[UVXY] update

At the backlink I worried that a 4th wave HT could be forming and if it completed and confirmed that the August low would be taken out.  I wrote, "This will resolve itself tomorrow.  If it gaps up at the open to break the top rail then the HT was fake and the reversal is upon us.  If this turns out to be a fake I would expect a bigger selloff because traders will have gotten sucked into the short side of VIX by this pattern."

Of course, by "selloff" above I meant the markets, not UVXY.



Below is actual.  Indeed, the stock gapped up at the open and it moved up very strongly today, more than 17% at the close.  But now we have to figure out what comes next.  The move below could easily count as 5 up off the recent bottom, then a zigzag correction and now at or near 5 up and pushing to the level of the prior 4th.  So it is possible that this is all we get: no motive wave has been confirmed at this point.  At the same time this could be a 1-2-1-2 stutter step leading to significantly higher highs.  Hint: if it gaps up again tomorrow then it probably is a stutter step and going much higher.

Here is my take: I'm not in this ticker for a few percent.  The risk is high and the maintenance is high and so it has to pay off big from time to time in order to keep me interested.  The main thing I don't want to do is lose money.  Because of today we have > 17% buffer which is our friend.  I'm willing to risk a large part of that buffer to avoid being whipsawed here at the start of a run that has the potential to go to a higher high than the last high.

Additionally, the DJIA has not retraced 38.2 of the current wave yet.  You would think that would be the minimum sell off before a move to higher highs.

Bottom line, I'm using a full 10% trailing stop on this trade in the hope that avoiding the use of tight stops will avoid my stop loss orders from become stop profit orders by mistake.  I would avoid bumping my stops up after each move.