Here’s a nine-month chart of the iPath S&P 500 VIX ST Futures ETN (NYSE: VXX), which shows the “fear factor” based ETN, which tracks the S&P 500 VIX Short-Term Futures Index Total Return, and reflects the implied volatility of the S&P 500 Index at various points along the volatility forward curve, bouncing off lows not seen since the end of last summer.

The VXX, which offers inverse exposure to the broad S&P 500 basket of stocks, basically goes up when the equity market goes down, and vice-versa.

The ETN spent the early part of the week bouncing off of support right around $15.54, pennies off of last August’s lows. At that point, the end-of-summer market compression morphed into a full-blown correction. Could a similar pattern be emerging right now?

It’s possible, but it might not happen right away. Investors seem in a “irrationally exuberant” mood, showing a strong appetite for risk and no regard for fear. The crossover of the ETN’s 50-day MA above its 200-day MA (see chart’s gold circle) is the technical confirmation of that sentiment, and historically speaking, VXX has recently followed the prevailing wisdom of that crossover, going bullish when the 50-day MA crosses above the higher, and bearish when it falls below it. Somewhat counter-intuitively, the bearish crossover of VXX indicates a high likelihood of a continuation of the current bullish trend.

So it might be a good time for contrarians to consider placing their chips on the table.

Last week’s support line of $17.60 was broken through last week, and it hasn’t been close to being revisited yet. (See top gold horizontal line.) New support? That would be the $15.54, and as previously mentioned, a line in the sand not touched on since last summer.

Resistance for VXX is the former support line, as is so often the case. So the bullish half of the over/under is 17.60, with the bearish being 15.54.

Also of note: The current downtrend, seen in the gold diagonal line, appears on the edge of a breakout, which would occur with just a couple of concurrent down days next week.

VXX PayDayCycle Status right now sits at -1, and ended the week forming a red doji.

PayDayCycles are 4-8 day trends in stocks that help people swing trade. To learn more about PayDayCycles make sure to grab the free Swing Trading Class on the right sidebar.

The MACD has been swapping bullish and bearish bars so tight lately that they can barely be seen as differentiated from the zero line. Though recent momentum has been bearish, that trend has shifted to neutral.

Overall, because VXX likely has far more room to run up then it does to drop down, it poses a good risk-to-reward ratio that, at the least, could be used as an inexpensive hedge that can serve against a bullish portfolio.