TVIX update.

In this post I provided an alternate TVIX count.   Despite today's AM move downward, that alternate model has not taken effect yet.  The current move can still be modeled as a 2nd wave because it was unable to create a lower low than wave 5 ($2.65).

The smart gambit is to treat this dip as an entry point but with tight stops.  If it hits $2.64 then that would be a lower low thus invalidating the model.  Failing a lower low what we could be looking at here is a double bottom.  Again, this is where I would be inclined to add to my position (which I did this AM when a lower low could not be found) rather than selling.

 

If this model is right, and I cannot guarantee anything about that (nobody can), the market is ready to sell off at a moment's notice.  Minyanville (very smart guys) wrote that yesterday's Humphrey Hawkins speech by Yellen was her "Irrational Exuberance" speech.  Of course, that is a reference to Greenspan's comments. But his comments happened in early December 1996 whereas the big crash began months later in Q3.  I don't think we have 9 months of rally left in these markets by any stretch.

In any case, just set the stops at $2.64 and limit your downside because according to this model, that should not happen.  As usual, models are about odds not certainties.  Also, it has to be understood that these very short term price movement models are on the cutting edge.  So don't get over leveraged!  It is the nature of this game to get stopped out a few times along the way.  When the king and rook are tracking down the king there will inevitably be times when a defensive posture must be taken and failing to do so can cost you the win.  That's what I mean by being skittish.  There will come a time when the momo is in our favor.  The wind will be at our backs and it will fill our sails.  When this happens it will be less important to monitor every single turn of the chart.  But with this kind of leveraged gambling ETF it will never be unimportant.