Monday, March 23, 2015

[JDST] update [GDXJ]

At the backlink I provided the model below.

Today's action doesn't change my top level model.  I think that the current action is following the red path below.  What I had marked as the 3rd wave in the model above ended up turning into what appears to be a falling wedge marked w3 below.  If this model is correct then we will likely get the bounce up to the $10.50 area which I had modeled above and in that case it should transpire in 3 waves (or morph into a 4th wave HT).  If we see that then it's back into JNUG for that 5th wave down but then it will be time to pile into JDST to see if the commodities wave has one more wave down.  If oil has one more wave down (and I currently model that it does) then I suspect gold and silver will fall, at least to some degree, with it.

Note several things here:
  • The JDST double top at ~ $17 forms an upward pointer.  This has nothing to do with EW and I have never seen it discussed in legacy TA in a formal way either.  So I consider this to be proprietary TA which is supported by my personal observations over many years (and nothing else).  
  • Not how the declining double top pointer of red 2 form a line that would make a great resistance point for red 4...
  • The falling wedge aspect of this model is still intact but we still only have one point on the upper rail so it is not cast in stone yet.
  • The falling wedge can be 3 or C.  If 3 then it should take the red path.  If C then the green path.  But this should out itself by tomorrow one way or the other and so I am just sitting on the sidelines after having pocketed profits from most of red w3.  I did not catch all of today's move in JNUG but neither do I care.  I am more interested in keeping my money than chasing new and since I model this with high potential to form a significant reversal, I'll just wait until the hand is tipped and then buy the dip of either JDST or JNUG, whichever one wins the coin toss.  
    • By that I mean that the herd could decide to gap up on JNUG tomorrow, invalidating this JDST model.  If that happens then JNUG is likely playing out 3 of 1 up.  So I will just wait for the pullback into 4 of 1.  Always buy the pullback, don't chase the peaks!  If JNUG is taking off for real then the eventual high will be a higher high than the last high.  So there will be plenty of time to make money.  Thus, job 1 is not to lose any!  Only the paranoid are going to achieve this goal IMO because the market should be exceptionally tricky near the major turns.
I also want to look at the view from the GDXJ side of things.  The herd has left itself options still.   It can likely do either the red or green path. 

For the red path, the juniors are not likely going to just bust out of that top rail on a whim.  I feel strongly that this kind of overhead resistance will need the power of a 3rd wave and not 3 of 1 folks.  It will have to be a 3rd of 3rd.  Right now we are working on what could be 3 of 1 (red model) or it could also be C of B of 5' (the green model).  If the red model is followed the chart could kiss that rail from below on a 5th wave, fall back a-b-c into a 2nd wave up and then come screaming out the top rail in wave 3 (or C). 

If the green model is followed then note how a gap could be getting filled.  So it really can go either way in the near term for metals and miners.  Again, I will stress: always choose risk reduction over reward acquisition.  Risk will go way down once we see 5 waves up in GDXJ that pulls back 3 waves and then breaks out to a new high.  Until then we really have to respect the falling wedge.

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