Technical SetUps

Technical SetUp: $VIX

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This technical setup was for long $VIX and was tracked publicly.

On July 24, when the $VIX was trading at 12 I published an article calling for a $VIXplosion, meaning a coming spike in volatility of size.

In the article I published, among other charts, this specific $VIX chart:

And I outlined the 24/25 gap fill target highlighted in the chart:

“While not all index gaps fill, not the same can be said for $VIX: All $VIX gaps fill eventually.

And there is an open gap in the 24/25 area courtesy Jerome Powell when he delivered his ‘flexible’ speech in early January leading to the renewed compression phase we’re in now, a clearly defined descending wedge pattern again.”

I then tracked this chart on twitter as the pattern was building:

Note it tagged the trend line again and then rejected one more time as part of the pattern build phase:

It was then on July 26 when I reiterated the pattern and 24/25 target on CNBC when $VIX was again trading at 12::

The market is in for a ‘VIXplosion,’ says strategist Sven Henrich from CNBC.

We then saw the target getting hit precisely in the days that followed:

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8 replies »

  1. Hi Sven, I heard something interesting. I heard at the water cooler that Starbucks are closing stores in my area (Washington, DC). I almost wonder if this could be a forward signal for slowing consumer spending or simply mere saturation of stores in our area. I liken it to the Waffle House affect, in that when a natural disaster occurs and Waffle Houses are in the area, if they are back up and running in one day, it tells you that the area around that Waffle House didn’t suffer as much damage as Waffle Houses that may take 2. 3. 4, or more days to get back up and running. Believe it or not, the Federal Government actually monitors Waffle Houses because the company has a very effective and efficient system to bring their damaged stores back online quickly. Any thoughts about the “Starbucks Barometer” (beside go and get a latte)?


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