JNUG trading update

In this post from Tuesday I correctly modeled a short term bottom on JNUG.  The share price was $7.72 back then, only about 15 cents off the all time low.  Here is the public time stamp from that post.  Note that I am in central time which is 1 hr behind east coast time that is used in my TDAmeritrade charts (and pretty much all other stock charts for that matter).

 The shares then bounced to close at $8.22.  After seeing the bounce, I later suggested that traders use caution because the bounce could not get past the gap fill.  I was working my real job at the time so I could only spend a few short minutes on that "trading flash" type post.  Now that I have more time (At 3:43 am ;  ), below is the full story.  What I see there is a very clean wave count of 5 waves up.  I did not label the interior count of wave 3 since it is so obviously also a 5 wave motive move.  Then there is the vee type 2nd wave and triangle type 4th.  Yeah, that whole thing counts as motive to me.

If my model is correct in this matter, we should see a strong move down at the open to perhaps $8.  This is a very volatile ETF and so we have to expect a pullback that is bigger than just the 38.2 fib.  A pullback as shown by the red model would be the 50 fib.

Now listen up folks.  I know JNUG has been plummeting for a long time now.  But that is when you buy!  You do not buy the exponential curve of GILD because all the momo money is already in it.  Buying that curve is just letting the market bait you into a big mistake.  Now everyone should know that JNUG is not a long term hold just like TVIX isn't.  There will be times that you can buy and hold for a long time.  Despite the deep vee pullback of TVIX, I doubt that it will go lower than $2.50 because I think the major indices have peaked.  But given that the conventional wisdom EW count on gold is only in 2 of 5 right now, JNUG is still probably not a good long term hold.  But that doesn't mean that there is not huge money to be made there over a short period of time.  Countertrend corrections can be the most rapid types of moves.

Any time you enter a trade you should do so with a plan and every trading plan must begin with a model so that you can define trigger levels, target levels, entry and exit points, etc.  If you are not doing these things then you are essentially a sucker because Wall St. is doing all of the above.  They have models.  When I was at AMD, Wall St. was the major buyer of Opteron servers.  Why do you think that is?  Because they have modeled Mark and Patsy and they use big data, including all of our individual trades (which they have full knowledge of!) to do it.  It is essentially insider information and it is very powerful.  They know what the market is going to do before the market knows.   Your only hope as an individual gambler against that system is to have some kind of system of your own.

So you should be drawing charts like the one below and not counting on something you read from some person who you don't know and who you are not paying for their services.  The primary intent of this free blog is to prove the power of EW modeling so that everyone will do it on their own.  So below is my current model for JNUG. 

The first thing is first: we should get a small pullback to test $8 support and then come gapping up hard to take out that down sloping resistance line.  Once that happens it will be a clear buy signal and you would set your stops below the line.

The first bounce target would be the level of the prior 4th. If you see a-b-c that looks like it is terminating there, run away because that will suggest significant weakness in the shares.  But if it powers through that area then look for a much stronger resistance at the 38.2 which just happens to coincide with a line to blue 2 and, if extended, roughly up to black 2 as well. 
 

While there is big game to take down with this model, keep your eyes on the real prize.  This bounce, should it play out per my model is LIKELY only black 4.  The real prize is to be set up in full battle armor at black 5 when gold and silver have bottomed into the conventional EW count of A.  In other words, 5 waves down from the very peak should have transpired at that time and the bounce into B should be, to put it mildly, dramatic for the jr miners.  It would take them from a money losing situation where their operations are bleeding cash and thus have negative net value to being wildly profitable again (even if only for a few quarters).  Expect JNUG to win huge during that time.

But again, let's not look too far ahead.  A possible prize awaits us with JNUG starting tomorrow if the shares pullback and find support at $8 per the model.