Dear Readers,
In emotionally charged markets where "asset" valuations appear chaotic and completely separated from "fundamentals" much of the time, the predictive power of Elliott waves is our only tool for avoiding the trap of being run around to and fro with the rest of the herd which operates under the emotions of greed and fear. If you can see the future with even slightly better than random odds then you are seriously ahead of the other players in the market, each trying to get something for nothing from all the others who have decided to play this ridiculous game. The leverage of slightly better odds in their favor is how Wall St pros fleece society with their fake asset "ownership" game.
But if you can see the future with much higher odds, perhaps 70% or even more in some cases, then your chances of beating the competition go up exponentially. And right now, I smell an 80+ opportunity right in front of us in the form of the gold miners. While I trade JNUG, I have been looking for the proper entry point for more and more of my stock account to go into longer held bets in both commodities and in metals.
Today the commodities and metals industries are literally in a great depression. Deflation has ravaged their businesses not because demand is down all that much but rather because they were all greedy pigs going big on big debt. Thus, a normal cyclical pullback in demand created shock waves across the leveraged commodity industry.
Of course, they really had no choice but to lever up given the corrupt money supply. Those who do not leverage up at the start of the so called business cycle are quickly pushed aside or taken over by those who do. The pigs must eat all they can as fast as they can or some other pig will grow bigger faster and kill the smaller pigs off. This is even more true where interest rates are driven artificially low making the real time cost of leverage low. But the real kicker is what can be done with that leverage and in a world of exponentially rising automation, putting in robots to displace human labor rapidly creates free value for the asset owners. Every so often there is a gut check to see who, as Buffett put it, is skinny dipping. Those weaker players go out of business and their operations are taken over by those who have shown more restraint.
The bottom line is that commodities are never going out of style, they will just experience booms and busts. If you can get in at the start of the next boom which eventually follows every bust, the profits can be dramatic. Ridiculous profits await those who time the bottoming of this commodities bust.
On August 28th, I made a bold commodities bottoming call using silver, which is half money metal and half commodity, as a proxy for all commodities and miners. Maybe it seemed ridiculous "bullshit" to some people at the time but it was not a random call. My models are not always right but I try to ensure they are not random. It should thus come as little surprise that what looks to be a motive wave followed.
Then in this post on Oct 28th I called the exact top of the first up wave of the silver reversal using the USLV chart as a proxy. Referring to the chart below I wrote, "Today the wave put in a unicorn horn which came right up to the top parallel. With what we have so far, I think the odds are high that that we either see a move to the bottom rail or to center of the channel before reversing upward and breaking out."
Furthermore, I even saw that peak coming if you read the backlink to that post.
Since that modeled peak, silver went into freefall per the current snapshot below. So now here is the part where many years of experience can really help those who understand what is going on. The herd has literally unlimited options. The future is NOT set in stone. But the herd does not have unlimited LIKELY options and understanding this dramatically smaller set of probabilities is where EW puts us ahead of every other non EW savvy gambler on the planet.
The likely options as I see them are:
1) My commodities bottom call was correct. Everything since that was wave 1 of the new bull.
- In this case, everything since Oct 28 was a shock and awe deep vee second. If this count is correct, that 2nd wave likely bottomed this past Friday (11/6).
- This model is interesting because of the boomerang shape of the wave. This is not the typical motive look. It smells corrective.
- Even more interesting is the fact this this seems to have bottomed at an exact gap fill.
- Additionally, the chart stopped at strong support trendline in the chart per below.
2) My commodities bottom call was off by one wave. In this model variation, that was wave 3, the Oct 28th peak was wave 4 and now we are working on wave 5.
- Wave 5 could be the 5th wave of an ending diagonal (meaning to expect 3 waves down). If so, wave A could be complete as of this past Friday 11/6. If this is the case, expect a vee retracement and then a strong finish lower to either the bottom of the channel or a small throw under thereof.
It could also go true deep vee. But the big names should get a lot of the early money when it finally does come flowing back into M+M. We are very close to or already have seen the bottom of the 2011 gold bear IMO. For the past few months I have been suggesting that normal people buy something golden. I now suggest to buy even faster into the current plunge. Pick up the pace people, the big money is made at these levels. Anyone who is not a trader and who has dry powder should be buying over the next 2-3 weeks in order to get a nice dollar cost average of this bottom. I suggest this because its also possible that the previous bottom was a 3rd not a 5th meaning we get a lower low down to $5. That would correspond with broad hatred for precious metals as well as reaching down below $100 GLD right into Avi's model's wheel house for wave 2.
You know what comes after wave 2 down? WAVE 3 UP. As in gold smashes the old $1900 level to the upside.
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