Wait until it breaks out of the old high of ~$4.20, likely on Monday before noon. I expect it to take off very strongly once a new high is put in.
To be honest, I am now more afraid of it gapping up big time at the open on Monday but I count 5 waves up from noon into the close and so I have to let the wave count be more important to me than some gut feeling. But the wind is now filling our sails from behind instead of us having to tack into the wind. Can you feel the mood change? If so then check yourself! It's great to observe the moodiness of others but successful traders will ignore the emotions; they are your enemy. The so called reactive mind (yes, I'm quoting L. Ron Hubbard even though I'm not a fan of Dianetics or any of his other "work") is real IMO. I have to fight it all the time myself. It's the ID not wanting to lose that makes most traders make the biggest mistakes (and don't I know it from years past....).
Hey cap'n,
ReplyDeleteWhat are your thoughts on holding stocks like tvix overnight when markets get extremely volatile( like in oct 2011)? Do you think its possible for the average trader to ride the wave to the top without being screwed by manipulation?
Great question. First off, I do believe in manipulation, fraud, you name it. However, I think the wave principle accounts for it.
ReplyDeleteAs for holding overnight, I think it depends on how much you have in play. I am swinging a monster bat on my TVIX trades and so a 10 cent move is real money to me. If I think the count will be down at the open then I see no reason to hold. Why would someone hold if they believe the odds favor losing money? But I will not sell just because I want to close the position at the end of the day. Doing this will lose you big money over time because some of the biggest moves are opening gaps.
This is a game of odds. You are never going to win every hand. Still, you don't hold and continue to bet if you know your cards suck. Likewise, you don't fold if your cards look good. The wave count is what I use to determine my odds and this in turn is is how I determine whether to hold overnight or not.
Right now, if you don't have a clear count, I would hold. The wind is now at our backs and surprises will not always but certainly increasingly be to the downside. In other words, the odds are turning in our favor.
But manipulation? It happens all the time. It is normal, not the exception. The con men will use whatever they can to steal an advantage. TVIX will not be twice the VIX, they steal some of it every day. I don't care because it will still be a 20 bagger when the accounting is done and all of their moves show up in the wave count which I read and interpret.