Massive VIX Warning for All Traders

By: John Winston & Chris Vermeulen | Thu, Jan 12, 2017
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My analysis of the recent VIX action is clearly warning of a potentially massive price volatility increase in the US and global markets. Many traders use and trade the VIX as a measurement of volatility. The VIX is a measurement of the expected market volatility over the next 30 days. As the VIX rises, traders expect larger and more volatile price swings. As the VIX declines, traders expect smaller and more narrow price swings.

Currently, the VIX is near historical low levels and has recently past a critical cycle midpoint.

Daily VIX Chart

One can see from my cycle analysis, I am tracking to cycle events; a longer term top-to-top cycle event and a smaller bottom-to-top cycle event. I call these dual-phase and single-phase cycle events, respectively.

This analysis tells me we recently past a single-phase bottom cycle (near Nov 30th) and are expecting a dual-phase top cycle event near Feb 17th. Given the expected opportunity to retest the VIX high channel, the potential price move in the SSO would relate to a 11%~16.5% price swing (approx) - or larger.  The dark blue downward VIX channel is a boundary that we would expect the VIX move to attempt to reach. It could blow past this level and develop a much larger price correction in the US and Global markets but lets just focus on one target at a time for now.

Now, let's take a look as how this relates on the SSO chart.

On the below SSO chart, I have highlighted the critical VIX "Peak" levels with rectangles and I have drawn the VIX Single and Dual phase event cycles.  You can clearly see how these event cycles align with critical price swings and, most recently (after the US election cycle) correlated with a cycle event low and high.

Proshares Ultra S&P 500 Daily Chart
Larger Image

On the hard-right edge of the chart, I have drawn what I believe will be the likely VIX cycle event target range and target date range. I expect the VIX to increase moderately over in the next week or so and explode as stock prices rotate lower. I expect the US and global markets to react to these time cycles and for an increase in volatility. The chart shows a sharp correction as that is the max potential, but we could only see a 2-5 day dip before it heads higher. Either way volatility should jump soon and I plan to get involved with an ETF.

Our last few ETF trades generated some big profits with EDZ 20.7%, NUGT 11%, and UGAZ 74% return. I feel the VIX is starting to show signs of an opportunity unfolding.

 


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John Winston

Author: John Winston

John Winston,
Chief Investment Strategist
Active Trading Partners

John Winston

John Winston, Chief Investment Strategist of Active Trading Partners.com. is a recognized industry expert who specializes in providing financial advisors, hedge funds and individual traders with accurate market forecasts and trading opportunities. John's mission is to bring a unique combination of relevant market news, experience, and dynamic crowd behavioral trading ideas.

Prior to Active Trading Partners.com, He spent years studying human behavioral patterns, fundamental analysis, Fibonacci retracements, and Elliott wave patterns. He knows investors love to chase stocks up and by doing so, they increase their risk without knowing it. And that the crowd loves to sell low and buy high, John attempts to do the opposite.

Chris Vermeulen of TheGoldAndOilGuy.com met John in late 2008 as the financial crisis was unfolding. After numerous months of following the trading profits of and methodologies that John employs now at ATP, Chris suggested that a joint venture be formed and we offer this service to a select group of partners (subscribers).

Over a 23 year period, John learned how to consistently profit from investor behavior outperforming the market in both bull and bear market cycles. These strategies have become the foundation for his premium Stock and ETF trading alert service.

Copyright © 2017 John Winston

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
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He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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