETF for the VIX which is the triple leveraged volatility indicator "fund" (AKA gambling vehicle).   If the VIX chart is difficult to read, the XIV chart seems much easier to me.  XIV has skyrocketed from a low of $6 to its current lofty, fluffy peak of 35.53.  That 5th wave is forming an ending diagonal into a throw-over.  This is a perfect setup for a major reversal.  As usual, the first indicator of reversal will be a plunge back into the channel.  Then will come a test of the bottom of the channel which should come dramatically given the distance it has to travel.  Finally, the break below lower support should tell anyone who is paying attention that the Bernanke put is dead and that it's time to pay for your plunge protection.

Here's a close up of that 5th wave ending diagonal:

The safe play is to simply short XIV as soon as it breaks down below the lower trend line.  The more aggressive play is to go long VIX.  Nobody knows how much longer this extreme complacency can continue but my model suggests a rise in fear will happen pretty soon.