With the benefit of more data to go by, my primary count has been adjusted per below. Yes folks, right now it appears to be our old friend the Horizontal Triangle (HT). Why such a friend? Simply because IFF that E wave plays out as shown and then breaks down as show n then we know where we are in the wave count. This is because one of the few hard and fast EW rules is that triangles are always penultimate. As in B or 4 and this ain't no B.
If this plays out then after you see 5 of C of E of 4 (the E wave, like all other HT internal waves, should be 3 waves labeled a-b-c), buy UVXY with tight stops. The gain percentage potential for this will be huge because crash insurance, after being very out of favor for a long time, is suddenly deemed to be prudent again. Gee, who'd a thunk it? Additionally, the downside risk should be very small if you just wait for the 3 waves of E of 4 to play out and then set stops just above the peak of 4. If you counted wrong or if the model is wrong then you will lose very little. But if correct, look for 30%-50% or more in a day.
Note: if this goes lower than 4496 before hitting the upper rail then the HT model is bust.
And now a small anecdote that captures what I think the mind of the hive is thinking. I know a woman who works at a large Austin Jewish organization. The good people who work there are financially conservative because it is a religious charity. The charity invests its excess cash, which is diligently collected from members and accounted for to the penney, in the markets.
I was told that the recent market action had the heads of this organization meeting furiously even during the strong green bounces. Folks, I myself am half Jewish by blood. In my experience, a large percentage of people of Jewish ancestry are in fact good with logic, money, numbers and math. You might think it is a stereotype but stereotypes are often stereotypes for good reason. It is no secret that market volume collapses during the Jewish high holy days...
In any case, those hard DOWn days have literally changed the brain chemistry of those in charge. They are now frightened. They know deep down that the markets are fluffy and they don't want to be holding an empty bag in 6 months. When I stated long ago (several times) that a 500 point DOWn day would indicate that the herd had finally caught the scent of panic, I meant it. If red 5 goes to a lower low then I think it is really going to spook the herd. Once we have 5 down, people will be selling the next rally instead of buying that dip IMO.
No comments:
Post a Comment