While when zoomed out this looks like an a-b-c to the level of the prior 4th (and thus bearish), zooming in tells another story. The chart did not spike up for the obligatory gap close and then run away. In fact, it seems to be building a base in this area.
JNUG is up 5.59% in the premarket trade so we will see if it carries through. Here are the main 3 things I see in the the chart below that interest me:
- There is a gap to fill but wave 1 (or A) up was so high and wave 2 (or B) pullback is so shallow that a 3rd wave up should clear that gap handily and not tempt people to sell into it. Time will tell about that one. But at the very least the gap should get filled and if the wave count looks like 5 waves up I will sell it first and ask question later. After all 95-32= 63 cents profit and that is 20% in one day no matter how you slice it.
- We appear to have an inclining double bottom. The left cheek is a vee so the right one is rounded.
- The starting action on the current wave up is heavily overlapped waves that don't count like a narrowing wedge. In my experience, this is bullish. Its sort of like Fred Flinstone's feet moving underneath the car for a second or two before the car takes off. Yabba-dabba-dabba-dabba doo! All of those false starts tend to unwind as real waves. I view it as pent up aggression on the part of buyers who are trying, without much success, to get into the shares (or to cover shorts) without pushing up the price too much.
Since I was able to trade the swing yesterday near the close, my new cost basis for the whole tranche of JNUG is $3.32. I set my stops @ 3.25 and will be moving them up as the wave count progresses.
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