JNUG: not ready to pull the trigger just yet.

Here's is yesterday's JNUG update.  Monday's 15+% move up in JNUG was temping but I think it was just a gap fill designed to suck more people into a bull trap.  I expect it to peter out Tuesday and make a lower low.

If it can gap up Tuesday then I will begin to believe that it has some legs toward the big bounce.  However, given where gold is in the conventional count I think it that JNUG could end up in the "mid to low $2 range" where is where these highly volatile ETFs tend to put in significant bottoms.  Of course, that is just a gut feel guideline, not a plan.  A plan needs to include a wave count.  Still, I would buy the gap up should it occur and then set stops just below the buy point just in case miners were running a bit ahead of the metals.  No matter where exactly it bottoms, this is a great trade entry price for anything M+M.  Keep in mind that I modeled that it could possibly get this low back as early as March of this year.  I called it my "dream trade" and you can read about it here.  That post has GDXJ bottoming out around $22.  Friday it opened at $24.  While the route taken was a bit different than the model, we ended up at almost exactly the same place.   Just saying...

Gold likely has another significant wave down - perhaps 7% to 15% - before bottoming into wave 5 of A down.  This is, again, according to multiple good metals wave counters on the web including top rated (by SeekingAlpha) Elliottician Avi Gilbert whose service I have tried although I didn't keep it because I did not feel it was specific enough to warrant the $100/month price tag.  The forum is sort of a mish mash free for all, not structured enough for me.  Also, it's difficult to discern the site endorsed experts from regular members.  So it's difficult to see what the site itself is endorsing.  It's like a lot of opinions which you then have to compare against each other.  When I start a trading advice subscription service someday, it will be a lot more structured and I will keep score in a clear fashion in real time.

In any case Avi was kind enough to post this public chart back on Sept 22 of this year.  I tried to overlay the current chart on top of it (without much success...) but you can see that the real time chart has moved down significantly toward his target range of GLD (not the metal, the ETF) $95 to $105 since he made that post.  The top of that range is only $7 from the price of GLD which is currently $112.10.


The conventional wisdom wave count from people like Avi is that the test of the support level made by the prior two bottoms was actually wave 1 and then the bounce back up was wave 2.   It took the power of a 3rd to break down through that support and the support trend line was taken out with a gap to emphasize the fact. 

So now we are likely within 3 of 5 down of the gold count. 
The entire A wave down of the metals bear since Q3 2011 should be bottoming within ~10 trading days. 

Whether miners are also in wave 3 or if they are a wave ahead (wave 5) is always a question.  It is not required that they must be.  Miners can, for example, bottom before the metals by 1 small wave.

For now, we have to assume that they are also in wave 3 still.  Falling volume on the miners as they fall lower would indicate that the massive volume we just experienced was 3rd wave action.

Notice that the 2nd wave bounce in gld was a vee.  That implies that the 4th wave bounce will be sideways.  If we begin to see a 4th wave triangle forming in GLD around, say, $105-$107, then we just look for 5 more waves down from it into the purple target zone and then JNUG should be a very safe buy.   In fact it would not surprise me to see JNUG begin to bounce a short time before the price of gold does.

Nobody, of course, thinks metals (much less the junior miners and much-much-much less JNUG) is safe right now.  In fact, here is an article from Oct 21 talking about how metals sentiment is way down and that was before the latest gap down that made gold sellers look like rocket scientists.  How much more disillusioned will most people be just a couple weeks later given the massive capitulation selloff that M+M has just endured? 

So I plan to open fire on the herd within days.  My gun is already in position in the field that I am pretty sure they are now headed to.  You can see the pasture marked in purple above.   If this coming bottom is really just A of C then the minimum target price for JNUG is the level of the prior 4th which was about $42 in mid 2013.  It could go higher but let's stick with that as a target for now.


The multipliers involved for those who catch it right could turn out to be pretty incredible.  That is why it is important to scope out the hunting grounds completely in advance.  Don't expect to show up at the last minute and just be able to do the right thing without some careful pregame thought and planning.  The volatility will be (check that, already is) scary extreme.  So a plan is definitely required along with mental preparation since I plan to gamble some pretty big money on this.