USLV update (M+M proxy) including possible scenario for flash crash metals wipe out.

Back in this post from Dec 2013 I speculated that Metals and Miners could be in for a nasty ending diagonal. In this follow on post I commented that the model had received a "shot in the arm" by recent trading activity.  While the current model for ending diagonal has morphed a bit, the ending price target is similar to before: $34-$36 for USLV.  The ending diagonal model seems alive and well in the current chart below.

Or is it?  This final wave down is not supposed to be 1-2-3-4-5 which is what it appears to be doing right now, it's supposed to be a-b-c formed of 5-3-5 and that's not what I am seeing.  Who knows, perhaps this is just A of 5 and there is going to be a bounce at bottom support that does not break out of top support but rather comes crashing back down for a serious M+M wipe out / capitulation bottom on massive volume.  In other words, something like the chart below.  It would have to swoop way down, blow everyone out of the water who had any stops at all and just convince people that silver was going to be worthless some day before putting in a serious vee bottom and then skyrocketing back up.  This kind of whiplash would have everyone panicking like there was no tomorrow about their metals.  Folks, if you see this it is not time to panic sell.  Its the time to dump all of your net worth into metals and miners when everyone else is running away.

Importantly, recognize in advance that if this kind of massive washout capitulation occurs there will have to be a cover story for the selling.  It will make sense in in some way to the herd but of course it will be bullshit.  Whatever fear they muster is only designed to scare the flock in the intended direction.  The metals world is not going to end tomorrow no matter what you might hear.  People will get shaken out at the bottom like they always do while the smart money just waits for them to panic and then goes in and scoops up the profits.

This is shaping up to be a very interesting summer.  If silver does this, what will broader markets be doing?  Perhaps it will be a replay of the flash crash but an order of magnitude bigger.  All we can do is ride the waves while it plays out.