GLD at interesting technical crossroads.

GLD has rallied from extreme oversold condition since early October.  The conventional wisdom model says that this was wave 2 of 5.  There are 3 likely possibilities:

1. 2 of 5 is over.  In this conventional wisdom model, the 23.6 % fib will break down soon and take the blue path.  If this is the case, JNUG will likely head lower and become ridiculously oversold.  If JNUG continues to sell off hard then I will begin to build a position in it because when it takes off again, and it will at some point, the gains will be counted in hundreds of percent.
2. 2 of 5 is still in progress with A of 2 and B of 2 of 5 now complete.  In this case, the 38.2 was initial resistance but got punched through to create weakness there.  Then the chart pulled back to the 23.6 in order to consolidate and give buyers a chance to get in before busting up through the 38.2.
3. The entire 5th wave of the gold bear is now complete.  The next move up will be a powerful A-B-C to around GLD 138 and the junior miners will skyrocket.

 Because # 1 might be true, I am still on the sidelines for now.

Because #2 or #3 might be true, I suggest to buy JNUG on the breakout of GLD above the recent high of $120.50 should that occur.


Interestingly, while GLD has bounced since the beginning of October, JNUG sold off.  So they are clearly out of phase with each other right now.  JNUG formed a very clear 4th wave triangle and then collapsed to a lower low so we can be sure it is in some kind of 5th wave OR is now ready to break out.  My primary count says that the intraday reversal yesterday was the start of a countertrend rally which should take JNUG back up to at least $12 in short order.  Higher potential exists if the conventional wisdom model turns out to be wrong on GLD.  The $12 price point reflects a move to the level of the prior 4th which would be a wimpy recovery indeed given the drubbing JNUG has taken of late.

Thus other targets need to be considered as well.  For example, the 38.2 fib would be $18.39 and the 50 fib would be 21.76.

A really nice bullish setup would be another pullback to about $7.80 - a higher low than the recent thrust to $7.60.  This would form a failed 5th and also print an inclining double bottom.