TVIX update

My recent TVIX bet turned out to be a couple percent too early into the 4th wave instead of the bounce up from the 5th.  Today it sold off another very manageable 2.5% into the 5th wave and then it bounced right at the level of the 5th but could not go lower.  So I think the afternoon moves counter as 1 and 2 of the reversal.  I just held through the day in the expectation of a good move up tomorrow.  If it falls even 1 penny below today's close then I'll dump it and take the loss.

If this model is correct, expect a nice gap up on TVIX (weak broader markets) because it will be a 3rd wave.  It will have to make up for all the time it was stuck in wave 2.

What I am actually hoping for is a pop on TVIX at the open and some continued selling on JNUG so that I can sell the TVIX for a small profit and then switch to JNUG for a much bigger one as JNUG does an a-b-c.

Keep in mind that JNUG could pop up huge time pretty much any day now should there be a rapid escalation of the conflict in Ukraine.  War has a way of doing that. That Ukrainian situation is not going to end well. Putin is saying that any "run off" elections, etc. done right now by the Ukrainian government there are basically a sham.  Of course, Kerry (that blithering liberal moron) is running around doing a victory lap for having brokered a peace deal which disarms the populace.  Oh sure, that's going to work.  Those people will all trot right down to Russian Confiscation Central and turn in all their guns.  HA HA HA HA HA!!!  Do you think that if Kerry made some kind of deal with Texas governor Perry for me to turn in my guns that I would do it?   NO DAMNED WAY.  In fact, and listen well NSA, police and other "authorities", I would take it as a de facto declatation of war.  I have an inalienable right to keep and bear arms and I will defend myself from anyone who tries to use force to take them. 

If I feel this strongly about it, what about Ukrainians who will actually be needing the guns real soon now?  My situation is totally hypothetical.  There is only a very small chance that things will get so bad in the US that I will actually have to shoot anyone (small but certainly not zero).  But Ukraine???? Civil war is almost a given.  Any Ukrainian giving up their gun is a raving moron.  And so they won't.  "Leaders" can make up all the little rules and deals that they want to but when the herd wakes up as it is doing right now, those rules don't mean anything.  Ask the BLM, a federal agency which brought 200 agents, many vehicles and even helicopters to bear on Cliven Bundy.  Those federal a$$holes got run off of the Bundy ranch at gunpoint.  The government is just a bunch of bullies and blowhards compared to the awesome and unstoppable might of an awakened, organized, ARMED and angry populace.  This is true for Ukraine and it is true for the USA.  So don't believe for a second that anything is solved over there.  Kerry should just resign so that people can stop mocking the fool.

JDST and JNUG

As expected by my model, a 5th wave up did indeed play out on JDST.  It didn't count exactly like I stated but the net effect is the same.  In fact, I think there might be a bit more upside in JDST before it peaks but I would not mess with it now.  The easy money has been made and we should be looking for an entry into JNUG right now.  At the very least it has a nice sized wave back up, probably a 5-3-5 affair back to the prior 4th.  Well, that was 8 or 9% ago so this is a very trade-able move.

Now, I will be the first to say that wave counts at the 5th of 5 level can be very tricky.  I get them wrong quite a bit.  So I have learned to buy the bottom of the 3rd wave and then sell the top of the C of 4th and then just wait until I can get some verification.

Also keep in mind that per EW rules these past 5 waves down can be either the full 5th wave down after exiting that nasty horizontal triangle OR they can be just 1 of 5.  If only 1 of 5 you certainly do not want to be around for 3 of 5!!  JNUG has lost about 30% of its value in the past 6 trading days!!  That is some screaming leverage there folks!

In any case, we are no more than 1 trading day from a nice JNUG rally (minimum 10%, likely more).  What goes down quickly can rebound just as fast and percentages work in the favor of the long trader.  By that I mean, lets say an asset trades @ $30 and it loses 33% of its value (about the same % that JNUG lost).  Now it would be $20.  Now if the asset climbs back up to $30, the gain is not 33% but rather 50%.

 If it sells off on Friday as I have modeled below, just wait for the 5 waves to complete and then buy with confidence or just  wait for the end of the trading day and buy in just 30 seconds before the close (they can move these things several percent in the final 2 minutes I have seen - traders don't like holding over the weekend).   But that is an emotional response on their part (fear) whereas I would definitely buy into strong selling into the close as long as it looked like the waves were complete.  Why?  Because it will likely gap up on Monday so that the least number of people possible can get in.

Keep in mind that I modeled this move up in JDST on Tuesday - 2 full trading days ago (which is a lifetime for a stock that moves so quickly as JDST and JNUG do).  In that model, today's 5th wave is only 5 of 1.  So be on the lookout for an a-b-c back up for JNUG move as opposed to a 1-2-3-4-5 move.  If you get 5 waves up, it is likely that the full move down stated in Tues post is done.  It should only be a 3 wave movement in order to match the model. 

If it is a 3 wave move then mos def buy JDST when it is done because the next thing should be a 3rd wave down, a real doozy in terms of percentage.  Keep in mind that if we get that big 3rd wave down then we should also expect a 4th and then a 5th.  But those opportunities, as potentially profitable as they might be, are nothing compared to what will be made if the bottom of JNUG is bought on the ending diagonal throw under of the miners because my others models suggest that that would mark then end of the entire bear market in metals and miners.  Catching that wave could be a very exciting prospect even with relatively small amounts of cash on the gambling table.  Think 10x gains easy to the next major peak.

JDST model: initial crap and then big rebound to a higher high?

Few words necessary if markets open a little red and then do intraday rebound as my models indicate they will.

$COMPX model - watch out for head fake down at the open and then reversal.

I'm long TVIX for tomorrow's open but this new view of the $COMPX has reinforced my view that the weak opening could be a head fake down that will have an intraday reversal which would be a short term (1-3 weeks) overall bullish indicator.  So I'll ditch TVIX for several hundred bux gain and then flip to TNA or some other leveraged ETF that seems to be trading in sympathy with the broader indices (JDST might have just done that according to the past few days of trading)

That "Fish Tail" formation is a clear a-b-c.  In fact, its more likely a W-X-Y but I rarely bother with that level of EW perfect correctness.  I think people get caught up in those details.  I also think that it detracts from paying attention to multiple scenarios from both sides of the trade which, IMO, is where the real insight comes from.  Getting multiple verification on a model theme is one of the most time consuming but powerful ways to trade with confidence.  I see few if any other EW centric sites doing this.  They simply provide their bullish or bearish count on whatever they are tracking.

I bought into TVIX just after the close of normal trading today.

As soon as the markets closed I entered my limit order for $6.71 in the after hours trading and got filled.  I haven't been saying much about TVIX lately because of the opportunities I had in JNUG but now I see a potentially very powerful short term trade.  As always, I could be completely wet about this but it would be a mistake to consider it a random move on my part.  Quite the contrary, I saw the setup coming and waited for it like a sniper.  Again, I could lose here but not very much since I will use today's close as my stop point.  If it gaps down tomorrow I could lose up to a few percent.  I'm willing to take that bet based on the following chart analysis.

First, I've flipped over into "end game" mode.  By that, I mean that I expect every tricky triangly whiplashly thing possible.  The bull is wounded but not dead.  It has resulted in confused markets as the bull wobbles around.  But the EW rules still apply.  It just takes a different slant on what to choose as the top model.  TVIX also has a few very interesting aspect which played a big part in the decisions so check out the high level chart below.

All of the history of a chart has to be considered.   This chart has been doing 3 wave moves for some time now which is indicative of internal triangle moves.  But back at the start of April there was a major break down and then a back test from below (left most blue circle) that failed at the confluence of two major resistance lines.  It got smacked down to a higher low (inclining double bottom) and then on the way back up it again paused at that resistance (blue circle second from left).  The it peaked at what I have labeled as wave 3 below.  Importantly IMO, those peaks point higher and higher and higher.  While not part of EW rules and not part of any other TA I ever studied, I have observed that these peaks are often an arrow pointing to an eventual higher high.  Even if they peak and then crash like TVIX did into what I labeled wave 4, that pointer is still valid and it increases the confidence that wave will eventually go higher. 

Another point is that from the recent bottom @$6.30 I see 3 waves up into 1.  Then 3 waves down into 2.  Then 3 waves into 3 where that long, nearly horizontal support/resistance pivot line that began back in January seems to have been the divider between the A and the C wave.  Then the same thing back down into today's close, also looking much more like a 3 wave move than a 5 wave move.  The reason I waited until the close today is so that 5 of C could play out and it certainly did there at the end.

Zooming in to just show the month of April, here is more detail on how I think it could play out.  In order of likelihood that I think they will occur:

1. Blue
2. Red
3. Green

First I will discuss the worst case for me since it should dominate my attention at tomorrow's open.  Since I bought at the close today, I will be watching this carefully at the open tomorrow and if it cannot quickly break back up into the little ending diagonal's channel then I will probably get stopped out for a 1-2 penny loss.  I do not really expect a gap down at the open given the strongly down close we had but this about odds and not certainties.   If I get stopped out, I will be looking for a possible re-entry at the lower orange line.  Why?  Because it would form a wave that is about the same length or a bit longer than the wave that hit the middle resistance line.  Also, the double bottom that the lower orange line originates from points to this location.  If  I don't see the right wave count terminate there then I will begin to suspect that the down sloping orange line will be the support.  This would not surprise me at all.  Bottom line, I will be perfectly happy to get stopped out quickly because buying back at a lower price that also matches a valid model is never a bad thing.  What IS a bad thing is to pick entry points by gut feel and then when they go bad you just hang on hoping it will come back.  Hope is mos def not a good gambling strategy.

If instead it takes the blue path then I will probably sell speculatively and take the profits at the center line.  If it subsequently breaks out past the centerline I can always buy back in.

The green strategy is least likely but I will know that it has been chosen if the center line is broken out by a 3rd wave.  In this case, I will be looking for significant resistance at $7.70 - $7.80.   That would form a declining double top that would predict lower prices.  However, if it breaks to a new high ($7.87 or more), expect it to go all the way to the top of the up-sloping orange line and then throw over before coming back down. 

Miners model from the short side.

In this post from earlier today I showed how miners ETFs had broken down and now I model a decline that likely finishes off their ending diagonal.  Once that ending diagonal is complete, I think the entire metals bear since 2009 could likely be complete as well.  In any case, I plan to continue playing metals long and short based on waves.  This is part of the reason I don't care about the day to day moves of the price of metals relative to my physical holdings.  I have a long time before I retire and no matter what the prices do today, it will have a much higher dollar value in the future.  I hope physical gold goes back to $250 per Ozt.  It would be nice to add to my stack at much lower prices.  I'm not predicting that it will go that low but I'm not saying it won't either.  I am saying I don't care.  If gold is at $250 in a massive deflationary depression then gasoline will be $1/gallon again.  It's all relative.

In any case it should be easy to figure out the short side of the miners chart but here it is anyhow.  Go in with a plan based on wave count.  Pick entry points that will allow you to determine whether or not your model is correct without losing much money (tight triggers).  Set the stops accordingly.  I am going to try to catch a piece of JDST tomorrow (5 waves up)and then flip to JNUG for that 2nd wave down (a-b-c/5-3-5).  That 3rd wave up in JDST should be very financially entertaining.  Look how 3 of 1 of C had a gap.  I can only imagine what the gap in 3 of 3 of C will look like but typically if the 1st wave has a 3rd wave gap then the gap in the 3rd wave will be larger.  3rd waves generally don't like to be outdone...

M+M took a hit today and got rid of the confusion people are talking about with their charts.

I took the day off from trading today in order to sleep in given the level of uncertainty I was having over the very short term and when I got up I saw the technical damage that had been done to metals and miners.  It was pretty big blow.  Despite my earlier post that suspected the triangle would be a head fake, it is now increasingly looking like an a-b has formed.  That is not going to be bullish in any way for metals and miners.  As usual there are a couple of ways it can play out but my primary count says we take 5 more heavy waves down on GDX, GDXJ, and JNUG as well as SLV and GLD too before any kind of a bottom is in place.  No worries, trading the decline is just fine with me.

If this model holds, the safe way to play is to wait to see if the 5th small wave down occurs on GDX.  If so then what should follow is an a-b-c, probably back up to kiss the orange horizontal line from below.  Then a massive wave 3 of C of 5 should just beat the living snot out of any gold lovers and then a 4th and finally a 5th (after which the entire sector becomes a screaming, flaming, don't over think it buy).

The best case scenario for new money coming into this game would be to finish the 5 wave ending diagonal that I first warned about back in this post.  While I know that metals and miners are going to be a big winner in the long run, I don't fight the waves.   This move down was anything but a surprise; I always knew about the potential for it.  Now the waves have spoken loudly.

Upon seeing this I wondered what the dollar was doing.  You know, that worthless piece of green paper that everyone would kill their mother for.  It always amazes me how people haven't figured out the scam of fiat currency yet but the will become quite aware of it in the next five years, if that long.  In any case, the dollar chart is seen below and it looks to be very near the completion of a significant ending diagonal.  The fundamentals behind a dollar rise here are simple: credit deflation. Most global debts are dollar denominated and as they default (or are repaid), it effectively deflates the money supply no matter what Yellen does.  Unless she can pass a law against defaulting, the deflation will come.  Credit is 10-15x the size of the monetary base.  Of course, if Congress keeps giving out free Obama Bucks to everyone that doesn't really want to work then sooner or later deflation will be overcome and then we will switch over to hyperinflation in which the dollar finally dies.  But first we will see a good deal more deflation before the great inflation comes.