Metals and miners update

The bottom left scenario of my previous post on the miners might have played out today.  While I don't like to try to look too far ahead, this is what I'm currently modeling for the miners.  Right now, there has been no decoupling of mining stocks from the broader markets.  When the Dow is up, so are miners.  While each group will ultimately move on its own (miners and metals have been plummeting over the past couple years), their waves, just like ocean waves, sometimes get in synch to create monster market waves where everything is going in the same direction for a while.  So if this leveraged junior miner ETF (JNUG) follows this model then it seems the Dow will rally into the end of April and perhaps the 1st week of May as well.

This model should be easy to play.  Buy into GDXJ or JNUG (serious leverage!!) Monday at the open.  I actually bought JNUG near the close today.  Set your stops just below the prior low as shown by the blue line.  If this model is correct, then we are in a 2nd wave right now and it cannot go below the start of wave blue 1 on the chart.  So this is a really easy way to get serious short term gains while probably risking about 5 percent worst case (about $1 from Friday's close).

I say "probably risking" and not "absolutely" limiting risk because I bought in today.  So if it gaps down hugely on me I could lose 10%.  I do not expect this to happen because this is not a 3rd wave location and it generally takes the power of a 3rd wave or a 3rd of a 3rd to do this.  But I accept the risk because if my model is correct there is likely 100% gain in it.  That's at least 10: 1 odds in my favor; a good statistical bet even if it doesn't pan out.  Remember, none of this is really investing.  All of it is gambling.  Never delude yourself otherwise.