EDZ, SPXU, VXX Among Charts to Watch
by Harry Boxer, www.TheTechTrader.com
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Today I'm going to cover some of the ulta-short ETFs that we've been trading over the last few weeks. The market itself had a distinctively and decisively negative session that cracked the back of their 5-week uptrend and took out a couple layers of support. The technicals were so negative today that it was overwhelmingly convincing that we're probably headed lower here, and, as a result, we want to take a look at some of the ultra-shorts and what they're doing.
The Direxion Daily Emrg Mkts Bear 3X Shares (EDZ), which has been in a terrible decline, rallied in April and May, and came down in June. The June rally was not as strong as the BGZ, as the emerging markets didn't do as poorly. But then it went into a very neat, declining, orderly channel, with a 5-wave decline. It based out over the last several days, and then today gapped up, trading the heaviest volume in several weeks, and closing up 3.29, or 9.55%. Immediate goal would be to test and then take out the 38 1/2 area, which may be done tomorrow. We're at that level in the aftermarket. The declining topsline is around 40. The declining 50-day moving average is around 42, my initial trading target on a breakout. Secondary target is up around the 50-51 zone.
UltraPro Short S&P500 ProShares (SPXU), also in a falling wedge, broke out today with an 8.3% jump, up 2.46 on 7 1/3 million. It gapped up above the 10-day moving average, and broke above the 21. There's a minor target around 33 1/4 we expect may be reached tomorrow. The secondary target up around 35 3/4, and intermediate target up around 40 - 41.
IPath S&P 500 VIX Short-Term Futures ETN (VXX) has a falling wedge that was broken today as well. Not as big a thrust, up 7% or 1.53, but enough to say that I think we've broken the trend. Volume is picking up a little bit, and we could see a move that tests the 25-25 1/2 zone, my next trading target. Beyond that I'm looking at 28, possibly even as high as 32 - 33, if we get a real ugly market to the downside.
Other ultra-shorts on Harry's Charts of the Day are Direxion Daily Large Cap Bear 3X Shares (BGZ), Direxion Daily Energy Bear 3X Shares (ERY), Direxion Daily Financial Bear 3X Shares (FAZ), and Direxion Daily Small Cap Bear 3X Shares (TZA).
