Market update.

It was an amazing day for the M+M (Amazingly bad that is).  JNUG dropped the most in terms of percentage that I have ever seen in a single day.   After 10 days of gains and 5 days of sideways crap, today's massive dump of $1.90 per share brought JNUG back down to within 55 cents of its prior low.  It looks like I might turn out to have been correct regarding my review of the shape of the GLD chart bounce as being corrective and I was certainly right in not holding it over night because of these concerns.

I sure hope Avi is right about M+M hitting a lower low than the Nov 6th low.  I cannot stress how important this would be to M+M longs.   Why?  Because it would corroborate his views about the current wave being the C wave retracement of the bull market that was put on hold back in 2008.  It really is worth your time to look at Avi's model of the HUI again and think about it.  He wrote that article when HUI was ~$150.   After the M+M bottom, HUI should be at ~$120 according to his model.  Notice that his model uses the log scale for price.  After that bottom occurs, the mode says the next wave up is a massive 3rd:

By Jan 2017 his model expects HUI to be ~$430 for wave 1 of 3
By Jan 2025 he expects it to be over $2000 for 3 of 3
By Jan 2033 he expects it to be $5500 for 5 of 3.

Keep in mind, HUI is unleveraged and is about the same as GDX in terms of percentage moves.  He expects a 350% gain by Jan 2017, an 18x increase by Jan 2025 and then you can do the math after that.  Like I said, most people should just begin buying golden things such as gold miners, silver and gold bullion, etc.  GDXJ of course would do far, far better than HUI or GDX and again has no time based options leverage.    GDXJ is what I would recommend to most people if it was my business to make such recommendations.

It also pays to think about what might cause this model to play out like that.  We see the price of oil in freefall right now.  The reason is deflation.  Since the stock market is now at or near the current model's peak, what would happen if the stock markets began to follow oil off a cliff?  What would happen if the coming sell off made the 2008 one look like a walk in the park?  Would the bat faced Yellen fed really stay away from QE or would she cave to the market's taper tantrum.  Well, the gold model seems to suggest that she caves and starts up QE again.  Of course, once she does that then forget about it.  The markets will know that there is no plan B and that money printing is all that is left.  It would also debase our currency such that all those big pensions of public "servants" would get  the value kicked out of them.  Something has to happen because we cannot afford to pay for their retirements AND our retirement.  So, something will happen.  Either an outright default or, as Avi's chart suggests, massive debasement of the currency.


In any case I think JNUG should get a pop at the open on Monday in the form of a relief rally/sucker's bounce at the very least before finishing out Avi's model.  Much less likely IMO is that it could also be that today's bottom forms an inclining double bottom in M+M which takes off on Monday.


As for the broader markets, the DJIA put in a peak and then actually went red right into the close via 5 waves down.  Someone then came in and painted the tape back up to around the 38.2% fib of the sell off.   In other words, they set us up for a gap down on the DJIA at the open on Monday.  I'm holding a full position of TVIX over the weekend in anticipation of that but what I really want is for gold to hit that $105 target so I can get long M+M.  As I have written before, I would rather be long stuff than short stuff any day of the week.  I'm only shorting the market because everything (except M+M) is so overbought it is ridiculous.  When M+M put in a solid model bottom I will probably be much less interested in trading TVIX.