August 22, 2017

VXX breaking to all-time lows.

Was it all a facade? Yesterday, the selling was heavy and historical as the NYSE TICK hit astronomical levels. Panic-selling usually leads to a short-term bounce, but a breach above $118.70 would once again nullify the bearish attempts yesterday. We have seen this type of price action  (heavy selling) five days over the past six weeks and all have led to higher prices afterward. However, this time it is different: yesterday’s selling was historical. The NYSE TICK hit levels not seen since the 9/11 crash and the Flash Crash in May. Given the aforementioned and the fact that the next five trading days are historically bearish, I am still sticking with the bears, but my sentiment is strained and I will be exiting if we move up through the $118.70 level on SPY.This could be the first time in quite some time that I have taken such a large loss, but I know that options trading is volatile and I will still be up since My Options Portfolio began back in May. The latter is somewhat comforting, but if I do have to exit my trades with heavy losses I will not be pleased with the outcome. Losses are guaranteed in any trading strategy, but only the person trading the plan is capable of recognizing when to exit the trade when it goes against them. I think this time I might have been fooled by the market and Mr. Probability. How many standard deviations can the market move away from the median before a decent pullback occurs. All indicators state that we are due for a pullback, but sometimes, especially in options, we do not have the time or capital to wait around for the anticipated move.

VXX Chart

Click to Enlarge

I will be back later with more…..stay tuned.

Kindest,

Andy

Kindest,

Andy