We told you we were building some long positions last Friday. Those are doing great, but this retracement in volatility may be short lived.
In the image above, note the VIX inverse head & shoulders pattern. This pattern was confirmed once down sloping neckline resistance (purple line) was broken. The pattern measures to 30.
Last week a huge upside move in the VIX followed the neckline break confirmation, but there is still five points of potential upside until this patterns move is complete. Today’s retracement to neckline resistance turned support at 20 (orange oval) may be the precursor to a completed measured move to 30.
We are keeping in mind that the Head & Shoulders pattern in S&P Futures completed its measured move to 1300, which is far more relevant than the technical pattern in the VIX. That said, the VIX pattern potential should not be ignored. We are not adding to anything yet as a result.