Conventional wisdom model broken in S+P and $COMP but not DJIA

Well, my paranoia was well founded it seems as both the $COMPX and the S+P500 moved back up into the region of what the conventional wisdom believed was wave 1.  So those two models are busted. 

As a result of the gap down this AM, TVIX stopped me out (again) at the open but I re-bought the same number of shares again [edit: to be clear, this purchase occurred after the trading day ended in the early AH trading, price $3.24] that I had at the recent peak but still with a good deal of cash left over.  

So even though the shares have fallen and even though my account value fell with it, I'm still ahead of the game because the share price fell even more than the relative cash position of my account.  No way this would be the case without the diligent use of stops.  As mentioned before  the other day, I see it as a positive for me when I get stopped out as long as the shares then continue to fall lower.  It just means I get to buy more for the next run up.

The more I trade TVIX, the more I appreciate the way its volatility plays into my trading strategy of getting stopped out easily if technical support is broken, side stepping much of the carnage, and then getting back in only when I see some kind of valid wave count.

So what valid count do I now see that justifies another buy in at this point in time?   I did this because I think that another model still exists which says Sept 19th was indeed the peak.  You can see the associated count in the chart below.

Normally I would not hold out such hope but:

• We now know this is not either 4 of 3 of 1 or 4 of 1.  It has retraced too far.  However, check out the new blue count into black 1.  It is a valid count.  If this is the correct count (i.e. that the recent market low was actually wave 1 down) then we should expect wave 2 up of  a new bear market to be a deep vee retracement.  As many times as I have mentioned this in these pages, there should be no surprise here. 
• That doesn't mean it is certainly correct but it does explain the action we have seen. 
• It also does not mean that 61.8 is as far up as the market indices can go.  The DJIA, for example, can make it all the way up to the 70.7% fib but not as high as the 78.6% fib without breaking this new count. 
• The bottom line is, stop out easily (tight stops) if TVIX wants to fall tomorrow  In fact, if it moves up a bit at the open with the intent of then going lower again for another rake at the shorts, just set stops for 1 penny below today's low in TVIX.  Of course, if it gaps down at the open then you have to just stop out at the open and let it play out.
• Now, check out the wave shape.  It is a nice a-b-c which came right back up to the 61.8% fib.
• Notice on the C wave that blue 1 is the same size as blue 5 and that 3 of 3 was a big gap up that took out the whole range between the 38.2 and the 50 fib.
• Maybe this is not an a-b-c.  Maybe it's 1-2-3 of a new motive wave upward but I'm not buying it yet.  Besides, after 3 waves up we should get at least a pullback into wave 4 before a higher high arrives.  So I figured that it should be safe enough to buy back into TVIX again and then set tight stops. Sure, if the market gaps up again I will get stopped out again for a loss but the odds of that are low because we already had out 3rd of C gap.  On the other hand, the first confirmation that I am right about this will come if the chart falls back into that gaping 3rd of C gap.
• The DJIA did not break back up into the range of its conventional wisdom wave 1 count (wave 1 of the commonly accepted count bottomed at the pink line).  Nonetheless, the DJIA retraced 61.8% of what many are calling wave 3.  While it is possible for the DJIA to be on a different wave count than the other indices, I'm skeptical.  We won't know for sure until we get 1 big confirmed wave down which has still not happened yet.

IFF this new count is correct, the markets must begin selling off before 10am and likely right from the open.  IFF this is right, the selling should get really really crazy in the broader markets into the end of the week because if wave 2 is over, the next wave down will be a 3rd.  This will be the most likely chance for the DJIA to have its 500+ point panic collapse day.

Nobody should be getting comfortable on the long side yet but I'm already seeing the cocky articles pop up like this "you need to be a buyer" bullshit by Cramer.  Anyone who hasn't figured this puke out yet needs to wake up.  He doesn't do anything but predict more of whatever just happened recently.  He's not a visionary, he's just a commentator.  Wait until stocks really begin selling off and watch Cramer tell everyone how he told them to be careful, this was no time to be buying, etc.  The guy is a total flim flam artist.

Who out there can ignore that fact that IBM was down 7-8% yesterday and another 3.5% today.  It will sell off again tomorrow because I see a 4th wave triangle formed today.