VXX: Protector, not fetale

Is it really possible to trade VXX as a stand-alone issue? Sure. I just haven't figured out how. My only success with VXX came when I used it to hedge my shares in AAPL. That day, the Flash Crash, VXX was in nice, fat profit territory, but I never sold it until more than half the profit was gone. In hindsight, that was all right since it protected me from a dismal (paper) loss in AAPL. As VXX declined, AAPL rallied. Turned out to be a good pairing and a good deal.

I don't really view VXX as something that can be gauged well by charts. It's far too beastly, like trying to cage a lion with paper mache bars. But this chart below (weekly) shows something interesting of late. VXX has touched the top of its Bollinger bands, only to retreat. I realize there are always profit takers at the close of a huge runup day for VXX, so how much of it really correlates to the VIX at that point of selling?

VXX 2-year chart (weekly bars)

As bullish as the market was since March of 2009, if it turns equally bearish from this point, wouldn't it be logical for VXX to return to the 100-plus level? Is that reasonable? Or does the design and nature of this ETN prevent that from happening? Whatever the case, VXX has proven to be a must sell above 31 since May began. It has also proven to be a buy below 28 in that time frame.

VXX 2-year (weekly)

As for my VXX/AAPL pairing, I normally use a small position in VXX versus a larger position in AAPL, a 1:3 or 1:4 ratio lately. The volatility in VXX can be extreme, as the chart shows. The price gaps up, down, all over the place from one minute to the next, even on a voraciously up day.

VXX 1-day (1-minute bars) vs. AAPL

VXX 5-day (15-minute) vs. AAPL

If you jumped on the VXX wagon early in the day, even after that ugly long candlestick down, it was easy money up. That takes some balls of steel, imho.

VXX 3-month (daily) vs. AAPL

The incline since late April has been stupendous for the geniuses among us like Le Fly at iBankCoin. There was no real need to process that minute-to-minute action. Just buy VXX in the low 20s and let her rip.

VXX 6-month (daily) vs. AAPL

VXX 2-year (weekly) vs. AAPL

For most of VXX's young life, it has looked like shit compared to AAPL or even SPY. If the global economy is, indeed, headed for the crapper, VXX has insanely huge overhead space to fill. I'm not a proponent of all-in craziness for inverse ETNs like VXX, FAZ, SCO or anything else. But using them as hedges can make a huge difference to the trading account and the confidence account.

Cash right now is still best move in many ways.