Market update.

Well we have an interesting situation forming right now which should not be all that surprising given that we are very possibly at or near the end of a 5.5 year long bull market.  The $COMPX and NAS100 soared to new highs while the DJIA and S+P 500 did not.  I see it as bearish divergence.  In addition, with all the euphoria the talking heads (AKA Aaron "the face" Task) explained how traditionally accurate measures of over-valuation probably just don't matter anymore.  As a contrarian, this is my kind of talk! 

In any case, look at the DJIA chart.  Looks like some significant resistance at the 61.8.  This is where I would be looking to take out a new short position with fairly tight stops.  Again, the market feels euphoric but the DJIA is still struggling.  Also, we were expecting some kind of a-b-c retracement, right?  Well, per the count below I think we finished 5 of C in the DJIA today (or darned close to it) with that sweeping, short crushing 5th wave up of the expanding wedge.  Again, the wedge that stopped exactly at the 61.8.  Maybe just a coincidence.  But it leaves us a very clear shorting entry point.

WHY??

Well, again, were we not expecting a deep vee, short crushing bounce into wave 2?  I know I was and I know I warned about the possibility of it many times.  Could it go higher still?  Yes, of course it could.  It could throw over that top rail and in fact I hope that it does because the entry point would be when it comes plunging back down through.  Then you put your stops just above the top rail and go about your business. 

King, meet rook and king.  Your wild movements do not impress or frighten me because I know what you are capable of.  But I also know that the bull market is long in the tooth and heavily leveraged already.  So there is not endless fuel to keep pumping these prices up with.  And so I will be patient, I will use stops.  We will do this dance until you tire out.  And when you fall dead over I will be right there to carve you up into steaks.

Below is the current chart of the $COMPX.  It seems to be tracing out the 5th wave of an expanding wedge.  Again, the buy trigger is the break down below the top rail and then you set your stops for just above the rail again before going about your business again.

I have the strong feeling that this will reverse tomorrow AM leaving TVIX with a double bottom.  Remember, the left bottom is oftentimes rounded but the right one is oftentimes a vee, thus making sure that very few people get in with low prices. 

Just watch the $COMPX and short it if it breaks below the top rail in the area of the blue circle and always remember that stops save you money in the long run.  Personally I hope they run TVIX down to $2.20.  That would be really nice of the markets.  But I don't think we will see it.  Time of course will tell.