$COMPX backtests top of channel

With today's market pullback we can believe that some kind of wave just peaked.  While this is what we expected, the next couple days will be critical to really understanding it. 

Today the $COMPX retraced to kiss the top of the channel.  To bulls, this is just the back test of a breakout.  To bears, this is wave 1 down which is never expected to be able to break back into the channel.  The key will be tomorrow.  If we get an opening bump and then a pre-noon reversal that breaks back down into the channel as shown then the odds tilt significantly toward the bears  But if this back test reverses upwards to a higher high then shorts know the bull, weak as it may be, still has some fight left in him. 

Here is the close up wave count for just today's action.  It seems a clear 5 waves down have occurred.  Thus tomorrow we should expect a bounce to at least the prior 4th, more likely to the 38.2 fib and still quite possible to the 50 fib.  The 61.8 fib can also happen and in fact wave 2 can bounce all the way back to the top of wave 1 as long as it does not exceed it.

The key to knowing where this is going is to count the waves right at the open.  IF we get a-b-c to the 38.2 then odds are that the retracement is over.  IF it pops above the 38.2 at the open then expect a pullback to the 38.2 followed by a trip to the 61.8 or higher.

Our goal as a bear at this time is the same as any matador in Spain who is in the end game:  DON'T GET GORED!!!  Don't get complacent because that's when the horns will get you.  The bull is dying, I am 100% sure of this.  But "dying" < > "dead" and even a dying bull can seriously wound a leveraged TVIX short.

I have described this situation as a bullfight and as the end game of a chess match where we have a king and a rook vs. the opponent's king.  He cannot win at this point, his army is spent.  The game is ours to win or to lose (a draw is definitely a loss for a leveraged gambler).  These analogies are useful to me as they help retain focus.  The opponent has had some tricky moves over the past couple months which would have badly hurt me had I not side-stepped the horns multiple times already.  All  we have to do is maintain discipline and the right level of fear and we will win big time on this deal.  All we have to do is to outlast the bull that is literally bleeding out its lifeblood which is an expanding money supply.  As the contraction of the credit supply (AKA "liquidity") picks up speed, our comfort zone will grow.  But for now, keep a weather eye on the chart and beware the mixed metaphor.