$UVXY – a look at a pure trending day

Following the red…

I guess the most surprising thing about today’s market sell-off is that it supposedly came out of the blue, a jet falling out of the sky.

But did it?  It’s September after all and September for bulls is historically the cruelest month.  Did everyone start thinking it would be different this time?  Again, yesterday?

Then there is the 40 day sideways move on the SPX…That could not go on forever. Typically when it breaks out of a tight range it breaks big one way or the other.

Now that’s a cloud hanging over the market that could be filled with thunder-and-lightning resistance on any snap back up to the breakdown line on the daily charts.

Technically speaking my follow-the-red indicator (the intraday trend) gave sell signals on the close yesterday on QQQ and SPY, but not on IWM.  It slid sideways into a buy signal on the VIX-based ETFs, in this cas the inverse 3x-leveraged UVXY (see chart below).  And UVXY, maybe the wildest and craziest ETF of all, put its volatility on display, up 32 percent on the day, 24 percent from the open.


Can’t be totally bearish since this market has defied sell-offs like this before.  Downside trending days like today tend to use up all of initial selling power so Monday could easily be sideways to up.

Still, the bears are on the prowl so it is time for bulls and investors to use stops to keep from getting mauled.

(click on the chart for a larger view)



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