Monday, April 6, 2015

[UVXY] update

In the backlink I presented the model below.  That blue line was the stop.

Since then we got a crazy and momentary double spike up into the $19 range and then a crash back down.  I would write it off as a data glitch but it appears on Yahoo charts and I think TDAmeritrade and Yahoo must use different data feed services because Yahoo did the JNUG reverse split backward looking data correction properly whereas TDAmeritrade, which is nearly useless in terms of customer support, still has it wrong (despite support telling me that they would fix it with their vendor).

Well, that double spike change the chart pattern.  In any case, based on the recent action, that stop mentioned above triggered and now we are left with the semi confusing mess below.  So, the blue vertical simply measures the length of what could be counted as the 1st wave down of this sequence.  that is why I have placed it at the top of that double spike which could count as a 4th wave.  Note the clean 5 waves down that would form purple 3 in this model (which could have been labeled w3 as well).  So if 5 is the length of 1 then the bottom will be in the $8 range. 

The recent volatility was so strange that it's really difficult to have much confidence in anything until we get more data her but this could possibly:
  • Short stroke the lower rail of the large blue falling wedge (that would be the green path)
  • Kiss the lower rail and then take off (red path)
  • Throw under the lower rail maybe to $10 and maybe all the way down so that length of purple 5 = length of purple 1.
We will know a good deal more tomorrow because the DJIA is either going to form 5 waves up or it will begin selling off hard.  We appear to be at a significant cross roads there.  A DJIA move above 17945 suggests more pain for UVXY.  However, a rapid move below 17580 would suggest that a significant sell off has begun and in that case you will see people run not walk for their crash insurance policies IMO. Complacency continues to be way too high relative to circumstances.  The fed is not going to bail the markets out again like most people think.  More likely is that the fed will try to do some controlled bubble deflation.

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