The markets continue to sputter upward. TVIX trickled down below $2.60 and then recovered. I think we are at a critical juncture again as modeled below using $COMPX as a proxy. The chart below shows that an expanding wedge has formed with the chart now in a 5th wave throwover. This is not confirmed until the chart breaks down - right now it is simply a possibility (the red model below). The other two possibilities I see at this point are:
- the blue route. This basically says that 1 of 5 is now complete and so an a-b-c back down will hold the line at the top support rail and then take off to new highs a good deal higher.
- the green chart say that today's action was not quite the peak and that we have one more small wave before turning down very hard and joining the red channel.
I think that it is likely the green model and so if we don't see some strong selling begin very soon then I will probably get back to the sidelines and wait. If we do a trickle sell off tomorrow AM then any price higher than today's close is probably reason to just bag it and wait. If, under any circumstances, the chart breaks back down through the top rail of the wedge, I would run, not walk to TVIX.
The reason I think it will be the green model is that sell offs rarely happen into holiday weekends. Also, at this time I don't think c of 5 is as long as a of 5. But September is now right around the corner and this begins the historically dangerous last 4 months. Having said that, everyone else knows this to and so maybe it will be different this time (red model ; )
When the big selling starts, what do you think they will try to blame it on?
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