Broader markets: Lions and Tigers and BEARS. Oh My.

After the recent market pounding, the buy the dip crowd is not stepping in.  This is not bullish.  Tiny bounces to the 38.2 fib are not bullish.  The action is too tentative, nibbling around the edges as opposed to conviction buying.  Maybe we will see more conviction when we get into the C wave back up but then I model the selling to take over again.

In fact what I think we are looking at is the finishing moves of wave 1 of 3 down. If I am right then some time before Wed we will see a massive, eye popping gap down that will shock and awe the markets.  That will be a 3rd of 3rd.  That will shake the markets to their core. 

I am waiting for TVIX to pull back from its recent gains so that I can pile in for the 3rd of 3rd gap down.   The typical way for this to work is gaps down at the market open as opposed to intraday reversals.  Why?  Because if the patterns change intraday then the shorts can see the setup coming and have time to get their game in place.   That is not what the market wants!!  The market wants to fool most people during these turns because this is when the higher % gains are made.  Not everyone can make big % gains!  There is not enough stored value in the markets to allow it.  So the markets get tricky.  I'm not saying we can't get an intraday reversal but I gauge the odds to be against it.

So, as long as we get the required a-b-c retracement fully played out, the proper play is to sit tight during the day and then go short at the close hoping to catch the gap down at the open.   Right now I would not try to catch any sucker bounce and flip long.  There is just too much chance of getting caught in a gap down.  Betting against the trend should only be done after 5 waves down of large degree in order to catch the a-b-c bounce.