PAAS update: the model is looking good so far

Follow this link and then scroll all the way down to check out my high level model of PAAS.  In short, the model expected a pull back to the $12.50-$12.90 range which is about the level of the prior 4th.  In fact, it recently hit the 50% fib and found support there at $12.65 and has now bounced to $13.06.  While my recent model rough price target has been hit, it was just a coarse estimation.  I never go just by price alone.  I always value the wave count as the highest order technical indicator while also keeping in mind that there can be more than one interpretation of the wave count.

Still, the count looks pretty clean here and so I have to begin with the assumption that the current bounce will peter out after 5-3-5 waves have played out into wave 4 of C.  I give it a day or two to do that.  Once I see a-b-c I will sell my USLV.

After that I would normally swing short on ZSL for one final wave down as shown in red above but only IFF the chart fell back below the b wave of 4.  Waiting for this trigger would ensure that I was not really in the middle of a 5 wave move up.  Why?  Because if it was going to be a 5 wave motive move then a-b-c would really be 1-2-3.  In that case, the next wave should be 4 and 4 can never go into the region of 1.  If it does you are either inside a triangle or it was a corrective wave, not a motive one.  I do not think it is going to be very difficult to tell the difference because of how clean these waves have been.

At the same time, if I ever see the chart put in more than a 5-3-5 (a-b-c) move up then I will have to assume that the USLV trip to the 50% fib was the end of the C wave.  In that case I would quickly switch back to being as long metals and miners as my leverage will allow.

Below is GDX.  As you can see, it just kissed the 61.8 fib while also being at significant support.  Note that the wave count on GDX leaves room for interpretation.  

• The move to the 23.6 fib could have been a small 5 wave movement down.  It is possible that this was the A wave.  Then a tiny B wave up and then 5 red waves down to finish off the C wave.  So it would be very foolish to assume that "for sure" we need 1 more wave down to finish this C wave.  The markets are always tricky at these transition points with the goal of screwing as many people a possible out of catching the exact bottom.
• On the other hand, wave 1 could have been the move off the bottom from $20->21 and change.  Then a small pull back followed by a gap up into wave 3 at only $22!!  That means the prior 4th wave is only 21.30ish in this case!!  This is a compelling prospect because it would really screw the non EW technicians would think fib levels are the end all be all.  If the 61.8% fib fails to hold they will not only sell any shares they might have bought but they will also go short, probably on high leverage thinking a lower low is coming.  But then all of a sudden they would be hit with a MASSIVE gap up as the 3rd wave takes off.  It will pay to keep all of these possibilities in mind as they represent 90% of the likely things to happen over the next 2 weeks.

Note: the only thing that could really pop metals right now would be some significant new fear about war.  I have written many times that stocks and metals will at some point diverge and that war is often the cause of this.