Metals and miners update as seen through the eyes of JNUG and GDXJ

First, please review the most recent previous model for JNUG which had to be modified from the original model.  As you can see from the updated snapshot below, things seem to be playing out fairly closely to the new model (and not too far off from the red version of the original model...).  Once a [4]th wave triangle was detected, the overarching EW model clearly expects 5 more waves down worth of selling.  The trick is to determine what the market is treating as 5 waves.  Since wave [1] will be equal in size to [5] if JNUG hits the low $6 price point as shown below, this is my primary expectation for its near term bottom.

Zooming in, we can see that yesterday's massive "unexpected" sell off of ~16% in JNUG looks like it completed a 3rd wave falling wedge.  These indications (the big drop accompanied by my proprietary "wedges = 3rds or Cs" observation) suggest that there will be some amount of rebound into green 4 followed by more selling into green 5/red 3.  At that point, a very trade-able bounce could occur which is actually worth being in.  Not so much for the fact that it could be a good day trade but more for the possibility (even if considered remote right now) that I could be off by 1 in my count.  In other words, the big near term blow out sell off of the juniors down to the lower trend line (JNUG=~$6) could occur OR we could short stroke the 5th and begin a significant (in percentage terms) trading rally from the $8 level.

In my view, the best trades are the ones you see coming a long way off.  Like a big game hunter sitting high up on the hill with binoculars, you patiently watch the herd leave the watering hole.  You know it is likely headed down to pasture because the herd has to eat and this is the time they like to do it.  There are a few favorite pastures they will likely use.  So you pick one of them that is likely and run down ahead of the herd so you can be standing there with your mini gun when the herd enters the appointed killing field.  Instead of chasing them, you let them come to you knowing that if you chose the wrong pasture to wait for them in that there is always another trade on another day.




If JNUG hits the low 6s I will be buying with both hands looking for a quick and easy double.  That would be a very reliable setup.

After that, I fear, there will be more pain for the gold and also for the juniors unless some kind of decoupling occurs (which it could easily do near the bottom).  But assuming no decoupling, JNUG could eventually find itself in the mid to low $2 range.  JNUG has not been around long enough to provide much chart data but GDXJ shows the general model, even if there is no time decay component to this ETF like there is in the highly (ridiculously highly) leveraged JNUG ETF.  The coming bottom for JNUG will only be 1 of 5 as shown below.  Then it will likely collapse into the end of the year or into early next year along with the major market indices.  At some point, a big bounce will occur - a big 2nd wave sucker's bounce.  That is likely when GDXJ puts in the B wave back up to ~55-60 range and JNUG does a 10x or better run from whatever gutter it has crawled into ($2 I bet...) by then.

The bottom line is that the miners have gotten beaten to Hell and since 2011 but that nothing goes down forever.  The miners will bottom into 5 of A and then they will catch a massive bid, perhaps based on the bat faced disposable fed woman Yellen playing her next card not of re-enabling the stimulus but rather unleashing capital controls.