Violent decline for S&P 500, Spike up for VIX by year end confirmed by Rare Anomaly research findings
Based upon the most recent findings from researching the three prior Bullish Sentiment Anomaly (BSA) occurrences since 2017, the probability is 100% for the following to occur by end of 2020:
- S&P 500 to decline by 11%.
- Call options which trade VIX, VXX and UVXY to increase by 1,000% to 10,000%.
- Shares of the VXX and UVXY which mimic the CBOE’s volatility index (VIX) to increase by 50% and 100% respectively.
See updates since latest 11/13/2020 BSA occurrence.
Additionally, the occurrence of the fourth BSA on November 13, 2020 since 2017 resulted in the development of the Bull Vix (BVX) algorithm which is now operational. The Bull Vix’s mandate is to exclusively:
- Monitor for future BSA occurrences
- Utilize BBT algorithm’s short signals, which have powered Bull & Bear Tracker and Bear Trader index inverse ETF alerts since 2018, to send alerts to trade VIX related VXX and UVXY shares and call options for the VXX, UVXY and VIX index. Due to increases in volatility for the five weeks following BSA occurrences being highly probable the conditions for deploying call option strategies for returns of 1,000% or more in five weeks or less are ideal.
Note. Until additional empirical research findings are conclusive the intention is the for the Bull Vix to be exclusively utilized for the 5-weeks after a Bullish Sentiment Anomaly (BSA) occurrence. Bear Trader should be utilized for those extended periods between BSA occurrences.
The most significant revelations from the ongoing BSA research:
- Double leveraged UVXY shares significantly outperformed S&P 500’s double leveraged SDS inverse ETF shares for the three prior BSA 5-week post anomaly periods even though both utilized same BBT algorithm powered Bull & Bear Tracker and Bear Trader short alerts.
- UVXY shares had an 88%-win ratio vs. 77% for the S&P 500’s inverse SDS ETF from utilizing the BBT Algorithm’s market short alerts.
- The lows for S&P and the highs for the UVXY occurred in either the fourth or fifth week after the occurrence of the BSA. Note. December 11, 2020 is end of the fourth week since the occurrence of the Bullish Sentiment Anomaly (BSA) for week ended November 13, 2020.
The cumulative gain for the UVXY for the last three post BSA 5-week periods was 433% vs. 54% for the SDS. The average cumulative gain from trading the UVXY for the past three post BSA 5-week periods was 144.3% vs. 18% for the double leveraged SDS S&P 500 inverse ETF.
The gains in the above table for the SDS and UVXY do not include the utilization of inverse securities for when the UVXY or the SDS were in cash during the 5 week-periods. Research is now being conducted on how shares of the SVXY, the inverse of the UVXY fared, against the S&P 500’s double leveraged SSO long ETF during the 5-weeks after a BSA has occurred. We anticipate that the gains for each of the three 5-week post BSA occurrence periods from trading the SVXY instead of the SSO will be considerably higher.
The table below depicts that the BBT’s short the market or RED alerts were much more effective for trading the UVXY than the S&P 500’s doubled leveraged SDS index ETF. The UVXY had an alert win ratio of 88.8% vs. a win ratio of 77.7% for the SDS for the three 5-week post BSA periods.
The table below depicts that for the three prior 5-week post BSA occurrence periods the UVXY’s percentage-trading-gain highs for the 5-week periods ranged from 70% to 235%. For the same periods the S&P 500’s losses ranged from 11% to 16%.
The table also depicts that two of the three highs for the UVXY and lows for the S&P 500 occurred in the fifth week after the last three BSA occurrences. The high week for the UVXY and the low week for the S&P 500 for the lone remaining 5-week period occurred four weeks after the October 4, 2018 BSA occurrance.
The chart of UVXY below depicts the potential leverage from trading the call options for VIX related securities.
The spikes for the UVXY from it’s all-time lows, after the occurrence of the Bullish Sentiment Anomalies (BSA) since 2017 likely netted gains in excess of 1,000%, less than 60 days after the deployment of a disciplined call option trading strategy.
The VIX and the securities which mimic the index, including the UVXY which is depicted in the chart above, are extremely volatile. Therefore, the timing for the exits to maximize profits is crucial.
The table below depicts the performance of the BBT Algorithm’s signals to trade vs. a buy and hold strategy for the UVXY after the three prior BSA occurrences. The BBT Algorithm’s signals to trade the UVXY outperformed a buy and hold strategy for two of the three years. The BBT Algorithm’s aggregate gain was 433% vs. the buy and hold strategy.
Since the Bull Vix exclusively sends alerts to trade VIX related securities for the 5-week periods after the occurrence of a Bullish Sentiment Anomaly (BSA) it utilizes the following single payment or one-time payment subscription offerings listed below.
There are no monthly or recurring payments.
[INSERT SUBSCRIPTIONS HERE]
There is a limited amount of capacity of capital which can trade VIX related securities. Therefore, all subscribers to the November 13 BSA occurrence are grandfathered and will have a first right of refusal to subscribe to the next Bullish Sentiment Anomaly (BSA) which occurs in 2021 or later.
For more on weekly AAII Sentiment Surveys and why Bullish sentiment readings are a contrary indicator read the following articles:
- VIX Research Uncovers Huge Upside Opportunity for December 2020, 11/30/20
- Market Sentiment Anomalies Create Rare Upside Opportunity for December 2020 11/23/20
A viewing of the video below about the versatile BBT algorithm which powers the Bull Vix, Bull & Bear Tracker and Bear Trader buy and sell alerts is highly recommended.