In the backlink I admitted buying JNUG during extended trading after its calamitous one day plunge of 36% yesterday. Today I sold half at $9 for a tidy one day gain. I'll keep the other half for the likely ride up to $10. The model below is not listed in the backlink but for now it has become my top model. In short, I think that after such a wild collapse that we will likely get some kind of double bottom, perhaps an inclining one, before people begin to venture back in here. I mean, 36 pct lost yesterday and down 13 pct the day before? That's fracking serious! And since most "investors" don't know what stops are or how to use them a lot of people at this entire collapse or were chased out at the bottom.
In any case, if we see 5 waves up we will know this model is wrong and that we should buy the subsequent a-b-c pullback. One indication that the reversal is in would be a large gap up at the opening bell that takes it about the level of the prior 4th. I would personally buy the first pullback of any kind if it gapped up like that and then set tight stops.
But if we see a measured a-b-c move up to the $10 ish level and then 5 waves down about the same size as blue 1 then there is a good chance that a big rally is pending there.
Now then, if she breaks down below red two near the open tomorrow then that is a near term sell signal so you now know where your EW-defined stops should go. But then start looking for that next entry point because it would likely means that red 1 is really blue4. So then expect 5 waves down to form blue 5 down to maybe $6.80-$6.90.
Tuesday, July 21, 2015
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