Charting Folly with the Volatility Index

Everyone knows that the Volatility Index ($VIX) is a statistic and so it makes no sense to try to do any kind of technical analysis on it, right? You’re not an idiot. So the iPath S&P 500 VIX Short-Term Futures ETN, $VXX, should be the same. I understand the thought process behind this thinking, but what say we look, just for kicks, to see if there is anything there. Scientific method right? Tell me the Earth is flat and I say prove it. I happened to bring a chart.

iPath S&P 500 VIX Short-Term Futures ETN, $VXX

I know this does not work, but humor me for about 13 points. I have labeled them on the chart. I am not sure if these make a difference. Send me your thoughts, but don’t trade this off of technicals……unless you believe in that.

1. This Topping Tail, confirmed lower the next day, lead to a 44% decline.

2. The Abandoned Baby led to a rise of 28%.

3. The Shooting Star confirmed lower and led to sell off of 29%.

4. Another Abandoned Baby, come on, this one leads to a rise of 20%.

5. The Doji’s, Topping Tails and Gravestone Doji, were followed by a 15% decline.

6. A third Abandoned Baby, lots of kids here, leads to a huge rise.

7. The Bull Flag breaks higher and runs to the Measured Move at 43 before consolidating.

8. The Bearish Engulfing Candle is confirmed lower and is followed by a run lower.

9. On the bounce the Shooting Star Doji is confirmed lower and is followed by a 28% decline.

10. The Bullish Kicker pattern reverses higher with a 37% increase.

11. The Hanging Man is confirmed lower and lead to a further sell off of nearly 50%.

12. The Bullish Harami is confirmed and it rises 23%.

13. The Dark Cloud Cover from yesterday, if confirmed lower would signal a reversal lower.

These were probably all just coincidences. Go back to what you were doing and remember the Volatility index is just a statistic.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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