[ABX] update

At the backlink I was wondering if we would short stroke the 5th wave but that model was quickly broken (and as you can see from the text there I did not have much patience for it - I knew the odds were not all that favorable for it).

So we are still working on the larger model which was presented in the previous post before the backlink which you can review here.   In short, a 4th wave which peaked in early 2014 then broke down and we expect 5 waves down from it.  The chart in the top level model was presented in log scale as shown below.   In this chart wave blue 5 should be about the same length as blue 1.



Below is the update of that chart.  The red bar is the height of black 1 of this chart.  Black 5, if it bottomed right now, would already be longer.  They would optimally be about the same height, but longer is generally better than shorter.

Fractally, Blue 1 and blue 5 should also be around the same height which they are right now.  Blue 5 has hit a new low so at this point we are very near either 5 of 5 of 5 or 1 of 5 of 5.  It is getting very risky to be bearish on mining stocks IMO.  After the multi year ass whupping they have received, they have restructured their businesses, shut down unprofitable mining operations, cut staff at HQ, etc.  In other words, austerity. 

While the vast majority of risk has been beaten out of these shares, a fall from current price to the $7 range would still represent a 50% loss in value for investors so you can never really be complacent; percentages are all that matter to investors.  But the lower this goes, the more dangerous it is to short because you get to the point where even a dead cat bounce could double the share price quickly.

  

 In the best case model, the nearly complete motive wave down is 5 of 5 of 5 (blue path below).  In the more bearish near term model, the coming bottom will only be 1 of 5 of 5.  Then it will bounce to 2/5 in the high 11s before turning down hard in 3/5 then 4 of 5 and finally 5 of 5 of 5.  There is no way to know in advance which of these paths the herd will take, only can know that it will be likely one of these two game trails with a slight lean toward the blue path.  Call it 60-40 at this point but those odds will change in real time over the next few days as we get more data.

For most people (i.e. non traders, your mom, etc.) I continue to believe that the bear market in metals and miners is going to be over within a a short time.  In the bearish case, only a couple months from now is the likely worse case.  But we should see some kind of pretty good rally before even the bear case (red) finally kills off every goldbug that ever lived, pisses on their graves and makes the metals nearly universally reviled by the investment community.  That, fellow gamblers, is the screaming buy signal of a lifetime.  Buy when there is blood in the streets but only after you find an EW-approved entry point of course and that always means buying the 3 wave or 5 wave dip.  NEVER chase peaks if you want to survive the wall st pump and dump.  And of course, learn how to use EW-defined stop and then have the discipline to eat a small loss if needs be in order to avoid it becoming a big loss.

Odds are never certainties!  But they are always better than gut feel trading.