Back into JNUG with 1/2 position in the AH, $4.67

Yesterday I suggested that people not chase the recent peak in JNUG and instead buy the dip, possibly down to $4.70 according to the model.  While I drew a straight line down to $2.70 in the model I of course (and always) mean that if it is corrective then it should have a corrective a-b-c vibe.  The action today can be counted as a-b-c quite easily.  The A wave came down and filled the gap and then exploded back upwards but was unable to make a higher high.  So I waited until near the end of the day, bought speculatively at $4.70, got stopped out for a small gain at $4.77 and now back in with only half at $4.67.

The main reason I want in here is that the recent peak could have counted as 5 waves up into "1".  If that is true then today's pullback is wave 2.  It pulled back right to the $4.70 range that I modeled.  The retracement was significant and it looks like the whole thing counts as one big C wave triangle.  It did not quite make it back down to the 50 fib but there is a significant support shelf at the current level shown by the horizontal blue line.


I did not go all in during the AH because there might be AM follow through down to the 50 fib tomorrow and it might occur before I can sell.  Since I sidestepped all of today's 21% loss in JNUG by going to the sidelines yesterday and then I also took 7 cents off the shorts today, it will not really kill me if they gap it down to the $4.47 level at the 50% fib.  If they do that then I will set my stops for $4.43 (just below the peak on the 10th) and let them take me out if that's what they want to do.  But the fear I have is that a 3rd wave gap up occurs at the open and I am less afraid of getting taken down a bit further than today's lows than I am of missing a big gap up.  The best case for me will actually be if it opens just mildly red and then saunters down to the 50 fib in a controlled manner, not gapping, not panic, etc.  If I see that I will go all in and then set tight stops for $4.43.  If that cannot hold then the odds go up rapidly that it wants to do a double bottom or even a lower low before turning upwards for the big ride.

On the GLD chart, here is my previous post on it.  My bottom line was "If GLD can gap up tomorrow or in some way prove that it is not going to get caught in the falling wedge then this pattern can be invalidated but I think it will have to happen very soon...".

Well, GLD did indeed invalidate the wedge as being a C wave by heading down in the early AM to kiss the 50% fib before rebounding strongly to a higher high.  So if wedges are 3rds or Cs, that can't be a C.  So I now have two most likely counts in mind.

The first is the blue numbered model which says the top of wedge was a 3rd followed by today's AM pull back into a 4th and then mid day higher high 5th.  This 5 wave move would count as green 1.  Then we had a pullback into green 2 (not shown) below.  The implication is that we could have a large 3rd wave up ahead.

The second model uses red numbers.  The red count again treats the top of the wedge as a 3rd and then the next swoon was "a" of 4, the following rally was "b" of 4, then the next swoon to a higher low was "c" of 4 (none of those 4th wave internal waves are numbered on the model above).  This model expects an AM move up to $115 into "d" of 4 and then one final break of the lower rail into "e" of 4 around $113.70.  After that we should get a 5 wave move up into red 5 if this mode is correct.

Anything significantly below $112.80 spells short term trouble for GLD and thus for M+M.  So again, no decisions being made here are done so on the basis of gut feel.  That is how losers lose.  It does not mean I will win every trade and I don't.  But by using model based entry and exit points on these highly leveraged ETFs I am allowed quite often to sidestep some big losses (like today) while still having a better than even chance of being in the ETF for the gains.

This kind of volatility is pretty insane to trade without some kind of system like this.  I just don't know how most people sleep at night when playing ETFs like JNUG without a system that provides odds based hints on not only when to buy but when to sell.