SVXY analysis suggests that bull market may have ended Aug 25th.

In the past couple months I provided a wave model for TVIX which I stated could have been either the final wave down or just the 3rd of 5 (the big ending diagonal into early July) . Well, the ending diagonal that I worried would be a 3rd was in fact a 3rd.  I was clear about the fact that I thought it would bounce and that if it did so in a certain way then it would likely be a 4th wave which would reverse downward after hitting the low $4 range.  That 4th wave in fact peaked Aug 8th.  From there I modeled that the next 5 wave sequence down would mark the 5th and final wave.  After that, the bull market in stocks since 2009 should be over.

So now 5 waves down in TVIX have transpired.  But these 5 waves still have three valid options under the EW rules:

1. They could in fact and in aggregate be the sum total of the expected 5th wave in which case markets will begin to sell off upon return from Labor day.  In that case TVIX will begin its massive rise which I think should, at the end of the big expected sell off perhaps 2-3 years hence, be a 20 bagger, minimum.
2. They could be 1,2,3,4 and 1 of 5.  In other words, the 5th of 5 could extend and then hit a brick wall and then collapse.  If this is the case, it will finish on Tue or Wed of next week and then reverse downward with conviction, likely blamed on some kind of news.
3. The could, as a whole, be just wave 1 of a larger 5th wave.

 They are shown below in abstract model form.

 

While any of these are possible, I think that SVXY is telling us that it could be scenario number 1.  to understand why I think this, check out the count below.  Obviously it is going to be the near inverse of TVIX.  Since wedges have been 3s or Cs of late, the rising wedge on the left side is likely a 3rd wave.   This corresponds to the falling wedge that I have been labeling on the TVIX chart as a 3rd.  Then we got a move to the bottom of the channel but instead of that being the full 4th wave, SVXY put in a big fat triangle B wave there and then went down 5 more waves to end in a falling wedge that must have been a C wave (C of 4).  From there I count 5 waves up.  Currently, all of the waves are the same size which suggests that the 5th wave might still extend.  But SVXY went out of its way to destroy its upsloping channel and then to back test it with 5 waves up and that is the typical behavior of a failed 5th, not 1 of 5 or a 5th wave that is about to extend.

We should know the answer very early on Tuesday and the triggers for bailing on TVIX are clear: If SVXY catches a bid and goes above the red line then sell TVIX and let the char either extend the 5th or trace out 3,4 and 5 of 5.  Once either of these are done, the odds become so high that a major change in market direction is going to happen that it really becomes a no brainer.  We really are in the last few days of the end game of the 2009 bull market here.  

If this gaps down on Tues then there are two likely paths it will take.  It will either go down to the level of the prior 4th (red 4 of 5) and then bounce to a higher high in 3rd of 5 OR it will just keep going down (which is what I suspect will happen).  Once it goes below black 4 then GAME OVER for the bull market IMO.  This will be a significant declining double top that will just set off every sell program on the planet.

Good luck to all of you who have been following the saga of TVIX unfold since I learned about in in early Feb 2014.  It was about $10 at the time and I have been watching it fall, counting the waves, testing entry points and getting stopped out multiple times at a small loss each time until that ending diagonal 3rd wave outed itself and predicted the big recent 4th wave bounce and 5th wave sell off.  This is getting ready to pay off folks.  I'll stay on high alert until a real reversal has been confirmed but after that I plan to only trade the major turns.  In other words, maybe a trade every 3-4 weeks not 3-4 days or even 3-4 hours.  Once we see that 500+ point single down day in the markets then I'll be able to relax a bit more.