[GDXJ] update

In my previous GDXJ post I pointed out that a falling wedge looked to be in play.  Today's continued attack on the Juniors suggests that I am on the right track here.  The model from that post is below.



Today's move down occurred exactly per the red model.  So the high odds now live with an eventual trip to the bottom rail which would represent either a awesome opportunity for a huge percentage gain rally going into June/July OR something much much bigger.

In other words, the recent bounce into January was not big enough to be wave B in the EWI model.  For wave B to be true, gold would have to be in the $1400 range.  So in their model we are getting a certain kind of correction which I won't specify because I paid to read their opinion and you should too if you want to hear it.  But nobody in the EW community can believe that the bounce we saw in GLD was the EWI B wave and thus nobody (including me) believes that we are collapsing into a deep C.

The other big name wave count for GLD is from Avi Gilburt who called for GLD to bottom in 95-105 range.  However in his count, which I find to be more credible than GLD hitting $700 since it would threaten to literally wipe out the entire mining industry, that bottom would be a massive 2nd wave bottom with a huge 3rd wave move up taking gold well beyond $2000 (and thus GDXJ well beyond $180).

In either case, a throw under of that massive falling wedge would be the time to load the boat with all things metal.  My primary model for M+M is Avi's at this point for reasons stated above and let's not forget the massive WC in COPX.

Zooming in on GDXJ, here is my near term trading model.  In short, while it recognized that the bottom is likely in the $18 range (i.e. 10% of the manic peak in 2011), nothing goes straight up or straight down and after 5 clear waves down since just the start of March we should now, at the very least, see a move back up to at least the $23.50 range.  It could also move back up to fill the gap at b' which would be a very trade-able move indeed on JNUG.  I bought a half position in the very early extended trade on JNUG and if this is green in the AM I will load up for the expected bounce.  If I am so fortunate as to see this happen then I will be pushing my stops up in an EW guided fashion designed to stop me out at the best price possible while not stopping out falsely.  This guarantees that I will NOT get the best possible price out of the bounce (should it occur at all) but it also guarantees that I will get stopped out for a profit worst case and best case I might be wrong about the model needing to hit bottom channel.  After all, wedges can reverse mid channel on the 5th wave, form an inclining double bottom and then break out.

If I had my druthers, it will in fact take the blue path because this would most exemplify a three wave move to the bottom of the channel which will give high confidence that a very significant bottom is in.  If that were to occur then I think the upward move to follow would show very clear and easy to follow motive waves; all the sellers would have sold.