Thursday, March 12, 2015

[GDXJ] crunch time

Please refer to yesterday's GDXJ update to find the model below that I provided pre-trade:

Zooming in a bit on that picture we see that yesterday's bounce was anticipated by this model.

That means that it is now crunch time.  GDXJ will either peak at these levels and then head down one last and final time to throw under the lower rail or it will break upwards from here and begin the big bull run whose first price target is $30 but whose likely price target is $45 assuming that this was only the bottoming of a large scale A which began downward in 2011.  In other words, that is the most conservative case, the worst case if you will.

If my primary model plays out at GDXJ plummets to $18 then run, do not walk, to grab the shares and then hold onto them with much stronger conviction than you normally might as a trader (AKA loose stops) because the most likely outcome will be a monster reversal as shown above.

Zooming in to this morning's snapshot we find a potential rising wedge is forming.  I have provided two numbering systems which both agree on the short term result.  The first is in red which treats it as a standard Elliott wave.   The second is in blue which count based on it being a rising wedge.  Both predict a peak at around $23.  This will effectively be a test of the middle tine of Andrew's pitchfork from below.  I do not think this can break out in wave 1.  If the bottom was yesterday, which is what the red model indicates, then it will have to pull back to the level of the prior 4th in 3 waves as shown before blasting through the center tine in a 3rd wave "moment of recognition" that the selling has ended.

However, if we have one more good sized wave down to throw under the large HT of the top model then the level of the prior 4th won't hold and the blue path (or some derivative will be likely taken) I personally hope the blue path is taken as it will maximize the profits for anyone who sees it coming.  That throw under of the top model would scream BUY!  It would represent a 90% collapse of the juniors since the peak and would usher in a massive bounce where stuff like TRX would be 10 baggers (if they survive, and they likely will if they haven't gone under already).

I do want to point out that a breakout of the center tine at any time is a buy signal with stops just below the tine.  Charts try to be very tricky at the major turns but support is support and resistance is resistance and that cannot be hidden by tricky head fakes.

As for trading strategy, I will not chase.  I will wait for the dip.  Maybe it will run away from me but I refuse to behave like a lake bass with a lure running past my nose.  I will buy on my own terms, just as I did with DRD yesterday at ~$1.55 (tight stops on that trade right at what I paid).  I tripled my previous position in DRD and will begin bumping my stops up ward if it just takes off from here.

Buy the dip.
Buy the dip.
Buy the dip.

Don't chase the peak!  Don't let your reactive mind allow you to fall into the old whipsaw trap.

And when you do buy the dip, use stops!  Faith based "investing" is for fools.

Once the bottom is in, these miners are going to skyrocket big time.  Mos def higher highs than the mid Jan highs no matter if EWI's model or Avi's model is correct over the long term.  We can cross that bridge when we come to in.  Putt for dough!

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