After the 28.62 price target was recently hit for a 60% gain from where I last highlighted an objective long entry on the pullback to the trendline on Feb 25th (100% gain from the objective entries highlighted around the divergent low back in Dec & Jan, that chart & the updated daily chart below), I wanted to share my thoughts on the trade, FWIW.
$VIX daily Feb 25th
$VIX daily March 5th
While certainly possible, at this time I am no longer looking for/expecting another pullback to the uptrend line, with $VIX likely to take out the 28.60ish target/resistance soon & explode to my next targets, assuming QQQ clearly takes out the 200-MA’s/bottom of trading range soon.
As covered in the recent video earlier this week, the rally into my 28.60ish price target coincided with a drop down to the bottom of my multi-month trading range on QQQ as well as the mid-point of the multi-month trading range on SPY. A solid & sustained breakout above that 28.60 target/resistance on $VIX will almost certainly be conditional on a breakdown of those key support levels on QQQ & SPY & as I like to say: Support is support until & unless broken.
Should $VIX pullback to the uptrend line once again, that would still offer an objective long entry, re-entry (for those that booked profits on the spike towards 28.60), or new long entry, although my preference would be to see how the indexes, market-leading Magnificent 8 stocks, crude oil, & XLF look, at that time.
Trading proxies for the $VIX volatility index include $VIX futures (my preference), options on those $VIX futures, or any of the various ETFs & ETNs that track the $VIX via derivatives, such as the futures. One should be aware of the potential risks when trading ETNs, especially those tracking very volatile underlying indexes, sectors, or commodities, such as the $VIX.
As per yesterday’s video, QQQ was (and still is) testing the mid-point of the multi-month trading range (resistance) with SPY still trading in the mid-point of the upper half (sub-trading range) within its larger multi-month trading range. As such & as stated in yesterday’s video, QQQ continues to offer an objective short entry here at resistance & that also factors into my preference to add to a $VIX long position at this time, vs. waiting for another pullback to the uptrend line. As with any trade, it either works out or it doesn’t & that’s what stops (part of any trading plan) are for.