Monday, March 30, 2015

[JNUG] [JDST] update

First JDST.  In the most recent post I suggested that wave 3 might be in progress due to a 5% move up during pretrade.  It actually rose 10.29% by the close so I think that is good evidence that it was 3 or C.  More evidence of this is how it gapped above the center tine of Andrew's pitchfork as shown in the first chart below.  That was not an accident, the herd knows that support/resistance line is there.  It's like a line in the sand that it either comes up against and is repelled from like an invisible electric fence or jumps over like a child jumping cracks in a sidewalk.

Zooming in, here is the wx-centric count which most EWers will not understand since it is proprietary to me.  In short, we had a w3 that could have been wc (and thus reversal imminent) but as you can see from the red horizontal, a higher high was made than green 5 so this is not likely the peak.  What would not surprise me at this point would be a 4th wave HT as shown.  IFF this occurs, the near term peak should be at around $12.90 or $13 ish as shown and that would be A of E of 4 of the large 4th wave HT that I first suggested could be forming back on March 24th.

IFF this instead turns down and breaks below the top blue rail shown below BEFORE tracing out a clear 4th and 5th then the odds increase that the top is in.  I did not draw that path in but it could easily become the top model based on tomorrow's action in metals.  For the record I will say that silver has retraced 38.2% of its recent move and so this would be a fine place for metals to turn back up hard if that's what they are going to do.  Tomorrow will probably let us know if this is A of E of 4 or if another, more JNUG bullish pattern is forming.

New readers (and there are many of you judging from my exponentially rising page hit count), please note that the above model does not have to play out!  It's just a model.  It's nothing more than a safari guide telling those on safari that the herd often moves in a certain way throughout the day.  The science part of it is that the herd has to move.  The herd cannot stay by the watering hole all day because the food there has already all been eaten.  The herd has to go to pasture at some point.  Also, the herd cannot bed down in the pasture at night or it will be easy prey for the lions.  So it has to head to the bedding grounds at night. 

The artsy part of it is the observation of the very small things which give clues and thus increase odds of making this determination or that about what will happen next.  The value of the written model is that it allows us to compare what is happening in real time to the model.  Reality will either resemble the model or it won't.  If it does, you hold your position and then you have a good idea where to sell.  If it violates the model, you sell for a very small loss while giving more clues about what is likely to happen next.  In this way having the model is deterministic and thus mechanical.  Thus it allows the intelligent use of stop loss orders so that you don't have to sit in front of the screen.  It's always going to be a form of gambling though because that is the nature of the stock market and you will never change that.

In any case, here is the JNUG backlink with model chart below.  This was from Monday AM.

With the benefit of an end of day snapshot and higher level of abstraction (60 minute), we could be seeing an inclining double bottom here.  Of course it could always go lower and if you look at the pointers circled in red they suggest a trip all the way back to the 84.1% fib is possible.

I'm pretty sure that something a bit unusual will turn out to be the case with this chart when looking back in the future.  That whole move from the 11th to the 25th was not a normal motive wave IMO.  It looks more like a rising wedge.  So I guess we should expect the market to be very tricky near a major turn but this 61.8 fib is about as low as I like to see a normal retracement happen.  So if we can catch a small bid at the open tomorrow I will buy the first dip and then put my stop below today's low of $16.85.  I caught most of the rise up into the peak and missed pretty much all of the downside since then so if I have to give up a little on a stop loss here then that is just the price of gambling.

If this does not catch a bid at the open then we can still count it as red 5 and blue 3 or C if it drops to the 70.7.  All you can do in this situation is buy a dip and then use stops just below the buy point.

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