Here is another potentially interesting post where I mentioned the possibility of a trip down to $2.65 as the bottom. I wrote: "...this could just be 1 of 5. If so, a very tiny a-b-c to perhaps $3.07-$3.09 could happen before a 3rd wave down to $2.85 and then finally a small sideways 4th and then the final 5th down to $2.65."
Today TVIX kissed $2.65 before heading back up. In the picture below, the two blue circles showed the breakdown from the ending diagonal and then the break back into the channel. That tells me the ending diagonal finished there. This is why I count that as black 3 and 4: ending diagonals in the middle of waves have been 3rd waves for quite some time now. The 2nd wave vee reversal is the other place where the ending diagonal is somewhat (and certainly less) common.
By the way, I use "ending diagonal" much more loosely than Elliott Wave International does. They have strict criteria for this formation making it very rare and only at the end of a full trend. I view to be an ending diagonal anything with 5 rail bumps within a wedge wherein each wave is an a-b-c and the direction of travel is significantly acute or obtuse. Sure, I could go very deep into all of the types of waves but I think it detracts from the real goal which is to predict the turns and to know when I got the model wrong.
After black 4, blue 1 looks really like a 3 wave move but trust me if you zoom in you see the 5 waves with some of them being momentary spikes. There is no such thing as insignificant data here! That thin spike in wave 1 had to be respected by all of the following waves until the motive wave was completed. It's along the lines of a butterfly flapping its wings in Japan and it results in a tornado in Iowa the following year. Again, without the proper resolution it is not difficult to miss the patterns of these final waves. Sometimes I have to drop all the way down to the tick level of resolution to see what is really going on.
Any move above $2.79 signals a very high likelihood that the breakout is upon us. I would not be surprised to see it gap up above that in the AM but it could also open weak for one small wave down (I hope!!) to double bottom at $2.65 before turning upward for the big run.
I will say one more thing here: once this breaks out, once we see the first big 300-500 point down day on the DJIA, dig in your heels and do not be tempted to sell out too easily. So many times in the past I have caught the bottom after painfully watching it go down like this VIX only to make a small profit of 2x and then decide not to get greedy, etc. Screw that, don't do that! This thing is wound up tight and I mean to a historically significant degree. The assholes that put us here and who threaten our entire economy and the security of the nation and of the world, these guys are running open loop and they are very exposed. By winning their money away from them during this next phase of market action you are doing the nation and the world a favor by transferring wealth away from fucking irresponsible con men and liars into the hands of thinking conservatives. We will make better economic use of the money than they do for sure.
Don't even think about going to the sidelines until 5 significant waves up occur giving you a quick 3-4 bagger. Remember!!! The prior 4th wave is at $11.50 and that is the minimum target even for just an a-b-c retracement. That is 4.3x the bottom price of $2.65. If you do get out, wait for the a-b-c and jump back in with high confidence of taking another huge bite during the subsequent 3rd wave. Do be aware that wave 2 retracement is the potentially dangerous one. It could be a vee retracement that could take back 50% or even 61.8% of your wave 1 up gains.
Finally, BE CONFIDENT that TVIX will skyrocket. When I called a bottom on my Sunpower model it was just trading for $3.77, just 6 cents cents shy of its actual bottom. Today it hit $42 (and now is ready to short like crazy having finished an expanding triangle 5th wave). That's an 11 bagger folks. The point is not that I made that call. The point is this: what do you think is more leveraged, an ETF that trades at two times the daily moves of the VIX or SPWR? Folks, the VIX is called the volatility index for good reason! When volatility is to the upside, profits are magnified. When you then double this, profits are double magnified. And when you are doing all this at the very peak of a historically significant debt Ponzi, profits will arguably be extreme. 20x? EASY. I will be insulted if it doesn't return that without any timing of the intermediate turns. 30x? More like it. 40x? VERY POSSIBLE.
Remember, the expanding triangle model for the DJIA and S+P 500 (they look exactly the same on the monthly chart) says that the coming collapse will fall BELOW the lows of 2009. And it will start from a much higher height. The last market plunge was roughly 12000 down to 6500. That is a loss of 7500 points. Multiply that by 1.618 (fib ratio) = 12135. 17068 (current) -12135 (expected points lost in the retracement) = DJIA conservative target of 4933.
This is below the lower rail as shown above and it is the minimum expected crash target for this model. Print this out and refer to it for strength each time the government rattles its economic saber and says scary things about and to the short sellers. The government will soon become powerless to change anything. Each time they try they will stir things up but the market will come back in for the kill, just like those 4 matadors that are surrounding the wounded and tired bull in the picture from yesterday.
Government (and its economic attack dog federal reserve) can hoot and howl and growl and threaten but the market is bigger than the government and it is bigger than the fed. These con men have no chance once the credit deflation sets in. Once the market learns the new mantra it will become increasingly bold in its attacks on the financial establishment. The long standing mantra has been "don't fight the fed". Soon it will be "don't fear the toothless, useless fed".
3 comments:
Hi Captn, a quick question re the TVIX:
You mention the opportunity for return of 40 x as panic hits the market. When I refer to the TVIX chart (bigcharts) I see the TVIX hitting heady heights of 9-10,000 during 2011. This would indicate returns of 3000 x the current price circa $3. Have I missed something re stock splits or decay? Thank you as usual and happy 4 July holidays... MackaNZ
Yes, Anon, you missed something. TVIX will not hit 11000 or even 3000. Heck, it will likely not hit 300. That would be > 100x gain. That is not going to happen man.
It is options based and it's value bleeds off over time. Think of it as a barrel with a cash hole in the bottom. You have to keep throwing cash into it or the level will go to zero. If people are throwing cash slowly then its value will bleed off and the price will go down. But when bad things happen all of a sudden, the cash comes falling into the barrel as if blown in under pressure because people scramble to buy insurance all of a sudden.
TVIX is not a long term buy and hold. It is an option but a very liquid one which is why I like it. During the past crash I played it with options and did very, very well in the middle of them but I wasted money up front getting in too early and it was hard to get out without a loss on new options bought near the end. With TVIX I can get in and out every day if I want to for just a few cents spread. It has allowed me to walk downward on the price with very little damage while still having the potential to be in the game when things begin to turn down.
Dude if we get a 20+ bagger out of this, that would turn a tiny 5k bet into a nice little 100k windfall. That is nothing to sneeze at.
You're a good man, that makes more sense thanks Capt.
I'm trying to settle on a strategy for when this lot implodes. Following the impulse and then standing on the sidelines as it retraces seems a good game plan if I can get the timing right. Either way, some fun to be had!!
MackaNZ
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