[DJIA] primary model is bust, alternatives shown.

In the backlink I pointed out a red line that could not be crossed while keeping the immediate hyper bearish model alive.  That line was crossed today so the 1-2, 1-2 model is dead.  It is still possible that today's rally is wave 2 of a large extended flat but I'm not so convinced about that possibility.  I think we have to keep an eye on the pattern below for more clues.

Pretty soon we should get a pullback and the type of pullback that occurs will be telling.  A pullback that kisses the upper rail from above and cannot break back down through should be a big warning for shorts.  However, a strong breakdown back into the channel will likely indicate that black 5 is printed and that bearish times lie ahead.

We really still are in a bit of no man's land.  The GE count is still near term bearish. It could not make the required new high today despite several days of back to back Dowphoria.  This is happening when investor sentiment and margin debt remain near extremes and so it should be of note to the bulls.

On the other hand, oil is up when the markets are up and down when the markets are down right now and I think the oil bounce is young.  So that suggests that we still have more upside in the DJIA since it does not seem like oil should suddenly decouple.

The safe play for shorts is clear: avoid being short unless and until the DJIA and S+P and $COMPX can break down that top rail.  You might miss the absolute bottom of UVXY but you won't be bled to death by the daily 7% loss either.  Having said that, I piled in at the close with a half position because I suspect that at the very least we should get a back test of the top rail.  I will be quick to sell if I see a-b-c down to blue 4 that cannot break back down into the channel.

If the bullish case plays out then miners and drillers should be the place to be.  Also, RUSL could become a good play after the chart gets done with the choppy sideways crap that is so tough to play with any conviction.

No matter what happens I will not be forgetting UVXY.  I will just wait until the odds are in my favor and then focus on it again (assuming the top rail holds).  Being able to let go of what is not winning until it is again winning is one of the most difficult trading skills IMO.