Volatility Investment Signal

     TQQQ's price: , change: .    

 

Update, Feb. 26, 2019:
It's been more than 3 years since our signal went live. There has been 3 corrections (Jan. 2016, Feb. 2018, Apr. 2018) and 1 bear market(Dec. 2018), our signal has worked amazingly well that it has detected all the 4 crashes. However during the corrections, the signal was a bit late in issuing BUY signal to get back in market, but it worked very well during the bear market. Anyway we've slightly adjusted our algorithm which would issue BUY signal with a lower threshold which would get us back in market a bit earlier. This slight adjustment should result in better investment return in the future.
So far we're very happy, so long as it can detect and instruct us avoid bear market and the huge crash like 2009, we'd be super happy. Check Analytics to see how well our signal worked comparing to strategy of BUY & HOLD.

 

Update, Feb. 01, 2019:
Switch volatility investment vehicle to TQQQ, SVXY is not volatile enough to make meaningful gain.

 

Update, Jan. 11, 2019:
XIV was a great votatility investment vehicle, since its closure, we've used SVXY to replace XIV for our volatility investment. However since the Feb 5, 2018 event, they've reduced the volatility for SVXY by half, which makes the investment in SVXY less attractive. Since then we've researched other opportunities, unfornately so far we've not found any one as great as XIV was.
However our algorithm is aimed at market volatility, it works same way for all volatile investments which are based on the broad market. So to check its performance against any volatile investment using our signal, please click Analytics to analyze your option.

 

February 5, 2018, this is the day we all should remember. The previous day XIV dropped 10.53%, today it continued dropping another 14.32%, closing at $99.00. After market things got ugly, panic settled in, XIV crahsed to $4.22. The next day Credit Suisse AG announced the event acceleration of XIV, the last trading day for XIV would be Feb. 15, 2018. XIV will be history afterwards.

Feb. 5, 2018, this is the day to remind us how risky it is to trade in volatility.

Thanks to our great signal, we've made very sizable profit on XIV and easily avoided the huge loss. XIV will be history, our algorithm will however continue. We are in transition to apply our algorithm to SVXY. Stay tuned!

 

VIX, the Chicago Board Options Exchange Volatility Index, measures the volatility in the S&P 500 index. The VIX is often called the "fear index" since it tends to go up when S&P 500 index goes down.

If VIX could be traded, it would make a good hedge to protect an S&P 500 index portfolio. Unfortunately VIX cannot be traded.

VXX (iPath S&P 500 VIX Short-Term Futures ETN) attempts to mimic VIX using the two nearest VIX futures contracts. It buys the 2nd month's VIX futures and sells the front month's futures. However it's a bad substitute for VIX due to the phenomena called "contango", a condition where the 2nd month's VIX futures is higher than the front month's futures. Contango makes VXX lose value on a long term basis.

What is VXX's misfortune is a blessing for another ETN - XIV (VelocityShares Daily Inverse VIX ST ETN) . XIV is the daily inverse of VXX. The "contango" effect propels XIV higher over the long term. The XIV's potential was amply demonstrated from Nov 2011 to June 2014 when it had a massive gain of more than 800%! However XIV can be very volatile itself. It can drop precipitously on a short term basis, as happened in late Nov 2011, when it suffered in a loss of more than 70% from the previous high just a short 5 months before.
Unfortunately XIV dropped more than 80% on Feb. 5, 2018, which led to liquadation of the ETN. XIV will be no more available.
Fortunately there is another Inverse Volatility ETF designed the same way as XIV -- ProShares Short VIX Short-Term Futures ETF (SVXY).

Our investment signal aims to avoid most of the downside, and capture most of the upside.

In 2012 we developed an algorithm to invest in XIV. Our signal evaluate the "contango" effect on a daily basis, when the "contango" effect is strong and consistent, we stay invested, otherwise we sell XIV to avoid the oncoming sell-off.
Since XIV is liquadated on Feb. 21, 2018, our algorithm is being slightly adjusted for SVXY.

In December 2015 our signal went live with detailed history, and we have been investing based on it. The results have been excellent. Each $1000 invested in December 2015 turns to more than $4179 by Feb 5, 2018 (annualized return of 93%),while buy and hold XIV/SVXY would have suffered a LOSS of at least 50% (annualized loss of at least 27%). Check our Volatility Investment Performance.

If you want to know more about the ETN, check this great post What is XIV and how it works?

How does our model work?

Our program analyzes data once daily (business day only). At 7:00pm it collects various data from internet, then apply the model to the collected data.
(Depending on market condition, occasionally it would also analyze data at 11:00am. However mostly at 7:00pm )
The outcome of the model is a signal, either Buy, Hold, Sell or Stay in Cash.

  • Buy — Buy SVXY the next trading day when the market opens. The price at the next day opening could be either higher or lower than today's close price. If the signal is issued in the morning at 10:00am or 11:00am, buy SVXY right away.
  • Hold — Hold your SVXY stock, do not do anything. There must be a Buy signal before and you have already bought SVXY stock at the signal.
  • Sell — Sell your SVXY stocks at opening of the next trading day. The price next day at opening might be higher or lower than today's close price. If the signal is issued in the morning at 10:00am or 11:00am, sell SVXY right away.
  • Stay in Cash — Stay in cash, do not do anything. There must be a Sell signal before and you have already sold your SVXY, now hold your cash and wait for the next Buy signal to step back in.

Where to see today's signal? — The latest signal is displayed on the top-right corner of this page. Note: SVXY price might be 2 minutes delayed.
For more signals, click on the menu Recent, the column Signal indicates the signal of the respective day. Today's signal would be listed in the first row.
Remember today's signal will be published after 7:00pm, which determines the action on the next day at market opening.

To see comments of current day's signal, click here.

Be aware: Investing in XIV is very risky, XIV is very volatile by its design. Also if it drops more than 80% intraday, Credit Suisse reserves the right to close the ETN.
If you don't have high tolerance to price fluctuation, you should not invest in XIV / SVXY.

 

Current Signal Comment:

 

 

 

 

 

 

Donation is very much appreciated

 

All investment information on our web site is provided free, you can use the data in any way you want. But be sure investing in volatility is very risky.

If our information helped you for your investment and you'd like to help us to maintain the website and the information we are providing, your donation is ver much appreciated. Please donate any amount you feel comfortable using Paypal (works with major credit cards and paypal accounts). Click on below Paypal button to donate.

Thank you very much.

 

 

 

 

 

 

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Volatility trading - past performance chart

Below is the past performance since Dec. 23, 2015 with initial investment of $1,000.00, based on our XIV / SVXY model.

However, keep in mind investing in XIV / SVXY is very risky, XIV / SVXY is very volatile. If you don't have high tolerance about price fluctuation, you should not invest in XIV / SVXY .
Also be aware, XIV is an ETN issued by Credit Suisse. If it drops more than 80% intraday, Credit Suisse reserves the right to close the ETN.

The below graph is the past history, it by no means indicates the future performance of our XIV / SVXY model.

If you don't see graph below, please be sure to click on Menu Performance

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Analytics - More investment options

 

Our algorithm is trying to predict the market volatility, it's proven to work very well with the volatility investment like XIV, VIX, SVXY etc.

The purpose of our algorithm / signal is to protect against market crash like bear market. For the BULL years, following our signal may produce unimpressive result, however for long run when correction and bear market occurs, our signal would greatly protect the investment.

The signal can also be used to invest in othe volatile investment like TQQQ, UPRO, UDOW, UWT, etc.

Below function compares any volatile investment with or without following our signal. Simply enter the stock symbol of you choice of volatile investment, it will show you the investment result comparison (with or without following our algorithm / signal)

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Analytics Super User - Tool to fine tune algorithm

 

Fine tune the parameters below

BUY parameters
SELL parameters

Volatility trading signal / price history summary

We started tracking our XIV / SVXY signal performance history starting Dec. 08, 2015, though we started using our XIV model in 2012.
Below is the list of XIV / SVXY price / signal based on our XIV / SVXY investment model for the past 10 days plus all Buy / Sell history. For complete history, please check History Data

However, keep in mind investing in XIV / SVXY is very risky, XIV / SVXY is very volatile. If you don't have high tolerance about price fluctuation, you should not invest in XIV / SVXY .

The below list is our past history, it by no means indicates the future performance of our XIV / SVXY model.

Note: Invested Amount is the current investement value if you started investing in XIV / SVXY with $1000 on Dec. 23, 2015.

If you don't see data below, please be sure to click on Menu Recent

Stock Date Signal Price Change Shares Value of Investment

Volatility trading signal / price complete history

We started tracking our XIV / SVXY performance history starting Dec. 08, 2015, though we started using our XIV model in 2012.
Below is the history of our XIV / SVXY price / signal based on our XIV investment model.

However, keep in mind investing in XIV / SVXY is very risky, XIV / SVXY is very volatile. If you don't have high tolerance about price fluctuation, you should not invest in XIV / SVXY .

The below list is our past history, it by no means indicates the future performance of our XIV / SVXY model.

Note: Invested Amount is the current investement value if you started investing in XIV / SVXY with $1000 on Dec. 23, 2015.

If you don't see data below, please be sure to click on Menu History

Stock Date Signal Price Change Shares Value of Investment