TVIX update

Nobody knows for sure when the Ponzi will roll over even if the signs are piling sky high that the debt Ponzi is on its last legs.  That's why models are so important.   My current TVIX model says that the pullback from the $6.15 high was not the start of a new motive wave down but rather an a-b-c deep vee second wave retracement.

That model is still intact despite higher highs of the DJIA other major indices and until it breaks down it will continue to be a warning that the Ponzi is just about ready to collapse.  There are two elements which must be satisfied in order for the current TVIX move to be a retracement rather than a motive wave.  The first is that it should have an a-b-c wave structure as opposed to 1-2-3-4-5.  The second is that it must not go even 1 penny below the old low.  If either of these are violated, the retracement model is bust.

The three usual guidelines in play here are:

• a trip to center channel in wave 5.  If it occurs tomorrow or possibly Friday then this is possible but if it waits until Monday I think it would be too late for this option because it would end up below the $2.50 level.
• a trip to the bottom of the channel.  Depending on how that channel is defined, it might already be too late for that option.
• vertical size of wave 5~=that of wave 1.  This is measured by the green verticals in the model.  It is still possible for this to play out without violating that all-important prior low.
• blue 5 has the same vertical height as blue 1.  A move down to $2.70 tomorrow would achieve that.

All we can do is wait it out.  If you are holding TVIX, set stops below $2.50.  Below $2.50 is a sell, above $2.50 is a buy.  Make no mistake on what the goal is here: it is not to try to nip pennies out of the price a this point.  The goal is to be in the ETF when it takes off again because if my model is correct, the next move will be a good deal higher that $6.20 and it will contain big gaps given that it will be a 3rd wave.

IF TVIX begins to take off again from here, know that it is likely a 3rd wave.  Thus, hold it overnight instead of selling because the upward gaps could be significant.  To say that metals and miners are oversold and the DJIA and $COMPX are overbought is an understatement of historical magnitude.  Those who grind through this bottoming process and retain their short side buying power will be sitting pretty during the big collapse.

Until, that is, the trade settlement system collapses too.  Don't think that is an impossible outcome folks.  I think it will likely happen.  But not during wave 1 down and that hasn't even begun yet for the broader markets.  So it is still safe to short stuff for now.  The danger will come during 3 of 3 down and 3 of 5 down.  The entire global economic system should be defaulting left and right during that time.