GDXJ update

Metals and miners have been taking a big hit for many quarters now and are terribly oversold.  The common wisdom count is shown in black.  It says that the miners are headed down in 5 waves, will then a-b-c their way back up in a retracement, and then will head back down 5 more waves to finish their bear.  But I observe that if GDXJ has a C that is equal to the A wave so far then it will be trading at nearly zero.  Perhaps it will happen but if it does, know that it will be the buying opportunity of your lifetime.

At this time I want to propose an alternate count which is that this is not a 1-2-3-4-5 count down but rather an a-b-c as shown in blue letters.  In this model, the C wave is shown in red numbers.  This says that the recent triangle was not just 4 of 1 like everyone is saying but perhaps 4 of C.  A hint that this is the right count should come very soon.

If the common wisdom count is right, this 5th wave down should be about as long as black 1.  That is shown in red.  BUT if my alternate count is right, red 5 should end up being about the same length as red 1.  That would be significantly shorter than the 5th wave ass beating implied by the length of black 1.

IF this is the end of a-b-c then the blue wave should result.  And so here is the part every smart gambler should understand: The only two valid models I see show the miners having a huge rally once this 5 wave is done regardless of whether it is 5 of A or 5 of C.  You will know that wave 5 is over in either case if the chart breaks back up above the top rail of the triangle.

 

So here is what I will be looking for.  If wave 5 is only going to be about the same length as wave 1, it should bottom per the blue model.  Otherwise it should go down a bit more, then back up (perhaps further than shown in red to test the lower rail from below before collapsing back down into 3 of 5 then 4 of 5 and finally 5 of 5.

 If TVIX has moved up significantly by the time I get a terminal count in metals and miners I will certainly move a chunk to JNUG.  Once JNUG bottoms it will begin a massive rally in percentage terms.  Think of it this way: the move from blue b to blue C was almost 400% move for JNUG.  If blue e above is e of 4 then after 5 waves more down the chart will put in a medium term bottom and then rally to at least the level of the prior 4th.  That will be a much larger distance than blue b to blue c and so the percentage gains in JNUG will likely be > 400% during that rally.