Important TVIX update

In my most recent prior TVIX post I indicated that the move up at that time to fill the gap did not count as a-b-c very well and in fact I thought it was more likely an impulse (1-2-3-4-5).  Since then we got what looks to be an a-b-c pullback that is forming a double bottom.  Now the big question is, as posed in this post, whether the 5 waves down into the late August lows are really 5 of 5 of 5 or just 1 of 5 of 5.  In fact I wrote:

"...TVIX has clearly had 5 waves down.  ... Let's assume that wave 5 shown below was really only 1 of 5.  If this is the case, then TVIX should be headed lower but not before a full a-b-c count is seen to retrace 1 of 5."

So the bottom line is that the bottom for TVIX could already be in OR the bottom of the wave below is just 1 of 5.  If this is the case, we should get a strong retracement to at least the 38.2 but I would also think that the 50 or even 61.8 fib is possible with such a volatile ETF.  The key now is to count the waves that are likely to about to unfold upward.  There are alternate counts of course and I will discuss them if we do not begin to get a strong TVIX rally very soon as I expect to happen.

Keep the following levels in mind as possible resistance:

1. $3.20 ish since it is both the level of the prior 4th and the 38.2 % fib.
2. $3.43 as the 50% fib
3. $3.63 as the 61.8% fib
4. $4.30 is the break out level whereby the bear market in fear is definitely over.

A good strategy will be to look for 5 waves up from here that take us to one of the first 3 levels above and then go to the sidelines and watch.  After all, those 5 waves up will get a retracement.  But after they do, the shares will either break out to a higher high or the "retracement" will turn into strong selling and a-b-c will morph into 1-2-3-4-5.  The smart play here is to risk losing a bit of profit by getting out when 5 waves up from here play out (if that is indeed what will happen) and then getting back in ONLY if a small retracement occurs and then a higher high is formed.  That becomes a strong buy signal.

We've been playing this one pretty tightly and now is not the time to lose focus or to get complacent.  But the market could do a head fake sell off in Sept since everyone expects it and the wave count of the big indices do not preclude a higher high (after the requisite pull backs finish).  Note: that would be my alternate count.  Right now, the primary is that the bottom for TVIX is in.