5/4 Daily Commentary

A good day.  Came in 30% short SDS and 20% TLT.  Sold 5% SDS at 30.10 and another 5% at 30.55.

Instead of Shanghai and emerging markets opening up in concert with Monday's rally they opened sharply lower.  The Shangai is easier to count and what I thought yesterday was a completed 5-wave has an extended 5th, so the bottom is at lower prices.

The DJI chart posted at 1:15 counted wave (iii) of 3 complete (which was why the decline was so sharp).  Sure enough, the market marked time for the rest of the session.  Alternating with wave (ii) this wave (iv) should be a triangle or flat.  If so then the next move is down, into wave (v) of 3.
I reduced exposure to 20% at a good price.  While I should keep my exposure high if this is a flat I don't like carrying large positions overnight and 20% of double-short ETFs is the max that I comfortably bear. 
Bonds, on the other hand, were also star performers and I remain 20% long TLT.

The weekly composite stands at -7 which is a sell signal equal to the 2007 high.