Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Inflation is Spiking Globally… Bond Bubble Bursts in 3… 2… - 15th Dec 17
Sheffield's 'Real' LORAX Defending the Trees From the Labour City Council Patrol Units - 15th Dec 17
Stock Market Decline Signals are Near - 15th Dec 17
Santa Is Putting Christmas On The Blockchain And Saving Billions - 14th Dec 17
The Unprotected, the Protected, the Vulnerably Protected Classes—Which Are You? - 14th Dec 17
Gold’s Upside Target - 14th Dec 17
Year-end US Interest Rate Hike Again Proves To Be Launchpad For Gold Price - 14th Dec 17
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17
Bitcoin Doesn’t Exist – Putting the Banks Out of Business - 9th Dec 17
China’s Struggle for Market Economy Status - 9th Dec 17
Is Gold Really Strong? - 9th Dec 17
Bitcoin Parabolic Mania - 8th Dec 17
SPX Make a 61.8% Retracement - 8th Dec 17
Gold, Stocks and Bonds - The 3 Amigos Update - 8th Dec 17
Gold Stocks Break, Gold to Follow - 8th Dec 17
4 Charts That Show How Trump Tax Cuts Will Trigger A Recession - 8th Dec 17
Precious Metals Breaking Down! 3 Amigos to Abort? 4 Horsemen to Ride? - 7th Dec 17
Bitcoin Just Smashed Through $12k… Wait, $13k… Now $14k… This Is Getting Ridiculous! - 7th Dec 17
Stock Market Tops Look Like This - 7th Dec 17
Crude Oil, Oil Stocks and Invalidation of Breakouts - 7th Dec 17
Bitcoin Doesn’t Exist – 2 - 7th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

XIV Climbs To New Highs As VIX Breaks More Records

Stock-Markets / Stock Market 2017 Oct 06, 2017 - 01:42 PM GMT

By: Submissions

Stock-Markets

By Mike Golembesky : Last week the XIV broke back over the previous all-time high of 96.91. This move came after the XIV experienced the largest corrective move since September of 2016.

Although the previous highs were broken, the move up off of the August lows still has what can be viewed as an incomplete pattern. This potentially incomplete pattern is leaving the door open to several scenarios over the course of the next several weeks.


Back in July, I had written about how the CBOE Volatility Index or the VIX index was setting some very impressive records in 2017. As of July the VIX had not only been trading in ultra-low price levels but in the frequency that these ultra-low price levels had occurred. This ultra-low volatility has now continued into August, September and even into the first few days of October.

Neither the new VIX methodology, which dates back to 2003, nor the old VIX methodology (VXO index), which dates back even further, have ever seen closings under the 10 level during the months of September or October. This year the VIX closed under the 10 level six times in September and for all three days of October so far. The VXO closed under the 10 level sixteen times in September and also for all three days of October so far.

Even more impressive in my opinion is that the new VIX has seen a close under the 11 level in every single month of 2017, and the VXO has seen a close under the 10 level in every signal month of 2017. This frequency of low volatility is truly unprecedented and is not something that the market has even come close to occurring in at least the past 30 years.

As I noted previously, while I cannot say with certainty that these records will never be broken. I can say that I would be truly impressed if the VIX can manage to once again accomplish a feat like we have seen in 2017.

Price pattern sentiment indications and upcoming expectations

As noted in my previous article I would have preferred to have seen the XIV make another low prior to breaking the 96.91 high. With that being said, the most imminent topping scenario that I had laid out previously is still technically valid and this scenario is shown in white on the charts. With this continued move higher, however, I have now adopted the alternate path that is shown in green on the charts as my primary perspective at this time. This green path does suggest that the XIV does still have a bit more work to do prior to making a larger degree top but still should be near the final stages of this larger degree move. Both of these paths (green and white) ultimately do lead towards seeing a move back under the August lows and potentially as deep as into the mid-40s. The big question is how much higher does the XIV have to go prior to making this larger degree top.

Under the green primary path, the XIV should still see at least one more fourth and fifth wave and potentially two more series of fourths and fifths prior to topping. These series of fourth and fifth waves have the potential to move up into the 106 area and even as high as the 111 zone prior to topping as there are several Fibonacci price extension in those areas. The XIV does, however, need to remain over the 90.75-87.80 zone to keep this green path probable. A break down below this zone would be the initial signal that we may have indeed made the larger degree top in the XIV. Further confirmation of this top would come with a break under the 85.06 level followed by the 76.19 level. Unless and until those levels are broken, however, the pressure does remain up on the XIV in the near term.

Once we have confirmation that this period of record-setting low volatility is behind us, things are likely to once again get very interesting in the volatility space. Until then, however, I will simply stay nimble and continue to be on the lookout for tradable setups to take advantage of.

See tables on the VXO & VIX closings (under 10 & 11, respectively), plus charts illustrating the wave counts on the XIV.

Mike Golembesky is a widely followed Elliott Wave technical analyst, covering U.S. Indices, Volatility Instruments, and Forex on ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2017 Copyright Mike Golembesky- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife