Volatility Ready to Spike (VXX, UVXY)

vxx30minapril252012.png

Complacency has built up again, and that means the VIX is ready to spike again.  VXX is a nice short term play.

The VIX has formed a tight bull flag pattern over the last two weeks in April, and a breakout would spike the VIX close to 23.  VXX is one way to play it.  The more aggressive UVXY could reach near $18.70 on a quick spike over a few days. 

The S&P 500 should dip as well, but keep in mind a spike in the VIX would cement a bottom in the S&P 500.  Therefore, VXX and UVXY are not buy and hold situations, but rather quick plays on volatility spikes.

There is a very clean example of a bull flag on the VIX itself over the last two weeks.  The chart in the article is VXX not the VIX itself.  What is being suggested is not a black swan by any means, but rather the same type of spike in volatility that we have seen consistantly throughout April.

Does not look like a flag to me. This looks like the typical pattern of VXX apiking then melting down to see in this pattern the anticipation of another spike is dangerous.  Buy VXX here at your own risk and pray for the black swan to arrive.