$SVIX $ES #toppong #Expanding Triangle #Megaphone
This is how the macro bullish scenario looks like:
Even that bullish scenario argues for an upcoming rejection of that rally off the red trend line.
The bearish alternative scenario argues for even bigger decline:
In the past I used to watch wave counts on VXX, an ETF that tracks VIX, the index of volatility. That approach does not longer work well because volatility has been under pressure and when it spikes it spikes with a lag to S&P.
I have found an alternative solution. We can watch SVIX, an inverse ETF to the VIX, the “fear” index. This is why it is often called “the greed index”. SVIX offers daily inverse exposure to short-term VIX futures.
We can count that rally off the Oct’23 low as the final wave 5 up. Under that count this rally should be followed by a corrective A-B-C pullback down to the Oct’23 lows.
However, I like more an alternative count that considers that rally as a part of a corrective wave 4 down shaped as a very tricky Expanding Triangle:
When SVIX gets over 36.30 that would be the time to buy cheap long dated puts on SPX, SPY or ES because the top in SVIX means the bottom in VIX, the volatility, the fear index.
Let’s review the micro count of this rally:
This micro count argues for an upcoming pullback in ES/SPX. The target for the wave (iii) up in SVIX is 35.00 – 35.20. Then I would expect a pullback down to 34.00. A pullback to 34.00 should be followed by the final push up that can top at 36.30 or slightly higher.
I like that alt Expanding Triangle wave count because it matches the bullish count in ES-mini:
That scenario argues for an upcoming move down in ES-mini but it does not allow bears to make a lower low under the low made in Oct’22. It argues for only a minor pullback that should be followed by another large leg up