Metals and miners update

In the previous post on this topic, I expected to get some clarity on the coming movement in M+M.  While nothing is confirmed yet, I think I might see the play.

First off, if this is a near term bottom with significant upside then the market has to be tricky.  It has to make things painful for the nervous (read "leveraged to the hilt") gamblers.  Only true believers get to ride the full ride.  Everyone else is beaten up and scared off until late in the rally at which time they provide the incoming cash for the early birds to bail out on.

Occasionally I see a first wave off of a bottom like this form an expanding triangle.  It is a bullish formation when seen as the first wave.  The volatility of the interior waves is just what is needed to shake most people out.  With this in mind, check out the GLD chart as of Friday which is provided below.  Today's volatile action formed the bottom of the triangle (4th wave) and then popped back up to form a sideways triangle.  Well, those are supposed to be penultimate.  That suggests that wave 5 up will be a 3 wave affair made up of 5-3-5.  It doesn't have to throwover as shown below and it can even fall short.  But It would be a great harbinger of the coming rally to see a throwover.  It would also provide more shake out volatility for the following a-b-c back down to the prior 4th as shown by the red or the blue lines.

I would not be surprised to see a gap up at some point in time on Monday as part of that C of 5 to form 1 up.  If you see it, don't get greedy, know that it represents the 3rd of C and thus be looking for the 4th and 5th.  I would mos def bail at that point (assuming you are not playing the sleepy GLD chart but rather some fast mover like GDXJ or JNUG).  Then I would be patient for an a-b-c down to the prior 4th.  I would not flip short using JDST on this move; it's just too risky because the sentiment on GLD right now is so bearish (90+% advisers are bearish on metals right now according to EWI) that the specs could step in on a moment's notice.  After 1 peaks and 2 plays out, you know a new uptrend is firmly established if the chart then creates a higher high than 1. If this model is right then we should expect to see this peak somewhere in the $30-$32 range fairly conservatively by mid July.   After I see a-b-c that results in a throwover of the GLD chart, I will be looking at JDST again.