Intellectual honesty, fear and discipline.

I am clearly of the mind that the markets have peaked.  Look at the technical damage to the NASDAQ!  Still, fear and discipline require me to look at both sides of the situation so that I am not easily taken off my guard.  It's kind of exhausting since it is double the work but it has saved my bacon more than once before.

Let me be clear about one thing: forgetting what might happen in the next 2 weeks for a second, these markets are clearly in trouble.  It is just a matter of time, weeks not months before we begin seeing the Dow tank 500+ points in a single day.  This is coming as sure as I am sitting here.  So under no circumstances should my following writings be taken as waffling or closet bullishness.  I am a major bear on these markets but I also know that there is a season for all things and if it is still hibernation season for a couple more weeks then I won't fight the ticker.

SO, taking the other side of the TVIX argument, the bullish side, I can easily come up with a wave count that moves the goal posts out to late April or even 1st week of May in order to accommodate the master theme of Walk Away in May.  So this is really nothing more than a companion chart to the Dow extension into May post that I wrote here.

While I have long thought that this could be a triangle (see all the posts for some time now), I previously modeled the apex as occurring around mid April.  But if I use today's higher high in TVIX as a C wave instead of a 3rd wave, I get a very interesting chart and one that bottoms at the end of April (means the real Dow peak would occur there.  There are several things I really like about this model:

• It just revealed itself today as a possibility. The later the data is unveiled to people, the less time they have to digest and react to it which mean fewer people catch the exact bottom.  It's all about being very tricky now!  That's all this market has left in it, a bit more short term deception (2-4 weeks by this new model).
• I like the way it turns an awkward 1-2-3 count into an a-b-c count.  That counts much much better as a-b-c.
• It provides maximum whip lash to market participants.  The better to shake as many as possible.
• The throw under would land TVIX at an even $6.  The market likes to do things like that.  The last major bottom of the S+P 500 was 666. Yes, really.
• It would bring the Dow rally right up to a Walk Away in May event, something which is often predicted by a negative January Effect.

From a trading perspective this is an easy model to validate or refute.  If this is going another 3 waves down then we might get a tiny pair of Owl Ears as shown in the model and it would leave us with a declining double top.  If the decline then goes below what used to be marked as 1 but is now marked as "a" between 3 and 4 then you know the motive wave theory is bust and this 3 wave decline is all that it can be.  It will have a form of 5-3-5, probably with a throw under as shown and will probably be accompanied by some great news that, during any other time, would be thought of as a market positive.  One certain sign that a peak is in place is when good news is sold off.  That is a major, major warning sign.

The market will only have a couple days to break out of that orange line and if it cannot I'm going to change my primary model to this "2 week extension on the life of the bull" model.

This is not the time to get complacent.  FEAR AND DISCIPLINE.  Conquering the Crash means conquering our emotions.  We must outlast the market which is trying to break down the stamina of the shorts.