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Sentiment Speaks - XIV Closing In On A Local Top But The Next Buying Opportunity May Not Be Far Off


  • Price action over the prior year.
  • Anecdotal and other sentiment indications.
  • Price pattern sentiment indications and upcoming expectations.

Price Action Over Prior Year

The XIV has seen an incredible run since the February of 2016 low moving from 15.36 to a high of 87.54 on June 26th of this year. This represents a move of over 470% off of that 15.36 low into the June highs. With the VIX trading at historically low levels, the question at hand is; does the XIV have any room left to run to the upside or are we on the precipice of seeing a significant top on the XIV?

Anecdotal and Other Sentiment Indications

As noted the VIX has been trading at historically low levels for the past several months having seen levels into the low 9s in both May and June of this year. These are levels that had never before been seen since the new VIX was created in the early 2000's. Not only has the VIX seen very low price levels but the range it has traded in over the last several months has been exceptionally low. This is evident by looking at the 100-day moving average which is currently sitting at 11.57, a level not seen since 2007. So as the VIX continues to maintain this ultra-low range the XIV continues to grind higher and higher.

Price Pattern Sentiment Indications and Upcoming Expectations

Since the low, in February of 2016, the XIV has been tracing out a very clean impulsive wave pattern that has aligned quite well with the pattern that we have been watching in the equity markets. Currently, we are in the ideal target zone for the larger degree third wave. This was a fairly wide target zone that had come in at the 73.45 - 99.61 zone but so far the XIV has only managed to get into the middle of this zone.

As is

This article was written by

Michael Golembesky profile picture
The #1 Service For Market and Metals Direction!

Michael Golembesky is a senior analyst at ElliottWaveTrader.net who focuses on the both the Forex Markets as well as the U.S. Equity and Volatility markets.

Mike is a renowned practitioner and educator in applying Elliott Wave analysis to trading forex and volatility instruments. He is a popular speaker at financial forums and conferences in the U.S., including The Traders Expo and The Money Show, and widely syndicated on sites including MarketWatch, Seeking Alpha, and Nasdaq.com.

Mike can be found in the main room at ElliottWaveTrader.net as well in the volatility (VIX room) and the Forex service within ElliottWaveTrader.net. Along with analysis on the XIV and VXX ETFs, the volatility service also has a model portfolio and trade alert component.

Michael is also a contributing analyst to the Market Pinball Wizard.

Analyst’s Disclosure: I am/we are short VXX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Short VXX through put options.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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