$COMPX likely breaking down right now; I'm betting big on TVIX.

In this post from last Friday I mentioned what to look for as signs of breakdown in $COMPX and today we got some good indications that a breakdown has begun as pointed to by the green arrows below.  Today a small 3rd wave took out both the upper rail of the blue wedge and the lower rail of the orange wedge.  This was clearly a small 3rd wave. 

Wave 1 rested down on top of the top blue rail, wave 2 bounced just a little and then wave 3 took both of them out and then back tested the bottom of the orange resistance line to form wave 4. So I expect more selling from the open and then a reversal at some point soon back up to nearly the yellow line (that would be 1 down and then 2 back up).  Then a healthy 3rd of 3rd should take out the lower blue rail. 


If that model plays out then it should begin to take out a series of stops that the leveraged longs no doubt have in place right now.  I have not seen much fear of late in the markets but that breakdown, were it to occur, should be enough to do it.  The target for the retracement of a rising wedge is the full length of the wedge.  So per earlier post, I expect $COMPX to show support around 4000 where it will likely bounce with gusto but likely not a higher high.  The reason for this is the ending diagonal, should it be confirmed by a break below the lower blue rail, is a high percentage top indicator that would cap off the C wave that has been forming since 2009.


Folks, since this is by far the best TVIX setup I have seen all year, I am betting big on this.  Although I am never without some fear in this game (fear and discipline), I think that the risk is rapidly turning into me not being in these shares when they explode upward.  I'm looking at the after hour trading and the last was $2.77 and 8.2% up.  This comes on a day when the DJIA only lost 107 points - 0.62%.  Imagine what the TVIX price will be after the DJIA loses just 5, 10, 15%. 

Folks, I have been tracking and trading TVIX for many months time now.  I've made plenty of false starts during that time but always with the understanding that a trigger point would stop me out if I got the count wrong.   That's why I'm still in the game today.  But I also got some important counts right like this one where I modeled the possibility that an ending diagonal would form into July and then this model in early July showing the expected bounce.  In this model I worried that the ending diagonal was only a 3rd and not the 5th that I originally believed it to be.  In this subsequent post I warned that the big pop was possible C of 4 and that we still might have wave 5 left to go.  I zoomed in on the risk of wave 5 down here and called the $2.50 area as a possible bottom.  All of this experience with TVIX is telling me that my primary model must be that TVIX is now in a bull market.  


Still, I remain aware that we are not out of the woods until we see a higher high than the recent high of $3.06.  In fact, the herd left today's chart purposefully ambiguous and looking like a 3 wave move.  A move below $2.60 will put all of this TVIX bullishness on the back burner for a little longer.  It is still possible that the recent low was only 1 of 5 and that today's action ended 2 of 5.  That will be negated if we get a higher high than $2.76 tomorrow (highly likely according to the AH trading on TVIX).  After all of this hard work, it might be time to start collecting a significant paycheck.