Despite near term bounce potential, M+M have broken support.

Unfortunately for M+M longs, SLV / silver broke down to a lower low than w3 in the chart today thus clearly putting in 5 waves down.  There is no such thing as 5 waves down all by itself.   They come in twos and 3's but never in 1's.  You can have 5-3-5-3-5 for a normal motive wave and you can have 5-3-5 as part of a triangle or a corrective wave but never just 5. 

This crappy jagged bounce was always a concern.  It simply does not look motive and now I think the fact that it was a correction has been confirmed.  Since 5 waves down have occurred, the next big move should be a-b-c up to the level of the prior 4th into 2 (or b) as shown below.

Of course, for unemotional traders, there is no such thing as a bad move.  There are moves you see coming in advance which you profit from and there are moves which you don't see coming which take your cash.  But to a smart trader, whether stocks go up or down is immaterial.  The main thing is to be on the right side of the trade.

Because the current wave down does not look complete, I'd like to see a small move down in SLV to ~$15.25 to finish the 5 wave motive sequence that is in progress.  Then a nice a-b-c up to ~16 before the downturn to $13.50.  Wherever silver goes, miners should not be far from.


If I see it play out like this and I see 3 waves up as I ride JNUG into blue 2 then I am mos def going to take the wave 3 down for a nice ride with JDST but following that (it should be wave 5 down), swing again into JNUG for a big, big percentage rally.  The lower this goes before finishing out the big wave down from 2011, the bigger the profits will be for the patient. 

If you are very conservative, stay on the sidelines with JDST until the up-sloping blue rail is broken.  That is the breakdown signal that tells you $13.50 is likely to be hit.