Metals and miners update

In this post near the end of May this year I modeled that the metals and miners were due for a bounce.  While I indicated that a lower low was possible, JNUG began to rally almost from the day of that post.  Here is the GDXJ model in early June which expected a big M+M rally into D of 4.  In this subsequent post I modeled a small pullback and then higher highs with the target starting to smell like low 30s.  In this subsequent post, I used GDXJ to model the miner's rally as being almost over and that pain was about to come to the sector.  I modeled the blue path as a peak to $44 when in fact it peaked just $2 higher at $46.50.

Since then, GDXJ has plummeted, breaking down both the top rail and the bottom rail of the 4th wave triangle.  The EW model suggests that from the peak we should see 5 waves down and then a rally that should retrace the entire metals sell off that started in late 2010.  By retrace, I mean to the prior 4th, or the 38.2 or the 50 fib, etc.  I think it will be a bigger positive retracement than expected because if that monster collapse of silver was just wave A then without a big B wave rally, silver will be a negative number before the M+M bear market is over.

At this point the only requirement for this 5th wave down is that it be made up of 5 waves.  I think that it could now be at the end of (or very near the end of) 3 of 5,  a model best visualized on the 240 minute chart lower left.  The chart might have ended mid channel and we will know pretty quickly tomorrow whether this model is any good or not.  So I jumped back into JNUG just after the close today @11.90 and will set my stops just below yesterday's low of $11.70. 

Gold is also plumbing the oversold depths as you can see from the RSI below.  It's only been this oversold 3 other times this year.  Perhaps we are only looking at 3 of 5, perhaps the full 5 waves down have transpired or perhaps, worst case for M+M longs, this is only 3 of 1 or 5 of 1 of 5!  It's impossible to say at this point.  The best form would occur if 5 was lower than black 3 and so that should be kept in mind. At the same time, the e of 4 wave was a short stroke.  Perhaps a sho5th will be used to compensate for that.
 
Regardless, JNUG has been selling off 10% per day on a regular basis for the past few days so I will be trying to catch the bounce on it (and bailing out quickly if I'm wrong...) while TVIX decides whether it is going to rock or roll.