Wednesday, March 18, 2015

High odds that [GLD] just bottomed.

I've been looking for GLD to bottom in this region and nothing can be taken for granted yet as the recent waves could possibly be viewed as a 3 wave move to the level of the prior 4th.  But my primary count is in red below.  Either what I have labeled as red 5 is only red 3 and we have one more wave down to $105 (the top of Avi's range) OR this is going to break out per the red model.

Right now, it's all about that down sloping blue line.  If it takes and holds that line then I think we have our answer.  But if that line becomes major resistance then we could see more downside before the real bottom is in.

In terms of a breakout, what would be conclusive for me would be a solid gap above that line.  The would tell me that the herd knows the line is there (which I already know it does) and that the Rubicon has been crossed.  The gold shorts will scramble to cover at that point so I expect rapid action once the breakout is confirmed.  I expect a pullback from that line to occur so that it breaks out on a 3rd wave up. 

Zooming in, here is my count.  The herd can literally take it either way, it has left itself the option.  But in both of the most likely cases, we sell off a bit at the open.

The main thing I do not like about the red model is that such a significant resistance line will not be broken out of on a 5th wave.  At the same time, we could see the old stutter step 1-2-1-2-3-4-5-3-4-5.  So if this breaks out tomorrow AM it is likely to move up very, very quickly because it will be an extended 3rd.  If this gaps up right from the open then we are looking at a 3rd of 3rd of 3rd - hyper bullish.  This is why I am holding JNUG overnight even though my primary model indicates AM pullback likely.

If this pulls back to the level of wave red 1 then stop out, no questions ask.  Just do it.  Wave 4 cannot move back into wave 1 so if this happens we know that this move was a C wave head fake up.

If GLD just bottomed then likely so did commodities like PBR, COPX, etc.  Never chase.  Always and only buy the 3 wave pullback.

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