Market update.

If you look at the latest model provided in my previous TVIX update from this past Friday, it is clear that I expected some rapid movement to the upside very soon.  The conventional wisdom is that the broader markets (and therefore TVIX albeit reversed) have entered into a stutter step where the blue wave is nested inside the black wave as circled below.  In other words 1-2-1-2-3-4-5-3-4-5.  Perhaps this will turn out to actually be the case but I have questions about that mess within the circle.  Sure, blue 3 gapped up as you would expect from a 3rd of 3rd but blue 1 was longer that blue 3 was and that does not sit well with me.   Maybe for a 3rd of 1 but not likely for a 3rd of a 3rd...

Now don't get me wrong.  TVIX strength is growing fast.  I'm just obsessing over the short term because that is what keeps the smart gambler 1 step ahead.  By "TVIX strength" I mean that the DJIA closed down only 42 points today, $COMPX was only down ~6 points and S+P was only down ~5 points.  This is nothing to write home about.  But TVIX was up over 10% at the close and that is a big move relative to those paltry losses on the major indices.  So I do believe that, very shortly, TVIX will just skyrocket and will be at $7 or more within 30 days.  But how we get there can be via several different paths and so I want to float one potential model that is not being mentioned anywhere.  In short: The Owl.

I think that it is possible that the real count for the DJIA is shown below and the main reason for this view is my proprietary indicator that rising wedges are Cs or 3s.  Couple that with the 3 wave move down to the 16950 level and you can see what I mean.   That would make a very nice 4th.  Then the 5th could be coming still and it could be a short stroke failed 5th as shown below leading to a Declining Double Top (DDT).   This would form the right "ear" of The Owl and set the markets up for a very rapid sell off with abundant fear.

This is not my primary count yet but it could turn into that if we see strength in the broader markets tomorrow AM.  Conversely, if we gap down in the morning then this will likely have been a false alarm but The Owl would shake as many people as possible and send TVIX back down pretty nicely.  That should be what the market wants to do and so it has to be watched carefully.

Either way is OK by me.  If they want to stop me out and give me another shot at buying even more TVIX at lower prices then I'm good with that.  DJIA above 17150= stop out on TVIX.  If they instead want to gap down hard tomorrow and then keep going then I'm good with that as well since I am holding overnight. 

I am currently more worried about TVIX doubling without me in the next 30 days than I am about it going lower than $2.50 again.  I'm pretty sure the bottom is in but TVIX could pull back pretty hard before whipsawing back upward.  The big move in TVIX today relative to the tiny sell off in the broader markets smells like fear.  Fear is good for TVIX longs.  Long live the healthy dose of fear!