Volatility's Collapse Enters a New Phase

$+VXX – S&P VIX Short-Term (Last:25.98)

I haven’t quite given up on the lottery ticket we still hold — four 19 Jan 28 calls acquired for 0.67 last week when VXX touched a longstanding bear-market target at 26.32. On Monday, after noodling around near that Hidden Pivot support for three days, VXX slipped below the water line, trading as low as 25.76 intraday before closing at 25.98. The overshoot may not look like much on the chart, but it amounts to a so-far 2.1% fall beneath my benchmark. It is astounding to me that such a clear and compelling Hidden Pivot has evinced no bounce whatsoever. In any event the puts are keepers, bought as a high-leverage speculation that VXX would trampoline from somewhere very near 26.32. If it does not we will have exhausted all possible targets of interest, and it’s unlikely we will try bottom-fishing again in the foreseeable future. There are some bigger downtrending patterns than the one I’ve used to project 26.32, but they all yield D targets below zero.  In the past, this has sometimes implied, as it did in case of Bear Stearns and Lehman shares, that the companies were headed toward bankruptcy. However, in this case it likely means VXX will continue to fall toward zero until it is reverse-split yet again by the DaBoyz so that more retail suckers can be enticed to buy options from them.  They’ve been making steady money with this shell-game for years, but it is predictable that most of the profits will be wiped away in just a few days when VXX finally explodes, as it surely will someday. But with the magic power of our 26.32 target very nearly used up, there is no point in our dreaming about catching that bottom and being on the profitable side of VXX’s day of reckoning.