I'm very skeptical that this selling in the miners is just "A" wave action.

Thursday I bought JNUG just around noon.  The shares had finished a motive wave count down and then put in a double bottom.  I paid $5.51, stops at $5.49.  With that kind of tight stop, why not give it a try, huh?  After all, $5.50 seemed like psych support as well.  Well, for the next 30 minutes the shares caught a bid, eventually trading as high as 5.67.  It was clear that I had caught "a" bottom but I wondered if if I might have nailed "the" bottom.  So I just closed the chart window and went on about my day. 

I checked back after work and all I could think was "woah".  The bottom had fallen out of JNUG yet again.  Did I mention that I love the stop market order?  It executed flawlessly and automatically limiting my loss to a negligible 2 cents + commissions on the round trip.  I would have gotten completely screwed by the end of day finish had I not used stops.  Properly used stops are your friend, especially on these hyper leveraged take-no-prisoners ETFs. The last trade was $4.91, down a mind boggling 25% on the day.  Note that despite this massive 1 day drop, JNUG volume was 5.4 mn shares whereas the 3rd wave bottom in early October was nearly 8 mn.  I think we are very close to a bottom in the Juniors and the bounce should be mighty-mighty indeed.  If this is 1 of 5 then expect 2 of 5 to be a vee style recovery as shown.  However, because of the capitulation type volume there is a nonzero chance that when the smoke clear this bottom is not only just the bottom of this 5 wave sequence but also the bottom of the whole metals bear market. 

Taking these ideas separately, we now have a clear 5 wave down wherein wave 5 threw under the lower rail.  Those who are afraid to trade will simply wait for this to break back up into the channel again but when it does you best believe that the momo crowd is going to pile into this fast and furious.  

If we bottom soon and then get a bounce to kiss the lower rail from below but cannot break out of it, then this is likely not 5 of 5 but rather only 3 of 5.  The further this dips below the lower rail before catching a large retracement bid, the more likely this is to be a major, major bottom and perhaps "the" bottom (as in this is the 5th of C and not the 5th of A as every seems to believe).  Again, already being down 80% from the top and now with rising exponential volume, it's starting to make less and less sense that this is only A.  And if it is only A then I think we should expect a massive B, perhaps even a 61.8 fib retracement type of B and if that happens then it will last a whole year or more and it will feel like a new metals bull.

According to conventional wisdom, gold is a commodity that should trade (for now) in opposition to the dollar.  I have been a dollar bull for some time now but given the capitulation action in the juniors, perhaps it's time to look at the dollar chart with more scrutiny.  The conventional wisdom is that the dollar is tracing out wave 5 of a new bull market.  This has been a weak wave to be sure but it makes sense given that wave 3 was such  a strong, extended wave. 

The vertical pink bars show that wave 5 is about the length of wave 1 which is a common stopping point for a motive wave when the 3rd wave was the extended wave.  Of course, the current pause could simply be A of 5 of 5.  That is why the red oblong model price target is allowed to go above black 3 a bit.  But if she kisses the top rail or slightly throws over before reversing back down into the channel then there is a good chance that the dollar is reversing and if so M+M will skyrocket.  So be patient, be standing there with your Gatling gun, and open up on the herd with the 50 cal if you see this happen.  Whatever you do, use intelligently selected entry points with predetermined, leave-no-room-for-emotion stops.  If this peaks out tomorrow then I might even hold JNUG over the weekend.  Not because it certainly will win but simply because I will like the odds.  Intelligent people are too smart to expect anything more from a trading system than better than average odds when gambling.



The exponential rise in selling volume for the juniors should not be ignored.  We are mos def seeing some kind of BIG capitulation going on there and folks, that is where you are going to find your best values.

I continue to believe that, while wave counts a always subject to interpretation or morphing by the herd, my trading strategy for using them is strong.  Never enter a stock without some wave count to back you up.  Thus, the sell trigger is set right after the trade because you know the stop loss point going into the trade.  I cannot tell you how many times this has saved my ass.  You still assume risk for holding overnight of course but nothing in a gambling situation should be considered to be risk free.