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Kevin Wilde
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Kevin Wilde is the chief trading strategist at alphaking.com and a Marketocracy.com Master. Investors can follow his trading advisories via his Daily AK newsletter, or have their money run for them via Marketocracy.com money management services, where Kevin's trades will be automatically entered.
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  • Calm VIX Says This Sell-Off Is Different

    The S&P500 has moved into a very dangerous position of its prior breakout level, highlighted by the dotted red line in the chart below.

    An air pocket resides below that level, and very hard selling is likely to appear in a hurry if that level is breached in earnest, which is likely due to the stance of the short term indicators.

    Note how calm the VIX is behaving as the S&P500 challenges that critically important level (white line near bottom of chart)?

    Bottoms are made when the VIX spikes come in pairs, highlighted by the twin blue arrows and circles, with the second triggering the actual buy.

    A couple of weeks ago we got the first cross of the VIX above the Bollinger Band (detrended in the chart below the dotted red line,) and the pullback as stocks tried to recover landed on cue. Also, right on cue, most stock indexes are making lower lows than we saw on the first VIX spike (dotted blue arrow and circle.)

    This time around, the VIX is remaining very calm, and showing little sign so far that it wants to explode across the BB.

    That is a big problem for the bulls has bottoms are made in fear, which the set-up below says has still to come. That says the S&P500 is likely to land into that air pocket beneath the prior breakout level, setting up a potential hard and fast plunge has traders react to the breakdown from the failed breakout.

    I plan to add more long exposure on the expected plunge once these indicators show it is safe to do so - so long as the trend remains up by the time the all clear is issued - though till that second VIX spike comes my QQQ long position remains hedged with TZA and getting ready to flip and trade short if the plunge into the air pocket is deep enough to trigger a change in trend.

    If you would like to track updates on the chart shown below sign up at alphaking.com, click on the verification email, and get THREE months free access to my on-line newsletter.

    -Kevin

    (click to enlarge)

    Disclosure: I am long QQQ, TZA.

    Mar 27 11:52 AM | Link | Comment!
  • VIX Says Another Plunge For Stocks Coming

    As I mentioned last Friday, the major stock indexes rallied yesterday on a sell the rumor buy the fact news event surrounding the Crimea vote. Volume was pitifully low though, calling into question the longevity of the move.

    The next news event is the FED two day meeting starting today, which brings us smack in line for a Martin Zweig "three moves and a stumble" event - and possible stock market peak - once they pull the trigger on their third tapering of QE bond purchases on Wednesday. A rally into that decision is likely to be a buy the rumor sell the fact event.

    The chart of the short term indicators below also have Wednesday peak in sight, as the white line of the VIX has pulled back below the detrended Bollinger Band, triggering the first of an expected pair of buy signals from this very important fear/complacency indicator. The dotted blue lines and circles highlight the first VIX buys, while the solid blue lines and circles highlight the more important second.

    Often, the pullback below the BB between the two last two days, and followed by a two to three day spike of the VIX back above the BB that sees the stock market make lower lows than the level seen on the first VIX BB spike.

    Thus, a continuation of the rally into a Wednesday peak and reversal that sets up a hard sell-off post FED decision to close out the week looks on the cards on a buy the rumor (of the FED decision) sell the fact play.

    If so, the AK indicators will highlight whether that second VIX spike marks an important bottom that should be bought with both fists, versus the start of the "big one" on the downside.

    If you would like to track updates on the chart shown below sign up at alphaking.com, click on the verification email, and get THREE months free access to my on-line newsletter.

    -Kevin

    (click to enlarge)

    Disclosure: I am long QQQ.

    Mar 18 10:47 AM | Link | Comment!
  • Time To Hedge Longs Again

    The hedging indicator has turned negative, which was predicted by recent sells from the short term indicators (red and yellow circles,) thus I am buying TZA with 10% of portfolio value to go with my 50% long QQQ position.

    I will add another 50% exposure on any dip to the green trend averages, and another 50% when the short term indicators trigger an oversold buy - so long as the trend remains up by then.

    So I'm being very cautious here on the long side, as the hedging indicator shows individual stocks rolling over even as the stock indexes continue to put up a fight, and prices need to come down some to reduce some of the risk.

    The hedging indicator made over 100% last year as a stand-alone strategy, while trading the short term indicators - two triggered in the same direction to enter a trade, one in the opposite direction to exit and move to cash - returned 33.6% last year trading the S&P500 without leverage.

    If you would like to track updates on the chart shown below sign up at alphaking.com, click on the verification email, and get THREE months free access to my on-line newsletter.

    -Kevin

    (click to enlarge)

    Disclosure: I am long QQQ, TZA.

    Tags: QQQ, TZA
    Mar 13 7:56 AM | Link | Comment!
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