JNUG update

As modeled yesterday, the 16% bounce is looking like a gap-fill with more pain in store for the triple juniors ETF.  GLD is a good guide to use as a coarse measure but be careful about trying to use it to time the exact bottom of the miners because there could be 5th wave decoupling / nonconfirmation.  Let me tell you that anyone who was even so early as to have bought JNUG at $6 will find himself swimming in profits even if the chart does a move down to $3.60, $3.00 or "the mid to low 2's".

If the chart falls to the level of $3.60 and then finds uncommon support because that will represent a 90% loss from the recent $36 peak.  This is a typical reversal point.  If the chart falls to mid channel then it could be counting as a falling wedge with a failed 5th.  Both of these scenarios are modeled in blue below.  Don't discount them.  The negative sentiment and selling pressure on the metals and miners is extreme.  While it could always get worse for a very short time, anyone who thinks that metals or miners are going to zero is a complete fool.  When the turn comes it will likely happen in a way as to generate a strong reversal, perhaps even a vee bottom.

If it will be a double bottom then most likely one side (typically the left "cheek") will be round and the other vee.  That is given by the green path.  Or we could get a huge washout bottom that screams past the prior 4th on the way up.  In that case, the bottom would be the full and complete 5 waves down that we expect after the 4th wave triangle shown (but not numbered this time since it is so clearly a 4th wave triangle...) in the upper left of the chart.

Let me be clear about one thing: there is no certainty to which path will be taken to finish off this round of panic selling but once that top green rail is broken out of, the prudent trader will buy the breakout in the assumption that one of the 3 models is above playing out.  That is the case even if it turns out that today's action was actually a very stubby 5th.  If you see a gap above that top rail, buy it and then set stops just 3% below your buy point.

A good strategy will be to dollar cost average into this carnage.  A bad strategy will be to see it fall, fall, fall and then always wait for a new low even after it gaps up and begins a reversal.  Any purchase at these sub $4 levels will eventually be wildly profitable.  So many traders will watch it go down and it will make them fearful to EVER buy when in fact those who understand EW see this plunge as part of a 5th wave capitulation bottoming process that can only be considered a gift from the herd.

Get your mind right about this right now.  Be the hunter, not not the herd member.