Metals update: fear and discipline pays off

Even before posts like this one and posts like this one I began to wonder if metals and miners were going to form some kind of ending diagonal/triangle based on the a-b-c shape of the internal waves.  In this more recent post I correctly called a strong resistance line for metals and miners and advised caution until the chart worked out one way or the other. 

In this post I noted that the inclining double bottom on ZSL opened the possibility for another significant down wave of metals and miners.  The important thing about that ZSL post was the actionable intel it provided.  It basically said if you buy ZSL immediately and then set sell triggers just below the support line then you could, in a low risk way, stay in the poker hand and receive the next card to see if the hand was going to go your way.  That is the problem with most people's trading: they have no defined, hard and fast trigger points that define action (including the act of sitting tight).

Below is the current chart of ZSL.  I am posting right now because I think the A wave is likely complete and now I expect a rally in metals for some days until the B wave completes.  Then the C wave likely takes metals down again, probably to the bottom of the ending diagonal with a throw under.  At that point it will be another high odds poker hand to go long metals and miners while we see what cards follow.

Note: that B wave is drawn in there just to show basic direction of the next expected move.  The retracement shown is normal if the A wave were not part of some kind of triangle.  But the A wave IS part of a triangle.  That means that the B wave can go all the way back down to the green support line again before forming the big C wave back up.  It often takes the form of a boomerang but I like to call it a fish tail since I am an avid deep sea fisherman.

The play is simple here: WATCH FOR THE TURN (it could have a bit more to go yet, this post is intended to be advance warning as opposed to a look in the rear view) and then sell ZSL and go long USLV unless the top green line fails to hold over the next day or two.  Once we see 3 waves back down in to B, dump USLV and go long ZSL for the throwover C wave.

If this model plays out as expected, that C wave ZSL throwover should bring USLV down to $30 to $35 which could very possibly be THE end of the entire silver bear market.  Again, this is looking a long way forward with tons of speculation but by creating these hypothesis and then allowing the data to either confirm them or destroy them we create actionable trigger points based on historical market behavior combined with real time data.  The combination is very powerful IMO.