Worst case scenario for shorts.

I always like to look at as many angles as possible so that I am not blinded by a tunnel vision point of view.  That is an easy mistake to make and I have made it more than once before.  So in this post I will look at what could go wrong for short sellers not because this is my primary model but rather because I want to have a plan in place in case it happens.  Nobody knows the future.  There is only the past, the present and the odds.  So, while I am looking for a sell off to accelerate this coming Monday below is what I will be thinking if we don't get some significant selling in all the markets real soon now. 

In this model, the chart is forming a rising wedge.  I can count 3 wave structures without using much imagination for each rail bump.  If this model is correct, the DJIA will turn up from its current B wave into C of 5 as shown below.  The peak of this, should it play out like this, is more than likely to be pretty sharp as shown in the model.  In this case, 18k could be the approximate ending point of the chart.  If this happens it will result in TVIX at $2-$2.20.  I repeat: don't just sit there and take it!  A break above the blue line must be allowed to stop you out of TVIX.  Then you look for 5 waves up which are about the same length as the B wave and that should mark the all time top of this 2009 rally.

Odds, folks, not certainties.  Be the smart king and rook against the market's king.  Follow the rules, keep to discipline.  Don't get tired, get lazy or give up.  Play to win and you will win.