Trading thoughts for Monday

Bottom line, if the peak is really in (and I think it is), market surprises should be to the downside.  Even if the real peak is not in, the current retracement is not enough!  We just barely broke down the lower rail so far but look how the $COMPX did it: with a strong stroke, some kind of 3rd wave most likely, even more likely a nested one.  Maybe just maybe we get a small rally to kiss the lower rail good bye from below.  This is not required but if you see this happening, don't freak out.  However, if it breaks back into the channel I would go to the sidelines right away just for safety and then only re-enter TVIX if we got some upward count that looked corrective OR it breaks back below the rail.

And if it did go above and then back below, have conviction that it will go much lower, at least do the green arrow around $COMPX 4k.  That is where the next real support is.  I say again, there is nothing but freefall likely between the underside of that orange line and the green arrow. 



I went to the sidelines on TVIX Friday at the close.  I mentioned I might get back in if it dipped aftermarket.  But I went and did other things instead of monitoring it and so it did dip and then recover without me.   The futures are down 55 right now so if nothing changes then there will be a small , buy-able gap down at the open.

Depending on the premarket, I will likely jump back into TVIX in either premarket or at the open.  My first stops on TVIX will be $3.92 tomorrow, just below that lower orange upsloping line near the red circle.   If I get stopped out then I'll wait to see how the count plays out but again, I think there is not much resistance on TVIX (after clearing the $4.20 barrier) up to about $7.50.

I'll also be watching Intel and GE to see if their charts move back up into their triangle channels which would imply that a small 5th and final wave is to transpire.  I believe that has to happen tomorrow, Tuesday latest or be dismissed as a possibility.

The absolute ideal situation would be if metals and the DJIA remain trading in synch for now.  Conventional wisdom is that metals are at or near 1 of 5.  I'd love to see the markets gap down and then get some kind of bad news in the AM and then just keep accelerating to the downside.  If this happens, in the AM just let your profits ride into the afternoon.  In the current market I don't know what it would take for an intraday reversal from down to up but it would have to be some pretty strong indicator and I don't think many of those are in our future.   I see "weak", "weaker" and "oh $hit" as the likely news.  I mean, so many things are unraveling that they should be amazing me at the speed which they are happening. Of course, I'm not amazed because I understand the time component of exponential math.  That's a nice post from 2010, well worth your read if you haven't seen it yet and likely good timing for review if you have.

In any case, if a DJIA decline was then accompanied by a metals and JNUG decline to a lower low that the recent $8.45 low then just about the time that the DJIA bottoms into wave 1 down, metals will be ready for 2 of 5.  Oh, to buy JNUG in the $6 range!  Oh, the guaranteed rapid profits that would bring.  Please, market, give us a big DJIA acceleration downward into wave 1 and a final capitulation sell of of JNUG into the sixes and let me swing on over there for an easy double or more!

We should only be so lucky! 

I think we will have our answer on that soon.  Either SLV will break down the lower orange rail and bring JNUG collapsing into our waiting arms or it will break out the top rail and prove to me that the recent formation was not a 4th wave rising wedge.