Miners update

In this post from last Friday I admitted to holding JNUG long over the weekend.  Fortunately, the stock traded in my favor with a 3.5% pop at the open which zig zagged its way to a gain of about 9% before noon.  Then we got a 3 wave move down into noon which I held through hoping to catch the next wave up which I had hoped would be a 3rd.  But after 3 waves up to kiss the newly formed resistance, the chart formed an ending diagonal and when it broke the lower rail of the tiny diagonal, I bailed with a 7+% gain.  Why bail?  Because a 3rd wave would have smashed that resistance like it was nothing and no smashing was happening.  That was my trigger to take profits and I just sat out for the rest of the day.

So it's clear that miners (and metals) are still quite undecided with many other EWers out there saying the chart looks "confused", disorganized, etc.  Of course that is exactly what triangles are meant to do: wear you down, frustrate you, whiplash the crap out of you.  The minute you look away, they change direction.  The sure thing profits you had evaporate.  The choppy 3 wave nature of the internal structures was a warning to me and that my model was on shaky ground but intraday reversals are not very common for most stocks so if it opens green it will likely close green.  With a green opening, I had a tail wind to let it run and see where it would take me.

Since the direction of this is so uncertain in the short term, the smart trader doesn't try to look too far ahead.  Try to enter only after a clear a-b-c downward movement has finished.  At least then you can set stops just below your entry point and if you were wrong about that being a bottom (it turns out to be 5 waves instead of 3) you get stopped out very close to where you entered.  Easier said than done but if you are patient and if you can pass on some of the less certain entry points your odds of winning go way, way up dear gambler.

Below is my model for tomorrow.  That lower support line was drawn with only 1 data point so it is a total guess based on the length of A and the fact that the B wave is already formed. 

We are definitely in a C or 3 wave down. I expect it to be a pretty clear 5-3-5.  The bottom for this wave might already be in place but I was not sure enough about it to hold over night.  If I don't get the hand I want, I'm not going to even ante up by holding over night.

Once I buy in, I'll just set the stops and let it rip.  Breaking down my stops means I was completely wrong about the wave and the penalty for that is $10 paid to Ameritrade plus any stop buffer that I might put in there to avoid the pros painting the tape down (buying and selling back to themselves -which they can do for free given that they work at the market maker- in order to manipulate the price down) to take my stops out.  Stops are not nearly as easy as they should be to use because the broker knows what your stops are and likely sells it to those trading against you.  I've gotten screwed out of my stops enough times to know that if you are in range they will come and get them.  But if you are far enough down where they would have to create a 6th wave after 5 waves down in order to get your stops, they rarely if ever go after you.