Decision time for Metals and Miners.

In this prior post I suspected that the rally on JNUG was corrective but that it was possibly done.  Still, I was not sure so I did not bet against it using JDST.   Well, the rally was not done and JNUG powered up 9% today at the expense of JDST.   And so now we will soon find out whether or not the recent 5 waves down of JNUG was 1 of 5 or 5 of 5.  I really do not know but I bet against JNUG today near the close catching it a bit too early (again) @ $22.94.  Fortunately that required me to liquidate my TVIX for a small profit before it turned down hard in the afternoon. 

Below is the JNUG chart and it shows why I am betting against it and for JDST right now.  In short, after 5 waves down it rallied up to kiss the lower resistance line of the triangle from below while filling the gap.   This also happened right about at the 50% fib retracement.  If it was going to break out then I would have expected that to occur "with gusto" during the 3rd wave.  In truth, today's move did break back into the channel slightly so this is far from a slam dunk trade.  The chart is being purposefully vague here and leaving both bullish and bearish options open without violating any aspect of the EW principle. 

My only (but critically important) ace in the hole here is that I am guaranteed a very small loss if I bet the wrong way simply because my wave count enabled me to buy into JDST so near a significant turn ($22.94 buy point vs $22.20 bottom and then recovery into the close of 22.77).   If that sounds like a lot, keep in mind that the bid/ask spread on this is often 15 cents!  I don't waste time with limit buys.  I just buy at market because by the time you enter your order the action has moved.  So the ante into this poker game is almost 1% of your bet.  In any case, if this thing goes just one penny below 22.20 then my model is bust and my automatic stop loss kicks in for a manageable 3.3% loss (which is nothing relative to the possible upside here).


It is important to note that a higher high tomorrow very likely seals the deal on the JNUG reversal.
 

Here are the models from the JDST side.  The black numbering (with red subwave numbering) vs. the blue numbering.  The black path is bullish JDST/bearish metals and miners.  The blue implies that a bottom for M+M is in and that more pain is coming for JDST.

And now a peek at the GDXJ chart from which both JNUG and JDST are derived for a bigger picture look: