UVXY update

Here is my prior model post on UVXY.  Taken in conjunction with multiple other posts such as this one I think most people will understand that I have a very strong short bias on the markets.  The reason that I bother to re-re-re post this sentiment is a recent comment from what appears to be a new reader who is not very experienced in wave trading.  You can read the exchange here in the comments section but I'll summarize that he/she thought that when I post a stop level it is something more than an instantaneous snapshot of what I am thinking and why.  I use stops at key levels defined by the wave count as it exists at a given point in time.  There are no certainties with waves, only odds.  And when something is moving 20% per day, no I an not going to buy and hold before I have even proven to myself that it is putting in motive waves!  When I see a potential wave setup that tells me to sell if a trigger is breached, I put in a stop.  If waves unfold later on that allow me to bump my stops, I do.  If I get stopped out and then see another wave-supported entry point, I'm back in.

I have made many posts on how to move stops up as the waves allow it but I should clarify, these are not intended to be some kind of "follow me in real time" service or something of that nature!  They are just examples and I don't post even 1/10 of the stop changes or even intraday buys and sells.  You are not paying for that kind of service and so I hope nobody is foolish enough to believe that I am trying to provide it!  The primary purpose of this blog is to teach, not to give away free real time trading advice.  I hope I have made that abundantly clear.  Create your own wave charts and employ the principles I am trying to convey but do not think for one moment that I am sharing everything I do in real time.

I guess I will have to re-post something along these lines about every 2-3 months if my readership continues to grow at current pace.  Sorry to everyone who had to slog though this even though they already understood all of it.

In any case, here are two possible models for UVXY.  I do not know which will be taken and neither does anyone else.  The waves are about possibilities and odds but never certainties.  Even paid pros like EWI, Avi Gilburt over at Elliotwavetrader.net, Sid over at Elliotwavepredictions.com, etc. don't always get it right.  In fact, 70% is about as good as I have seen them do.  This is the reason why I decided to do this stuff myself: they all give you pretty much a single view of what they think will happen with only a second thought to "what could go wrong" or "where will you know there is a problem with the count", etc.  This, I think, is something I do as well or even better than any of them.  And of course there is the small fact that I also work for free, not even any annoying ads on my blog.

Bottom line: we are very early in the breakdown of the broader markets.  So early in fact that the bear has not been confirmed.  We have a powerful bull in front of us but he is old.  And he is looking tired. But a bull this old is a dangerous one and so watch your key levels for stops.  On the left mode, I can count 5 waves up in an expanding wedge.  This is bullish coming off of a low but it also means that the gains can be taken away as fast as they were given.  I don't like to give them back!  So I would stop out at the top rail if the left model happens and then see how things play out from there.

But I would not just sell here just because it seems like 5 waves have transpired; cut your losses short but let your profits run.  We could easily get the right hand model where we are in a 3rd of 3rd right now.  I think that there is huge potential upside from here as long as technical levels are not broken.  But if I get stopped out because of the left model you have to know I will be looking for a re-entry point which is supported by an a-b-c pullback to either the level of the prior 4th, the 38.2 fib, the 50 fib or the 61.8 fib.  I hope the left model is in play but I suspect it will be the right hand one because of the fact that UVXY was bright green today while the DJIA was up more than 100 points.  That is bullish divergence in favor of shorts (bearish for the broader markets).