TVIX update

In this post I listed three possible models for TVIX, one of which is was that we needed a sizeable pullback into wave 2.  Here is the chart associated with that model.

Below is the actual chart action which played out close to the model prediction.  So very early Monday we will see if this model is correct or if a complete rethink is needed.  If this model is right, the waves are doing a bit of a stutter step (1-2, 1-2-3-4-5, 3-4-5).  In this case, wave blue 1 and 2 are now complete and so Monday should bring us blue 3 of black 3.  3rd of a 3rd should have a gap and it should take out that top line.   In order to do this, the DJIA will have to lose some big percentage points.  Monday could be that "500 point down day" that I have written about several times in these pages as signaling that the worm has turned and the bull is dead.  If you see this, have conviction that TVIX is going much, much higher.

If we see something else (see today's $COMPX update for an idea of what that could be) then I will go back to the sidelines and wait for a lower entry point.  The no-emotion way to do this is to put in a stop just below today's low.  So for example $2.84 would be a good stop.  Note how the 3 wave move back down stopped at the 50% fib and then the first wave up off the bottom touched the 38.2 fib.  Monday should take that 38.2 out like it was nothing and if it does not then begin to worry that something else might be playing out.

Again, a big gap up on Monday, especially one where the gap clears the top rail in one fell swoop is a clear buy signal as it will mean that TVIX has entered a new bull market in fear.