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/VX – Beware Volatility…

Please observe the weekly chart of the CBOE Volatility Index Futures (/VX) below.

As the tax bill heads deeper into the process of becoming law, both bullish and bearish positions for swing traders become higher risk. Bulls may be surprised by a sell the news scenario on final approval of a tax bill or failure thereof. Bears hang on for any word of falter in the tax bills process. For this reason, the ShadowTraderPro Swing Trader model portfolio will remain flat ahead of any further news regarding the tax bill.

In the meantime, we are keeping a close eye on /VX which appears to be changing.

Unlike the summer months of 2017 where /VX would spike on occasion and then revisit prior lows, the futures contract has spiked a few time so far this fall, but is not coming back to prior lows. Instead it has made a series of higher-lows on the weekly chart.

Given the current political climate and unknowns in Washington D.C., we fully expect more spikes by /VX along with greater volatility following passage (or not) of a tax bill.

To access the ShadowTraderPro Swing Trader each morning on your ThinkorSwim Platform by TD Ameritrade, please follow these steps.

1) Go to the Tools Tab
2) Select myTrade
3) Go to “People”, then “Technical Traders”
4) Scroll over the ShadowTrader Swing Trader and select the “Follow” Button
5) Click on the Swing Trader Icon

The menu of our daily posts is found in the left column.

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The full version of this article appears in the ShadowTraderPro Swing Trader newsletter which is published daily. The Swing Trader newsletter delivers value to its followers on multiple levels. The newsletter stands alone as either a purely informational vehicle for those who like to find and trade their own setups, or as a daily resource for trade ideas. These ideas are listed in the Bulls & Bears section and may also be traded live via MyTrade alert by our team. Each day’s edition contains commentary on either the broad market or a particular stock in focus (Looking Ahead), a heads up on upcoming economic and corporate data, and a look Under the Hood, listing what happened with market internals in the previous day’s session, along with /ES Pivots and Market Profile levels for the current day. The newsletter is sent out at night assuring that users have ample time in the morning to digest the information regardless of how early they get up!
Dovetailing with the newsletter are specific trade recommendations via MyTrade which are sent out as we find them. Long/short equity trades are generally concentrated on issues showing extreme relative strength or weakness to the market. Selections are further narrowed by volume convergence/divergence, sector analysis, and technical events such as candlestick patterns and trendline reversals. ShadowTraderPro uses both daily and weekly charts to scan for short to medium term swing trading opportunities with a time horizon of 2 days to 4 weeks. Clients will receive detailed posts for each and every trade entry and exit, clearly explaining the technical analysis behind each move, including any changes to stops or targets. These trades get added to the ShadowTrader Pro Model Portfolio, which is updated nightly and included in each day’s edition of the Swing Trader.


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