Interesting day in the markets given that all of the major indices were up today until pretty much right up to the close while TVIX was also green. This is very rare to say the least. It makes me wonder if there is anything that Yellen can say at the Jackson Hole meeting on Friday that will be viewed as positive. In any case, nobody knows what the markets will do tomorrow but given this action I decided to get wet again, especially given the fact that stops could be set pretty tight. In addition, I read Fleck's statements and I thought that the timing of them was interesting given the Yellen meeting coming up.
Regardless whether or not the real peak is in yet, I see two main models as being most likely and they are shown in red and blue below. Red is most likely IMO. The early July peak was a rising wedge and that suggests 3rd wave. The blue model below suggests a failed 5th event which could happen but I would be wary if a sell off begins and then stalls at the level of the prior 4th as shown in red. Now, any sell off that breaks the lower rail is likely big news. But until that happens we have to give the bull the respect it deserves even if we know it is likely dying of terminal cancer.
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