How we knew the VXX fear index would go up (and markets go down) and for how long

Mar 27, 2020

 

This is a daily chart with a clearly defined UPSIDE DIVERGENCE on VXX, the Fear Index. The time between the first price bottom to the second one, when the divergence occurred, was approximately one month, from late Jan through late Feb 2020.

 

 

That suggested the up move in VXX and down moves in the major markets and component stocks should last approximately 1 month before the MACD begins to stabilize. Around March 18-20, 2020.

 

The lower time frames on VXX started showing MACD rolling over and some Downside Divergences, the SPY, QQQ, IWM, XLE, SMH, XLF and most major component stocks then began showing  UPSIDE divergences

producing huge returns on OTM calls.

 

 

 

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