Final thoughts for pre-trading Monday.

DJIA futures are up almost 50 points as of this writing.  The next logical stopping points are the gap fill shown by the red model and the 61.8% fib shown by the blue model.  I suspect it will be the blue because that would also cause a throw over of the 5th rail bump of a rising wedge.  If that happens and then the DJIA breaks down it would indicate that this was C of 2 having played out.  Much higher than 17100 and something else is likely playing out - perhaps a trip back to the top of the channel.  One very safe way to play would be to simply sell TVIX at the open and only buy back on a break down below the lower blue rail.  In other words, let this last gasp of air by the bull bypass you.  When the selling does begin, it should come pretty hard, likely tied to some kind of news that the herd can interpret in a bad way so that it has something to blame on the sell off. 

As you can see from the chart below, the DJIA is at a critical decision point.  It either has to commit to going higher to form C of 5 or it has to break down into wave 3.  Let me say again for the record that nobody knows for sure how it will turn out.  There are just models and triggers.  Anyone hoping for a know-all oracle that is always right is a fool.

In favor of the red model is that I would expect a throwover from such a large rising wedge.  Also in favor of it is that the "a" of 5 wave often comes close to the top rail before running out of gas before taking a breather and then breaking out with the C wave before suddenly losing all strength and crashing.

In favor of the blue model is that the b wave retracement normally does not fall this far.  So right now, we have an inclining double bottom which is actually bullish.  It only turns bearish if that lower rail gets taken out.  A smart guy once told me that if you have no firm conviction as to what the market will do, the sidelines is always an option.  I might just take his advice at the open tomorrow in both TVIX and JNUG.  Then, wait to see if a rising wedge forms that signifies wave 2's C wave is over before testing the waters again.  A subsequent higher high than the top of the wedge is a TVIX sell as that would mean 5 waves up have transpired and thus it must be 1 of C of 5.  We should know the answer tomorrow before noon.