TVIX update.

I was disappointed that TVIX didn't break down hard today.  I was hoping that they would go for capitulation so that I could hop back in.  Tomorrow will be telling regarding near term direction.  I am hoping for a fall to $2.20 or lower but don't really believe I will get that gift.  However, we are approaching the gift giving season for shorts, which of course is historically late Q3 and all of Q4.  Sept, Oct, Nov and Dec. are cold nasty months which play on the mentality of the herd.  No happy sunny days to make people forget about the economic absurdity of the situation.  Just cloudy and overcast and gloomy.  My shorting rose blooms in the winter.

TVIX made a slightly lower low today.  So mos def a 5th wave in progress.  Please do not forget way back when I saw that ending diagonal and wondered greatly if it was a 5th or really a 3rd.  That is what people should be thinking about.  It surprises me zero that we are here right now.  Of course one always hopes for profits sooner but the lower they push this thing, the more coiled the spring becomes.  That is a fact.  My patience is NOT endless!  If it were not for the wave count, I would be feeling totally dejected and sad right now.  I would be saying "The fed is omnipotent, they can move the markets any way they want to, I should just throw in the towel and go long"! 

Instead, I speculated correctly that the recent spike could be a 4th wave and that if it was then we should be able to trade our way to prosperity simply by using stops.  So far, so good.

The right way to finish this thing is to have massive capitulation by shorts.  I am not happy with a sideways bottoming.  Because of this, I have to suspect that the recent 5 waves down were simply wave 1.  So a good play would be to buy into what will likely be a small bounce.  If it turns out to be the blue path (i.e. the bottom was put in today) then you will just sit on your gains. But if wrong then you will stop out quickly @ 2.61.  The threat is that there will be an overnight gap down.  I am not taking that risk since it would be a 3rd wave gap.  However, if you see anything higher than $2.85, the shares are a clear buy.  In that case, you MUST watch the 3.20 area because that would be the 38.2 fib.   I hate to say it but you are not safe holding long until $4.30 higher (at which it becomes risky to sell.

Again, this is just the way it is when trying to catch the exact bottom.  You have to realize that most big traders don't even try to do this.  They wait until the momentum has most clearly changed and only then do they flip.  Of course, they miss big profits like this but they don't have to be skittish either.

Bottom line for the short term trading plan I am looking for a near term move up to $2.85 to fill the gap / hit the 38.2 for wave 2 and then reverse down into a short-crushing lower low as 3 of 5 plays out.  I'll buy at the open, stops 1 penny below today's lows and then look for an a-b-c  to the $2.85 level that tells me to get out.  If it takes the blue path (i.e. no clear a-b-c but motive shape instead) then just hang on and see where it takes me.  Odds not certainties!