Back into JNUG today after having dodged a $2 bullet.

In this post I revealed that I thought the pattern was peaking and so it was time to go to the sidelines on JNUG.  I never did flip back into JDST.  I decided to get a better handle on the model which I initially discussed in this post.  To summarize, after 5 waves down I expect an a-b-c retracement back to around the level of the prior 4th wave at the bare minimum.  There are only 2 JNUG models that I am looking at right now.  I won't confuse matters with the 2ndry model unless needed.  Suffice to say that if the 1st model becomes invalidated then I expect much lower prices until we have a real chance at a sustainable bounce in metals and miners.

The first model is that the recent sideways action since April 24th has been a B wave formation.  Given that it is likely a B wave, I would expect a 5 wave triangle to play out.  That does in fact look like what is happening right now and thus I bought back into JNUG today.  The chart below is the high level picture.

Below is the zoom-in to just the 5th wave down and then what I am modeling to be a B wave triangle.  As shown before, the 5th wave down was a perfect 5 wave sequence with alternation, a gap on the 3rd wave and excellent proportions all around.

Since then we saw 5 nice waves up into a followed by a horizontal triangle with rail bumps 1-2-3-4 and then a throw under on the 5th rail bump.  This is a very likely setup for a C wave breakout as shown.  Again, not a given but the odds are with this mode.  The odds go up dramatically if this can reverse itself tomorrow and break back up into the channel.  That break should happen on the 3rd wave.  So would really like to see that 3rd wave take out both the bottom and top rails of the triangle.  The would be a very nice gap indeed should we get it.

If this breaks out as modeled. the C wave should not be any shorter than the A wave.  If this alleged B wave does not fall any further tomorrow AM, a C wave that is exactly the same size as A would peter out around $23.50.  At 1.618 times A (a very common C wave characteristic), the C wave would be$24.11 which is pretty close to the level of the prior 4th wave.  $24.11 is thus my price target.

As for downside triggers, Below is just the 5th of 5th of b.  Even 1 penny below today's low means the model is bust and must be reconsidered.  This is best done by selling immediately upon model invalidation (using stop loss @ market) and then letting the chart play out.  It is always a huge challenge to sell at even a small loss but if the model is bust, it's bust.  PERIOD.  Sell first and ask questions later.  Sometimes it screws you to do this but the majority of time it saves your bacon and so it just has to be a rule.  You can always buy back in again later once the breakout is confirmed.  This is the risk you take by trying to buy exact bottoms using EW.  As the saying goes, if it was easy anyone could do it.