DJIA update

Bottom line: the DJIA could have peaked its final peak today but my primary count suggests that it will likely find a somewhat higher high (17400-17500) before coming back down for good. 

What we now know for sure is that the bottom into early Aug was not wave 1 down since the DJIA has now seen a higher high (even thought it was just ~$1 more than the high of July).  We also know that the market internals are weak (advance/decline, etc.) and that the percentage of market bulls is very near the all time high not seen in 27 years.  As Fleckenstein said, "this can't possibly end well".

The current wave up of the DJIA chart can be interpreted in two ways.  The first is that what I have labeled as red 3 is actually red 5 and also black 5.  In other words, the very peak was just put in a couple days ago and now markets will take the blue path below. 

It might turn out that this view is the correct one but I have to believe for now that the red model is correct.  Since the model could count properly either way, the kicker for me in calling this a 3rd instead of a 5th was my proprietary observation that rising wedges are usually 3rd waves right now, not 5th waves.  It would stand to reason that the last couple of days represented an a-b-c pullback to wave red 4.  In this model there would be good alternation and good parallelism.

If this model is correct then we still have one more final push to endure up to perhaps DJIA 17400 or 17500.  Again it's not cast in stone but it would make a wave that counts very nicely.  It would also take us into the historically market-challenged month of September...

We should know a lot more tomorrow.  The count will either fall to a lower low than red 4 (thus removing that count from the running) or it will gap up in the AM and begin trudging upward into the weekend and then continue on for a couple days after we return from the Labor Day holiday.  Today I moved my stops up to $2.71 thus likely assuring that I cannot lose money on this trade (which I have held since $2.67).  Yes, I could lose a tiny bit if there is a gap down on Monday but it would not be very much.

To be honest, my best hope is that the market puts in a rapid and extended "blow off top" 5th wave which stops me out at the open on Friday and then takes TVIX down to the $2.20 range by Tues or Wed of next week.  A capitulation bottom is one of the best, safest times to buy any asset.  If I don't get stopped out tomorrow I will just hold TVIX over the weekend.