Tuesday VIXology

Going forward this week we've got luke warm short signals from two separate high probability VXX PDQs. The upper PDQ is a model that's going to get a bit more exposure in the coming weeks as the direction of Project Z becomes more focused. The VXX short signal against the SMH is a brand new signal.
The lower VXX PDQ is comprised of the currencies and the single short signal against BZF is also brand new.

One of the joys of being a committed systems trader is never having to say "I wonder if I should really enter this trade." Serious system traders have a faith based comfort in their trade triggers and believe that while there may be drawdowns, the particular system stops will (should) prevent things from getting so out of hand that the trader develops sweaty hands and/or heart palpitations.
My approach to trading is a bit more flexible, fractal and largely reliant on the mining of various opportunity niches that I believe provide me with probability edges.
For daytrading I rely on the VIXEN and its permutations although for the time being, due to the floating nature of the VIX/equity crosses, it's been difficult to backtest the efficacy the those trades. The VIXENs are my faith based, albeit discretionary, mode of trading.
On the other hand, having devoted thousands of hours fiddling with TradeStation code and a variety of other linear and non-linear algorithms, I do have a certain confidence in system trading and deploy significant portions of my capital based on those signals.
Over the last 2 years the VIX (and more recently the VXX) have become two of my most important system trading tools, providing dynamic and reliable market momentum indicators, while at the same time providing revenue capture opportunities in pair trades.
This week our little VIX style box is a bit cloudy. The VIX/VXX and the dollar are looking technically oversold while the Qs are looking tired and prone to an excursion back down to the lower LR30 channel band at 45.

Here's a different look at the majors with each component sharing a common overbought theme, while TLT has broken off its bottoming pattern and now looks poised to gain some traction.
Last week our Telechart rotation scan picked IWM as the potential momo leader for the week and the results (kind of) bear out that forecast. For the week IWM was down 1.3%, Qs were down 1.5%, EEM was down 2.89% and DBC was down a heafty 3.98%. IWM didn't advance any but it held ground better than the other rotation candidates, reflecting its relative strength.