Watch [SLV] for potential long term bottom and asymettrical risk bet.

At the backlink it turns out I was 1 wave early calling a bottom.  I was looking at that right hand wave that seemed like it had a good chance of creating a double bottom.  So I labeled it 5 for the time being and then of course set the stops right below it.




Per the red circle below, that double bottom then spiked up hopefully but could not create a higher high (first warning) and the did create a lower low (sell trigger).  But it bottomed just a couple days later and then rocketed up into the wave I am labeling blue 1.

What we are very possibly looking at here is a deep vee second wave which is near completion.  Maybe it even finishes tomorrow.  In this model, everything since the peak of the 14th has been a big WC2.  Don't look that up if you are new to EW because it is my own observation which is that wedges are 3rds or Cs.  I know it's a bit cryptic for newcomers but search the blog for "cwt" for more info.

The beauty of this chart is something that will be lost on most people and that is that it represents a potential asymmetrical risk setup.  The logic is simply.  IF that bottom on the 23 was the major major bottom that my model would indicate it to be then one penny below it and the model is bust.  After all, a bottom is a bottom, right.  Now, let's say we get within pennies of that bottom tomorrow as shown but do not exceed it.  That means that the model is potentially, if not probably (but not certainly) correct.  Still, there is a good chance that it will be correct because I have a valid wave count that says it could be.  Also, we know from experience that after a long trend in a given direction, a major bottom is often marked with a deep vee 2nd wave just like this one could be.

So the trick to the asymmetrical risk bet is to wait for this to exactly bottom (as defined by 5 waves down from the E wave of the HT) and then buy a bunch of whatever metal or miner you like.  For most people who don't have time or inclination to do a bunch of trading should buy GDXJ because it is ~90% down from its all time peak and it has no options time value in it.  So you really can buy and hold it.  It's diversified so that one jr. BK won't kill your gambling bet and its going to be a fast mover from a percentage standpoint once these things turn up.  JNUG will do far better but you must actively trade that because it will eventually go to zero due to time value in the options.  I of course will be using JNUG and RUSL here, both of which are highly leveraged.  It will not surprise me at all to see both of these trade above $100 at some point.

Tomorrow is likely to be a critical data point in this model.  I really would rather mainly be long the commodities and the miners than playing UVXY even though UVXY has explosive potential.  UVXY represents fear and fear always subsides over time.  The herd gets fearful now and again but the herd always has to eat at some point. 


 For the record, I have posted this chart of silver before but I want to again point out that it has potential as an expanding wedge which is ready for wave 5 up.  As long as it doesn't fall below the 2008 low this model is still valid.  You can see the internal a-b-c wave structure here that puts it in the running to be a rising expanding wedge.  Also note that the pointers from the last bottom draw that lower ruby rail.