[$COMPX] and [$NYA.X] updates

In the backlink for $COMPX I modeled a near term peak using the concept that the recent 4th wave HT low must be followed by 5 waves up in order to complete the motive wave.  Today I want to present a an alternate, higher level model which could also be in play.

Before discussing $COMPX I'll show the chart of $NYA.X (NYSE composite) because it contains a very interesting feature in the form of a tall spike way back in Jan 2014.  That spike is just a single point which some declare to be a misprint.  I do not believe in misprints.  If it's on the chart, it's on the chart.  Chart data cannot be ignored, ever.

Since that spike, which created a 5 move up into a peak, there were 5 clear waves down.  5 waves down following 5 waves up is the EW reversal signal.  Since then we have been forming a rising wedge.  Friday looks to have kissed the upper rail into green 3.  If this model is right, it should begin down very early next week into green 4.

IFF that downward move begins per this model then it would go lower than most EWer think.  They think that what just finished is 3 of 5 and thus we have a small pullback and then the final wave up.  I am not saying that can't happen but I am saying that if the model below did happen then most people would be fooled into believing that the big bear had begun.

Now if we just get a small pullback over the next 2 days and then a higher high to break out the top rail, just wait for that 5th wave to play out  and then move it.

It could also happen that the lower rail is something like the green line.  This would make the pink boxes the same size and center the sideways move within the wedge.  So a move below the lower upsloping orange rail is not automatically the breakdown signal, especially if you only see it happen in 3 waves down.

Again, since nobody can predict the future since the herd is figuring out next steps in real time, the best we can do is try to narrow it down from a virtually infinite number of possibilities to some small, manageable set of most likely possibilities each of which have triggers built in.  While I have discussed the $COMPX model with the red top rail below already in earlier posts I will also mention that there is another model that is possible as well which uses the green line as the top rail.  For that model, the top rail has already been broken out of and apparently in a 3 wave move as one would expect from the 5th wave of a rising wedge.  So perhaps a very nice short term trigger level would be to avoid shorts above the green line and to initiate them below the green line.

I also want to note that a very powerful psych overhead is just a stone's throw away: $COMPX 5k.  While the herd could possibly eventually break through it, we must expect serious overhead resistance in that area at the very least.