Small but important change to JNUG model as a result of today's action.

Here is the JNUG back link.  In essence, in that link I counted that the move up on Dec 9th as wave 1 up due to the strength of the waves but now I count it as just blue 4.  I reasoned that JNUG had a failed 5th wave but once it bottomed at $2.80 and did not take off strongly from there I began to believe I was one small wave too early.

In any case, I liquidated more of my UVXY near the close today for a nice overall profit in just a few days time.  I think UVXY as a TON more upside and I will certainly be moving more cash back into it on a big dip because the market crash really hasn't even seen panic yet.  But the big percentage points are made by owning something at the exact bottom and my current JNUG model suggests that the exact bottom for the JNUG is in or within a few pennies of being there.  So I'm now weighted toward JNUG with my last two buy-ins at @ 2.86 and $2.61.  Stops are set at a very tight $2.59.  If I get stopped out I will have to consider whether UVXY gets the cash back or whether I just keep my powder dry for the eventual JNUG bottom.

By the way, below is the bigger picture.  The 4th wave for JNUG was @$36.  That is the minimum bounce target (the level of the prior 4th) even if the EWI model is correct that the the recent bottom in gold was only A of C (as opposed to Avi Gilbert's model -and my personal view- that gold has just entered a new multiyear bulld market that will take it well above $2000/oz). 

What happened since July 2014 was the expression of a 5th wave down which, by the way, was modeled well in advance in gold and thus in the miners too.  While freely admitting that nobody knows exactly how the future will play out, we EW counters clearly saw a high probability of this coming as you can see by the dramatic down angle of the wave modeled "TO 5" in that link.  That's what these models do; they provide probable herd movements.  No more, no less.  No other kind of TA that I know of provides this kind of visionary insight.

In fact, this was modeled as far back as June of this year in this post.  In that post I led off with "I want to show you what could turn out to be the trade of a lifetime.  Literally, the best trade of your entire life.".  The whole theme of that post was that miners had not bottomed yet but once they did, the Juniors were going to skyrocket.  Below is the model chart from that post:

In that June post I wrote,"The above chart of the junior miner ETF (GDXJ) is telling us right now that, after 3.5 years of getting creamed, a bottom draws near.  We are currently either in a new bull market (the blue line, less likely) or in the 4th wave of an ongoing bear that will have 1 final wave down shown worst case in red.  

When this bottoms, and it will within the next 6-9 months, you want to have a nice pile of cash to throw into JNUG because the gains are going to be beyond belief ridiculous.  If GDXJ gets knocked down to 10-12 bucks then expect at least 10 x out of it during the subsequent recovery (see black 4 as the prior 4th bounce target, worst case)."

As you can see, the dip to $14 was labeled as worst case on the chart while the text bandied about "10-12 bucks".  Such is the nature of uncertainty.  

In fact, the chart has bottomed so far at $22.40 and we in no way yet have seen even the first motive wave up on the miners yet.  We could still possibly see $18 or lower on GDXJ.  JNUG might reverse split and then be cut in half again.  I do not know the future for sure and neither does anyone else.  But I do know this: if they let the juniors get too low then way too many people are going to become multimillionaires when the next metals bull breaks out and the market does not want this to happen.  The level of the prior 4th wave is already cast so it remains the target no matter how low GDXJ (and JNUG) end up going.

It should go without saying that until we see 5 solid waves up that it makes no sense to ride this expected trend bareback.  Use stops until there is confidence in the reversal.  This will ensure that you have your pile of capital in hand when the real bottom is in.   But doubling triple or 10xing your cash stack on this play is not going to be difficult once it begins to move back up and my current model view is that gold has bottomed and is now in a new bull market that will shock and surprise, that the dollar has peaked with all this optimism about the infallibility of "king dollar", and the juniors are trying to put in a final bottom in this area.  As soon as gold makes a decisive move up, JNUG will double or triple in short order (just like UVXY has nearly doubled from its recent bottom in just a matter of days).