[DJIA] update including current threat model

The volatility is incredible these days with 200+ DJIA days becoming common.  The market is in a state of turmoil.  It still has low interest rates which enables it to keep up high levels of margin debt but big names like MSFT are rolling over and that is never a good thing.  Thus the herd is nervous, like a bunch of stallions running around in the corral in an agitated and confused state.  We have no panic yet folks, just agitation and confusion.  The panic will arrive and when it does it will hit with shock and awe but we have not seen any of it yet.

The model from the backlink is still fully intact despite all of the whipsaw moves we have been getting.  Here is the current model:

I might turn out to be sorry for this but I sold out near the end of the day to lock in the nice profit based on my suspicion that Monday AM will start off green and then have an intraday reversal.  The buy the dippers need to get beaten up like this a few times before they will give up.  You can't blame them, buy the dip has been working since early 2009 and here it is early 2015.  But all good things must end and I model this bull market as being there already.  What we need is that big 500 point DOWn day to confirm the new trend.

The wave count supporting this Monday AM reversal theory is shown below. In short, I model that it will be W3 which means a small AM bounce which could have an outsized effect on UVXY before DJIA reverses back down again to a lower low as shown.

Now, below is the current threat model.  Notice how I moved the labels around so that the low of the 29th is now counted as e of [4].  Yes this count is still in play.  Yes I have seen this movie before many times.  Fortunately you will know quickly if this threat is real and that will be the crossing of the chart back up into the interior of the HT again.  To back test it with a little kiss and then move quickly down would be one thing, very bearish.  But to move back up above the lower rail, well, all I can tell you is that I will be selling UVXY first and asking questions later.  I can always buy back in if it subsequently breaks down below again.

Again, this is not what I think is going to happen but the herd can do it and in no way violate the EW rules.  In fact, it would give a chance for a higher high 5th wave which is more in line with the guidelines than what we have right now in terms of that 5th that barely broke above the top rail.  The purpose of these threat models is so that you are not blind sided and have to think in real time - which of course is where the market uses your greed and fear against you very effectively.  But the market loses its ability to do so if you can see it coming in advance and set triggers and create strategies designed to capitalize on it IF it occurs.

Anyone who tells you they know for sure what will happen tomorrow is a liar.  There are only odds and not certainties.  Other scenarios can play out, an infinite number of them in fact.  But EW allows us to treat all of them as noise except for two or maybe 3 models which are by far the most likely to occur.  Of course with a model to go by you know exactly when the current model has gone bust and you then look around for another model.