Metals and miners update: Extremely critical juncture.

I have not been posing as much about metals and miners of late because, per many predictions like this one on TRX, like this one on PAAS, I have been expecting a pull back.  We are now again at a point where it makes sense to take a stand on metals and while accepting the possibility of getting stopped out quickly if the model is proven wrong.  In this chart you can see that gold tried to break out of the downtrend but that a confluence of resistance stopped it.  Per the comments on the chart, it fell back into the channel and is now back testing the channel from below.  Many will immediately assume this is bearish and it might still be bearish but I see that the recent thrust leading to the $134 peak was 5 waves, not 3.  So my prior worries about this becoming an ending diagonal are now diminished.  While the only real confirmation is to break out to a higher high, I now see that a pullback has occurred and that it is made up of 3 waves.

 Here is a close up of just the wave up from GLD $114.  I count 5 waves up and so far only 3 waves back.  The best count right now is 1-2 upward.

Still not 100% conclusive but perhaps more compelling, here is my recent PASS model compared side by side with actual.  As you can see, not bad at all.

And so the play is simple here: treat that blue C as a hard bottom.  If the chart goes one penny below it, the model is bust and you should let yourself get stopped out and not one penny lower.  Don't wait around thinking it will bounce because when the model is broken you sell otherwise you are playing "gut feel" and the market is the master of emotions management.  It will play you like a fiddle unless you use an emotionless system like EW that has clear triggers and clear reasons for entry.   In fact, treat a fall below $13 on PAAS as very suspicious and probably worth the trading fees to get to the sidelines and watch for a day or two. 

We must also beware the ending diagonal finish for wave 2.  While I currently do not see this as the highest odds count, that mess in the middle could be a complex a-b-c and we could begin turning down tomorrow with the broader markets.  Again, a fall below $13 is probably enough to make me hit the sidelines on this trade.  We should know pretty quickly which is why I consider this an important time to pay extra close attention to metals and miners.