Ricks Picks

Here’s Why the Other Shoe Has Yet to Drop

EST

VXX, a trading vehicle that tracks short-term S&P volatility, turns out to be pretty good at predicting market disasters. The chart shown made it possible for me to foresee December’s avalanche, although not with the precision that the Hidden Pivot Method allows. Right now VXX is saying bulls shouldn’t get their hopes too high following Thursday’s 900-point reversal in the Dow. As powerful as the rally was, it would appear to be setting up another plunge that could be even worse than what we’ve seen so far.

How do we know this? Simply by assuming that VXX will reach the 56.30 rally target shown. A volatility spike of that magnitude could only occur in a meltdown. VXX would need to climb a further 7.53 points to reach the target. To put that in perspective, Wednesday’s 653-point selloff in the Dow correlated with a VXX rise of just 2.29 points. That implies the Dow would need to sell off perhaps 2000 points for VXX to hit its mark.  Admittedly, this is an apples-to-kumquats comparison, since I’m inferring Dow weakness based on an indicator that is tied to the S&Ps.  Even so, if VXX reaches 56.30 within the next several sessions, both the Dow and the S&Ps would have to be trading much lower.

No Need for Plunge Protection

Someone in the chat room thought he spied the Plunge Protection Team (PPT) at work when stocks went vertical in the final 90 minutes of Thursday’s session, reversing a big decline.  Although the President’s Working Group on Financial Markets, as it is formally known, exists, it seems unlikely they were finagling behind-the-scenes. Who needs a Plunge Protection Team when short-covering maniacs can do the heavy lifting for them free of charge or risk?

Comments on this entry are closed.

none December 28, 2018, 11:36 am

The Bull Market has ended:

The ‘Trump Low’ 11042016 is and was a key level of change to be observe.

The VALUG has broken the Trump Low point of 11042016.

The NYA is but 4.2% from the Trump Low point of 11042016.

The GDOW is but 10.1% from the Trump Low point of 11042016.

The SPX is but 12.6% from the Trump Low point of 11042016.

The INDU is 21.4% from the Trump Low point of 11042018.

The TRANS is but 8.5% from the Trump Low point of 11042018.

The UTY is but 12.5% from the Trump Low point of the 11042018.

The Year 2018 has had 3 historic break downs from major market manias.

1) BCC Token (Bit Coin) Drops 87% 01182018

2) Companies Bought the TOP SEC Rule 10b-18 rule 11292018 Chart Inserted.

3) The greatest equity blow off in market history.

Look for lower prices over the weeks and months and years ahead.

Happy New Year

John Jay December 28, 2018, 12:10 am

Hmmmmmmmmmm……
So, I wonder who “Got the Message?”
Did Jerome show the POTUS how easily he can move the Dow 1000 points up or down?
Or did Jerome back off after the POTUS and the Fed member banks let him know who is really running the show?

I would tend to agree with your Chat Room guy, Rick.
I find it hard to believe that after a sleepy. low volume day, all the Shorts suddenly panicked at exactly 11:27 AM.
I think the trading programs know exactly how much volume it takes to spike or plunge the futures market.
Looking at a daily YMH19 chart, I see exactly the same volume for the last two spike days, and exactly the same volume for the two plunge days before that.

Of course, I am always inclined to see Fisk and Gould printing Erie Railroad stock to sell to Commodore Vanderbilt behind the scenes!
Here is a link to an old Washington Post story about that and other Wall Street Scams:
https://tinyurl.com/y9mhs3vj
Well worth the time to read it, very, very amusing!



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