TVIX update

First off, let me remind folks that we only have the 1st confirmation of the DJIA ending diagonal break down in the bank.  This is nice but not conclusive.  NOWHERE yet have I seen any panic selling, big gaps down, or anything that would lead me to believe the herd thinks anything has changed.  This could just be false hope on their part but until I see it I am going to be skittish with my wager on TVIX.  As Andy Grove of Intel used to say, "Only the paranoid survive".  We should be seeing it no later than Tuesday but preferably it will begin on Monday late morning or early afternoon.  It depends on how much more sideways action we get.

In this post from yesterday I revealed that I had gone to the sidelines on TVIX in the extended hours trading session since my model said wave 1 down was complete.  Today we got part of what I was looking for in terms of a TVIX pullback but I'm not convinced it is done yet so I stayed in cash (and avoided ~ 4% loss by doing so).  Today's pullback only got to the 23.6 fib on the DJIA and only the 38.2 on the highly leveraged TVIX ETF.  I expect TVIX to give up 61.8 on this 2nd wave, shown by blue C below.

There is also an outside chance that we will get a deeper inclining double bottom as shown lower right.  If this happens it obviously cannot go below the prior low without destroying the DJIA ending diagonal model.  If it pulls back much more than the 61.8 fib then the DJIA will be be breaking back above the top rail of the ending diagonal and that is not at all usual.  A tender back test, yes.  A bash back up through?  NO.  It would call for a rethink to say the least.