That is why I posted the possibility for an ending diagonal here. Since then it dropped 30 cents down to $2.70 before having a small bounce and it is looking very ending diagonal-ish. I think the odds have to stay with the ending diagonal model for now. So if you see that orange line go down in 5 waves, especially if it does a nice throw under, jump on this baby hard because this is going to be a very significant bottom for TVIX. Buy low, sell high and all that.
Folks, they HATE the VIX these days. Who needs stock insurance anymore? That is old fashioned thinking, something for wimps and wussies. We don't need no stinking insurance because THE FED is in complete control of EVERYTHING! That's right, baby. We have entered a new pinnacle of pathologically permanent prosperity, people!! Yep, they hate it at $2.70 but I bet you anything they will love it at $20, $30, $40 and higher. That's just the way this game plays folks. Have no doubt, this will be a 20+ bagger. This is an options play. It is highly leveraged and we are at historical (hysterical) highs of complacency. This will not end well and TVIX will skyrocket during the carnage.
Having said that, I cannot be sure whether what I labeled as pink 3 at the bottom there is really the 3rd or the 5th. It just looks too obvious that it will be an ending diagonal. The obvious doesn't often happen, especially at the major turns. The market has to be tricky or everyone will get rich and that is an impossibility when the whole thing is a zero sum game. So, don't require it to break down one more time and throw under. Instead, if it breaks back out the top rail then use that as a major support/resistance line. Above it you want to own TVIX. Below it you want to be skittish and timid and to side step these punches. The lower it goes without you in it, the more shares you will eventually end up with during the skyrocket portion of the cycle.
Perfect thanks Capt. MackaNZ
ReplyDeleteLove your logic. Started position at 3.05 and continue to add in .15 increments. It's going to 2 first, IMHO. But u r right mi amigo, going to skyrocket. Meanwhile, I am there if she doesn't hit 2. Hope it does though, continue to buy MORE!
ReplyDeleteASK, I love your logic as well. You are easing into this very near the bottom using a cost averaging strategy. I have done this many times myself to good effect when I am not sure whether the most recent wave was a 3rd or a 5th.
ReplyDeleteYes, you have to be patient if it was the 3rd and the stock goes further south. But as long as you are not going to get a margin call and as long as this really is either the 3rd or the 5th of the final wave then you will have a very attractive average buy price.
When TVIX begins the voyage north, the upward speed will surprise people. This is a coiled spring. With record NYSE margin debt in play, there are certainly many people who will get caught leveraged long. The leverage is currently so high that they will not be able to sell rapidly without pushing the share price lower. Keep in mind that although we are at record high prices for shares, trading volume has been collapsing since 2008. There simply will not be buyers when the selling begins in earnest. The indices will cliff dive.
Nobody considers this important fact at the turns but this dynamic will lead to put options becoming a very, very attractive way to avoid panic selling of the shares while also avoiding the risk of complete collapse of the trading business if stocks begin to tumble hard (and they certainly will).