What I cannot be sure about until tomorrow is whether we just get a small move up to the prior 4th in an a-b-c tomorrow AM and then turn right back down for more pain as we approach options expiration this week. If we only get a small 3 wave move out of the open, I am going to quickly dump all of the new TVIX I just bought. That new money was put in there to catch a gap. I will not be patient with so many eggs in one basket. I do worry that they might run it down to $3 for nice round number purposes. They could do this by making this an extended 3 so that what I have as 5 isn't really even 3 yet. But I do like the 2-4 alternation and I do like the way that 5 plummeted below the 1-3 line. That is a classic 5th wave capitulation move. That is why I sold my winner to average down on my loser, something that I normally will not do.
Captain,
ReplyDeleteThanks for the research! What would be your trigger price to head back to the sidelines on TVIX?
Cheers,
Chance
Hi Chance,
ReplyDeleteWell we are getting down to brass tacks here. But this is all about odds not certainties so while I added a significant amount of TVIX in the AH session, I will be quick to sell it all tomorrow if we don't catch a quick bounce at the open.
If all we catch is a small a-b-c back up to 3.12 and stalls there and then begins to come back down I will sell it all. At this point, given that I'm trying to play this so close to the razor's edge, I'm not afraid of some trade churn. Again, I fear options expiration right now. Next week I suspect the shorts will have a much higher comfort level.
All anyone really has to do on this is wait for that day when stocks gap down in AM and then close at the low of the day. I think that will trigger the herd. The put/call ratio is at historic extremes (according to EWI research / chart in their short term update newsletter today).
Nothing will surprise me here. We could get a double bottom at this level, it could go down 80 or 90 cents more before hitting a real capitulation bottom. So I am going to be very skittish here until I see some indication that this ending diagonal model is real. There are aspects of it right now that I do not like! At the same time, there are so many other things are are rolling over already that the indices cannot be far behind.
If they wind this down more then I will try to sidestep the pain but I will also be bringing more guns to bear by selling other winners off.
If they want to wind it down like that and assure me a 30-40 bagger then yes, I will oblige them. That is what will happen if this hits $2. I say let 'em have at it.
Meant to write "We could get a double bottom at this level OR it could go down 80 or 90 cents more..."
ReplyDeleteI obviously can make a chart model case/argument that it bottomed already or I would not have gotten in.