[UVXY] update

Here's the backlink.  The model from that post is below.



So in words, the model expected an AM sell off down to either the 38.2, 50 or 61.8 fibs where it would find support and then take off like a raped ape into what should be the most powerful upward UVXY move to occur since I have been following it.  The reason should be obvious to long time readers: this will be a 3rd of 3rd of 3rd.

So, how'd the model fare?  In short, not bad but not perfect.  UVXY out of the gate, something I was fully prepared for (and was not holding over night because of it).  When it happened I initially I wondered if this was the full wave 2/3 pullback.  The main problem with this theory was that it was one big motive gap down and not an a-b-c.   In addition, I really would have thought a full retracement to at least the 38.2 if not 50 fib was in order for something so volatile.  Still, I caught the turn nice and early and rode it up.  

But then when it recovered to a higher high I thought that wave red 3 might be upon us.  When it hit a higher high I thought that I was home free and so I rode it back down to where I got stopped out near the 23.6 fib.  That made a lower low but I decided to watch it to see if I could figure out what it was doing.  When it made the declining double top I stopped trying to trade it because I thought it might be trying to form a HT and I just didn't see what was going on.  Then it tanked into the close and I was glad I was on the sidelines trying to figure it out.

As all this was happening very quickly while I had work related tasks to perform so I did not see until just recently (when I had a chance to review the day's action carefully) that the AM action was actually just the finishing of wave blue 5.  So, yesterday's peak was only red 3 and then the AM drop and rebound was red 4 and red 5.  At the end of the day, however, the pattern began to look very much like my model. 

We got a strong sell off in UVXY into a C wave of 2 of 3 collapse that broke down the 38.2 fib and then back tested it from below without breaking out so I am pretty sure we'll have to test the 50 fib if not the 61.8 (or the gap fill just above the 61.8) tomorrow AM.  But the model says that bottom will be very short lived.  If this model is correct, the chart should not dally.  UVXY should grow dragon wings, set fire to the longs and then take flight.  I would expect a 25% gain or more for something this volatile during 3rd of 3rd of 3rd. 

I did not buy back in at the close because I expect one more small wave down as shown but after I see 5 full waves down into C of 2 of 3 I plan to load up on as much margin as my broker will permit.  Be careful not to jump too early as this could go all the way down to blue 4 which is the level of the prior 4th.  At the same time, the wave count, not fib levels, is the primary market timing tool.

If you buy the deep dip, the absolutely lowest value you should use for stops is $26.  This is obtained by zooming way in. 

• Note: the TD Ameritrade charts are crappy like that (you should get the same bars zoomed in or out but you don't).  Amertrade also appears to be cheating.  I sometimes get stopped out at a price that would create a lower low on the chart but the print does not occur even when zoomed into the max and even when in "Tick" time mode.  Also, Ameritrade appears to be throttling the data sent to its StrategyDesk charts.  The charts on its Android app are always alive so I use them in real time as a sanity check and I have noted that sometimes I have to wait 15 seconds or more to see the strategydesk chart update on my brand new, no crapware installed PC (as well as my laptop).  So their charts just suck for cutting it real closely.  Oftentimes I will set a stop, get stopped out, the android app provided an audible indication that the trade triggered and then I see the strategydesk chart finally play catch up.  Other times, the Strategydesk chart is working in real time and keeping up with the Android app.