M+M took a hit today and got rid of the confusion people are talking about with their charts.

I took the day off from trading today in order to sleep in given the level of uncertainty I was having over the very short term and when I got up I saw the technical damage that had been done to metals and miners.  It was pretty big blow.  Despite my earlier post that suspected the triangle would be a head fake, it is now increasingly looking like an a-b has formed.  That is not going to be bullish in any way for metals and miners.  As usual there are a couple of ways it can play out but my primary count says we take 5 more heavy waves down on GDX, GDXJ, and JNUG as well as SLV and GLD too before any kind of a bottom is in place.  No worries, trading the decline is just fine with me.

If this model holds, the safe way to play is to wait to see if the 5th small wave down occurs on GDX.  If so then what should follow is an a-b-c, probably back up to kiss the orange horizontal line from below.  Then a massive wave 3 of C of 5 should just beat the living snot out of any gold lovers and then a 4th and finally a 5th (after which the entire sector becomes a screaming, flaming, don't over think it buy).

The best case scenario for new money coming into this game would be to finish the 5 wave ending diagonal that I first warned about back in this post.  While I know that metals and miners are going to be a big winner in the long run, I don't fight the waves.   This move down was anything but a surprise; I always knew about the potential for it.  Now the waves have spoken loudly.

Upon seeing this I wondered what the dollar was doing.  You know, that worthless piece of green paper that everyone would kill their mother for.  It always amazes me how people haven't figured out the scam of fiat currency yet but the will become quite aware of it in the next five years, if that long.  In any case, the dollar chart is seen below and it looks to be very near the completion of a significant ending diagonal.  The fundamentals behind a dollar rise here are simple: credit deflation. Most global debts are dollar denominated and as they default (or are repaid), it effectively deflates the money supply no matter what Yellen does.  Unless she can pass a law against defaulting, the deflation will come.  Credit is 10-15x the size of the monetary base.  Of course, if Congress keeps giving out free Obama Bucks to everyone that doesn't really want to work then sooner or later deflation will be overcome and then we will switch over to hyperinflation in which the dollar finally dies.  But first we will see a good deal more deflation before the great inflation comes.