Sold into closing TVIX strength for a tidy gain.

Today's move was profitable but not awe inspiring even though I was in it from the open as mentioned in yesterday's recap.  Again, I am not complaining about making a nice 50 cents today but that is already ancient history and I am looking into tomorrow.  Today's trade just had the look and feel of a retracement by the broader markets instead of the start of some new panic. 

It just doesn't feel like a 3rd wave yet and it should.   When a 3rd wave is in progress you can almost feel the electricity in the air.  I didn't feel it today.  Perhaps the chart will gap up at the open and leave me in the dust but if it does then I will buy the gap. But if it moves down from the open then be very careful because I am still open to the possibility of a move all the way back down to $2.70 which I mentioned in this post as being the approximate target for a reverse H+S breakdown.  If you see the red model below play out tomorrow, buy the close because I think the odds will be very high at that point that there will be support from both a wave count and a legacy TA perspective.  Then get ready for a very possible Freaky Frightful Friday as wave 3 begins to play out downward for the broader markets.

To recap, tomorrow's move could very well be the end of the wave 2 pull back, a deep-vee, massive, a-b-c correction of a short killer for any short who, unlike Economati readers, were surprised by the rapid move up in TVIX to over $6. 

A lot of those momo guys cannot read a chart.  They see it going up and everyone else getting rich and, like dragging (hmmm, perhaps we should call it dragoning...) a lure in front of a bass, they cannot help but strike.  And then the market stops in its tracks, backs up over the top of them so that they sell.  In truth, they are extremely weak hands who really didn't understand the fundamental wave count which made the herd take the move up in the first place.  And so they sell out at a big loss.  Lather, rinse repeat. 
 
Perhaps the single biggest warning to me was that the action peaked at a gap fill on TVIX (see blue rectangle).  Also, it moved back up to find resistance at a line running parallel to 1-3.  Coincidence?  Perhaps.  Nobody and I mean nobody can predict the exact future.  There are only models and odds and triggers.  So I'm modeling this as 4 of C.