Well, it cam damned close to actually touching the rail but it exactly stopped, at least so far, at the 50 fib and then put in a double bottom here. I sold out of JNUG for over 20% gain today in the belief that 3 of 5 was finished and that UVXY was right at support.
The play here is easy: buy into UVXY on the EW dip, however small you can find it, and then stop out below the double bottom of today because the blue path is actually the kind of pullback that one would expect UVXY to do into a 2nd wave. Said differently, hyper volatile ETFs like the 61.8 fib for pullbacks. The 50 is pretty much the bare minimum.
I would have been happier if the blue line were actually touched. The presence of space there smells like an opportunity to go lower and in fact I normally would normally probably not hold over night. But the FAZ chart, which is not as volatile as UVXY, also kissed its 50 fib today. In any case I bought so near the bottom today that if it goes lower tomorrow I won't lose more than 1 percent (unless it gaps down of course which is always a risk).
VXX touched that blue line. Wondering if VXX chart is more reliable for longer term EW analysis given it suffers less from futures price contango, roll yield, and price exaggeration common on leveraged securities such as UVXY. Another alternatively to get a read would be to use XIV chart which I'm sure you're aware is inverse of VXX.
ReplyDelete-TJ