EOM Trading Tuesday: XIV 11.1.16


The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way.
                                                                                         Marty Schwartz, Pit Bull


The Bears were in full control until late afternoon when a reversal hit.  All three major indexes closed in the red. I still do not expect any 1% moves until the election is over.

Tonight, I focus on my favorite election play XIVVelocity Shares Daily Inverse VIX Short-Term ETN.

Key Points…

1. Usually trades in the direction of the SPX and inverse the $VIX
2. No dividend risk if shorting
3. No options
4. After previous SPX pullbacks, XIV rallied 88%, 56% and 15%

How do I plan to play XIV? I am looking to play a bounce after a healthy pullback.

I set alerts if the following happens… 

1. Price trades above the 5-10-15 SMA
2. Price drops 16%+
3. CMF/MACD Histogram turns from negative to positive
4. Volume increases 25%+
5. Slow Stochastics crosses over 20
6. RSI crosses over 30

If you don’t set alerts you have a lower probability of catching trades. I set alerts with my online broker instead of my charting service.

Enjoy your evening,

David O. England


Plan your work, work your plan, and share your harvest! Philippians 2:3-4

This information is for Educational purposes only. It shall in no event be construed or interpreted as an offer or recommendation to buy or sell securities of any kind.

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy and Associate Professor Emeritus of Finance. This column is presented for educational purposes only and not intended as financial advice.

If you have a question or comment, contact David England at eyeonthemarket@outlook.com.

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