Current snapshot below shows that although the blue path tried to make a run at it, sellers stepped in and the red path is likely being taken. This is not a sure thing but it is my highest odds play. This could also be an expanded flat upwards. I give it 65:35 against that outcome. In other words, I am betting short. If the green path is correct, expect a big move down at the open on Tuesday. If we don't get that, I'll quickly sell the UVXY that I am holding over the long weekend and then step back to reassess.
My primary model of the big picture is per below. Wave 3 of 1 got us down to test the lower parallel rail and I expect 5 of 1 to puncture it but not be able to hold those gains. 1sts waves generally do not have the power to break long standing trend lines. Generally they will test them on 1, fall back for a running start on 2 and then bust through on 3.
Of course I could be off by 1 wave here. Wave 1 could have been what I am labeling 3. I don't see that as the case but if this thing gaps down on Tuesday and then just keeps going then we will know that wave 3 is upon us. Importantly, I think the mood has switched from buy the dip to sell the rip. Thus, any surprises that the herd has in store for us are likely to be to the downside. This is why I am holding UVXY over the holiday weekend even though I know there is a chance it could go against me on Tuesday.
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