DJIA update

Today's post builds on this previous post which in turn was built on top of this July 10 post in  in which I brought up the possibility for a finish based on an expanding wedge. Many charting web sites such as this call it a "broadening top" because it often foretells a market reversal.   The site at that link says, "Because Broadening Tops are very large reversal patterns, the technical implications are usually extreme."

Below is the big picture where 5 rail bumps within the orange expanding wedge have now completed.  Does that mean "the top" is absolutely for sure in?  Of course not. This is about odds, not certainties and if you ever forget that you will get chumped by the market players. 

But if you take the fact that this labels well as a 5th wave along with the broadening top/expanding wedge along with the fact that TVIX bottomed (so far) on July 3 EVEN THOUGH the DJIA made a higher high on the 16 (TVIX should have bled value away over that time period...) along with the way Boeing, MCD, JNJ, KO, and other big names have been selling off along with the fact that the Russell 2000 is clearly already in a bear market then you start to have a preponderance of evidence that leads you in a certain bearish direction.

Now, all of this conjecture is moot if the DJIA puts in a higher high (above the black horizontal line above).  That would likely mean what just happened was only A of 5, everything else since was B of 5 and then we get a throwover with C of 5 at which time the odds strongly favor a big reversal. 

On the other hand, get a little bit excited, a little giddy even, for TVIX if you see the first and red circles above break down.  If this happens then the odds will be skyrocketing into the favor of the shorts and TVIX will certainly have broken out of the orange down sloping line I mentioned in this recent TVIX update.

Below is the 5 minute chart model which suggests that tomorrow should be a pretty strong sell off starting right from the opening bell, or even gapping down a bit at the open.  Now, this is a very small wave since it is on the 5 minute chart but perhaps 40-60 points gap down at the open would send the signal that this is wave 3 down as opposed to something that will eventually result in a higher high.