The additional data from today is increasing the clarity of the model. Today's snapshot is below. I will be buying UVXY into the close (when the wave count is done) in anticipation of a bottom within the red zone. This model is bust if it falls all the way down into the region of red 1, an outcome which I currently do not see as high odds.
I hope that the UVXY experience thus far has shown the value of model based trading. When this is up 35% in one day and then down 17% the next it is very beneficial to have at least some idea of where you expect it to head. Buy and holders would end up doing OK as long as this turns into a Prechter-esque bear (well, more than just OK in the case) but at what risk? Risk management is everything but how do you know your risk without some model to go by?
By the way, what this model show is rising fear. Each little shock to the fear center of the herd produces a rapid response and then lack of "news" for a short while allows that to wear off. Usually, fear wears off quickly for herding species. When the antelope are attacked by the lions and one of them is taken down, the herd is back to grazing 15 minutes later. Instead of letting that experience weigh on it for a long time, the herd realizes that the lions now have to eat and are no longer in hunting mode. So while individuals may sting from the loss of family members, the herd at large is actually safer just after a kill. This is why the VIX tends to never hold its gains. Thus, when we see it holding its gains, we know that the fear is not wearing off more quickly than the little perceived shocks are arriving.
Once we get 5 full waves up and then 3 back, expect a massive, massive DJIA sell off as wave 3 DOWn plays out. It could be 2000 points lost in a single day, perhaps even more. It will certainly set all kinds of records.
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