Wednesday, March 18, 2015

[DJIA] update: no fear yet but soon.


In the backlink I modeled a bit of a higher bounce before trending lower.  We did not get that but neither does this look like the start of the breakdown yet.  First off, these look like 3 wave moves between rails so I think a 2nd wave deep vee correction is most likely to form an expanding wedge for one more wipe out of the shorts before some news sends it all tumbling lower.  Note that the pointers circled at lower middle told us where this pullback might find support and that is where the DJIA is currently at in what appears likely to be WC that forms a D wave of the expanding wedge.

Importantly, this could also break down here and if it does it should be taken as a serious breach of important support.  It would then likely fall rapidly as 3 or C unfolds.  So at this point I would be out of UVXY waiting to see what happens next simply because I gauge the odds of the next move being strongly up as high, and also because it will be easy to jump back in if the support line created by the pointers is breached to the downside.

Again, nobody knows for sure what will happen in the future so the best strategy that I know of is to capture as much of the reward as possible while assuming as little of the risk as possible.  Those who manage risk the best will be the ultimate winners here.

No comments:

Twitter Delicious Facebook Digg Stumbleupon Favorites More