Trading Charts, Not Words

Who isn't expecting a Fed bounce? I think it a bit too presumptuous to believe that two days of weakness will bring about strong words or strong actions from the Fed tomorrow. But at this point I'll stick to trading the charts rather than the Fed's words. Words from Europe have gone from dollars to daggers in just a few days, and Greece will certainly not go gently into the night.

It has also only taken the last two days to return to backwardation in the Volatility Index (VIX). This usually creates an opportunity to get long the SPDR S&P 500 Trust (SPY) and long short-term volatility via one of the many Volatility ETFs or ETNs for a quick pair trade into the end of this week. I am going long the weekly SPY 120 calls along with a long position in the weekly iPath S&P 500 VIX Short-Term Futures ETN (VXX) 43 calls. The SPY calls were $3.40 and the VXX calls were $3.80 in a long four SPY calls by long three VXX calls....287 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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