[RUSL] update

At the backlink I presented the red and blue models shown below.

High level:



Zoom:




So here is the the current zoom in showing how the green path was taken.  To be clear, the green path above is wave black 5 below.  So now I expect some kind of 3 wave move down to the usual suspects shown below.

Zooming out to see the bigger picture, the chart has come up against the down sloping resistance line which was documented via the green path of the top most model above.  This occurred after 5 waves up have transpired and so at the very least I expect a significant retracement here, at least back down to around $29.64 which is the 38.2% fib of the wave that started up in mid march. 

As always in any odds based system, there are a few options to consider and we are now at the point where it makes sense to begin considering the alternatives.  The main alternative to BOLO for is the blue path shown below.  In it, the massive dip down to $10 was really just the 3rd wave of an expanding wedge which means that the current wave, which could end right here or which could pull back, break out and then fill the gap marked by the pink rectangle before heading back down.  So far, each wave could easily be counted as being made up of 3 wave substructures.  The most recent big wave up from $10 looks corrective in nature.  This expanding wedge model will only fully be debunks once we see a move back into the territory of blue 1.

So here is the play:

• Expect to see resistance at or very near current levels.  IMO, sell into current strength, ask questions later.  Lock in that profit.
• Then be patient looking for a new re-entry point, even if it goes up a bit more before reversing.  Once out, don't chase!  Buy the dip only.  The odds are high of a reversal within a couple days time.  Expect an a-b-c pullback of about $7 (minimum, could be more) and if you see it, buy back in with tight stops.
• The first trigger that we are on track with this retracement count would be a break back into the channel of the rising wedge.  After that, BOLO something that looks like a motive wave down instead of an a-b-c to the prior 4th.
• Should you be the "buy and hold" type, note that a break down below the lower rail will likely lead to an inclining double bottom as shown by the blue wave below.  If you plan to sit through all that volatility, don't get scared out a the very bottom; that is where I would be loading the boat!
• Eventually I expect a monster bounce all the way back up to around $200, the level of the prior 4th.  This is consistent with a commodities recovery into 2H 2015.
• Long term models are great but mainly are for bragging rights.  Even if you agree that the shares will bounce to $200 eventually, the smart money at the very least goes to the sidelines if a 20+% correction is expected in the near term and that is what the model is calling for after green 5 completes.  I am even tempted to short it if I get the chart pattern that I expect.
• Note that the top rail of the falling expanding wedge actually only has 1 data point on it so far.  In my way of counting, the apex of blue 2 is not part of blue 3.  So while I initiate the trend line from there and while that point often serves as a good approximation for a data point on the trend line, the only confirmed data point is the peak of August 2014.  So while the herd will likely find resistance using the line through the apex of blue 2 and the peak of Aug 2014, I do not consider this super duper hard resistance.  This is how I allow for the red path in the model below.  In that model, the red line would be 5 of C of 4 of the expanding wedge.  Then a hard drop back to mid channel of the expanding wedge would take place in 3 harsh waves down, likely to form an inclining double bottom.
• Once RUSL retraces to the level of the prior 4th, DUMP IT and then even short it because it will then fall to a lower low than $10 due to the options based time value built into the shares.
• Finally, as always, this is about odds and not certainties.  All that the EW principle can do for us is eliminate 99.999% of the possibilities and then assign some odds to the several paths that likely remain.  There are precious few cases in EW where odds of a next move approach 100%.