Trend Average Challenge
The market came really close to invalidating the 1-2 count I speculated on yesterday by putting a high of 1698.38 but by early morning the market started to sell off confirming some sort of top yesterday by coming down to test the Trend Average as I had been expecting. The main question now is the degree of the top as we could label the move today to 1682 as an ABC or an 1-2-3 with more downside to come tomorrow. For that I am looking at the Trend Average which rose today to 1686 and the market closed just below the TA. The first close below the TA in almost a month so we'll have to see if the market can recapture the TA tomorrow, if it doesn't then it means the correction will continue. Last but not least, keep an eye on the rounded top trendline as any bounce should be held below it for a continued correction.
I am holding VXX which is underwater despite being "right" in buying it at 1690. But I will position trade if the market starts trading above the TA again. This ETN is a tricky trade as sometimes it doesn't correlate well to the market or the VIX for the matter but at the same time it can be very rewarding if one is patient.
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