With VXX continuing to shred its way to new record lows each day, we continue to hold four Sep 29 50 calls purchased Thursday for 0.65. The position was initiated when VXX fell to a clear Hidden Pivot support at 43.28 that we’d been monitoring for weeks. The fact that it was smashed after VXX took a weak bounce from it is bearish, but we’ll stick with the position for the time being anyway, since there is another Hidden Pivot target a 42.38 (see inset) that could deliver the reversal we’re looking for. In general, we will continue to buy cheap calls, usually for 0.70 or less, whenever VXX falls to a promising target, but not at any other time. We’ve had two big winners and three small losers so far using this strategy, even as we’ve avoided getting trapped for any length of time in VXX’s record-setting sinking spell. _______ UPDATE (Sep 18, 12:56 p.m. EDT): If the bounce doesn’t come now, from 41.54 (D target, on the daily chart, of A=54.92 on 8/18), the next opportunity for a decent rally would come at 40.68, the ‘secondary’ Hidden Pivot of a much larger pattern (A=64.44 on 5/17). And if that hidden support doesn’t hold, VXX should be presumed bound for 35.48, where I would expect this record-shattering bear market to make its ultimate low. The 35.48 target would be a back-up-the-truck buying opportunity as far as I’m concerned, since the crystal-clear pattern that produced it has been very precisely confirmed by price action at p=45.88. Click here for a chart that shows both patterns, big and small. _______ UPDATE (Sep 28, 10:46 p.m.): An opportunity to bottom-fish has ripened as VXX plays toe-sies with the 39.87 Hidden Pivot shown. Play this one however you like, since there is no telling how it will open. If it’s trading near 39.87 in the first 15 or so minutes, though, expiring or soon-to-expire near-the-money calls would be the way to go.
