Don't mistake recent wild volatility swings for panic. The panic is coming still.

I am on record many times in these pages predicting that a 500+ point down day will be the first sign of real panic in the markets.  Well, today the DJIA bottomed at a low which was about 450 points lower than yesterday's close.  But pushing down and then back up in the same trading day shows that the buy the dip crowd continues to try to time an entry point.  They buy it, wait for signs of strength that they can build on, it weakens and then they sell to a lower low.

So let me be clear on what I said: the DJIA must close down by 500 or more points before any of this is even more than an annoying fly to the market players.  They keep thinking to themselves, "this is oversold, we will buy here and then the herd will come and back us up and then we are off to the races after this annoying little dip.   Besides, these dips are healthy for the markets in the long run...".

Unfortunately for them, the wave count has mos def spoken on the matter.  This bull is confirmed dead but the crowd hasn't actually figured it out yet.  Yesterday it gapped down strongly below that long term support line that I have been talking about for a long time now; the throwover of the expanding wedge has broken down.  Now the shares will probably try to fill that gap while back testing from below.  Once that test fails, I plan to be in TVIX with everything I have, Gatling gun a-blazing at the bewilderedbeests.  By the way, it looks like today's late breaking rally might be 5 waves up, in that case, it is probably the A wave of an a-b-c retracement that will kiss the new resistance line from below before collapsing into real free fall. 




The panic is coming folks, have no doubt.  Volatility will continue to shake out the weak hands and bad traders.   I still believe that for now most people should just buy and hold TVIX until we see some kind of short term, panic ridden capitulation bottom.  I suspect that TVIX will be $8-$10 by then; could be higher.