UVXY Weekly and Daily Charts Falling Wedge Oversold Positive Divergence

The most dangerous ETF and ETN's to trade are the double X and triple X's that attempt to leverage the move of the underlying index. This sometimes results in odd price action but this action is expected if playing in this dangerous territory. The poster children for the most dangerous plays are the volatility ETF's and ETN's. If playing any of these tickers such as EIX, VXX, UVXY, etc..., you must at the same time buy an extra shirt, since these violent volatility roller-coaster rides will easily steal the shirt off your back.

The UVXY tracks the VIX and not surprisingly, the charts are now set up similarly.  Note the falling wedges, oversold stocastics and positive divergence which all point to an upside bounce coming.  Also of interest is the capitulative-type selling a week or so ago (blue circles). This shows that holders of UVXY gave up, throwing their arms up in disgust and yelling, "Get me out of here!" Typically, capitulative moves indicate that the entity is bottoming. Once everyone gives up, that is when the stock or ticker will bounce back. This trade requires nimbleness since the projection would follow the same path as the VIX chart. Perhaps a sharp up move, then sharply back down, then sharp up again. Thus, it is wise to grab the profits if they develop then consider reloading on the next pullback.

Keystone opened a new long position in UVXY on Friday and will likely add if it falls lower, and be quick to take profits and get out of Dodge if it bounces.  Keystone also visited the mall this weekend to buy a new shirt. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.