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.