Despite bearish calls on M+M that I have been making lately, I bought the 50 fib support in JNUG today shown below. It is possible that the 5 wave move up to $27.60 was a leading diagonal and that the retracement since was the 50 fib retracement. If this is the case then wave 2 likely just finished and next week a big rally would begin into wave 3. Whenever I get what could be counted as a 3 wave retracement to a common fib level I begin to wonder if it will reverse suddenly. This time is no different. I'm just playing the short term odds here, putting for dough. The first indication that a big reversal is in progress would be a fast move back up into the channel. Watch for resistance at the 38.2 because a small rally here could itself be a retracement of a more powerful downward trend.
Stops have saved my a$$ets so many times that I will never tire of recommending that they be used. Where stops get a bad rap is when people use them willy nilly and not in conjunction with the EW rules.
Intelligently placed stops are a major way that the winning trader distances himself from the wannabes. What can I say? Use stops!
With stops now set to $20.30 I could get taken out by a gap down on Monday but that is the chance one has to take when gambling with these leveraged funds.
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