[UGAZ] update

At the backlink I provided the alternate count below with the commentary, "In order to have confidence in this alternate count I would like to see a gap up above the top rail in the next couple trading days.  Without this the odds increase that the recent bottom was only 3 of 5 and that the real 5th could be sub $1 per the backlink model at the top of this post."



Today we got just the kind of gap I was referring to.  Look how the opening gap cleared the top rail almost exactly.  Someone please explain to me by what fundamental principal this gap occurred.  Please, do feel free to explain in the comments which news item caused this.  But then please also be so good as to offer some kind of explanation on how I was able to envision it happening like this.  Do I see into the future?  Was it just a blind lucky call?  Again?  Really?  Is that the most likely explanation?  Or is it more likely that people move as a herd, all herds have habits and cycles of behavior and Elliott waves are a useful tool for timing them?

Did I KNOW this was going to happen?  Of course not!  But in reviewing the chart over the weekend I saw the potential for it to happen.  In other words, I saw that there existed a valid wave count that would allow it to occur.  We are not completely out of the woods here yet.  My blue 5 could still be just 3 of 5 and we cannot know for sure until I see 5 waves up from the bottom which I have not yet seen.  In fact, I am holding UGAZ overnight in order to see if this pops above the top rail of that rising wedge and then falls back below the lower rail again which would be a clear sell signal.



Having said that, today's breakout was kind of a big deal.  As you can see from the zoom out below, that falling blue line has been resistance for some time now and today it not only broke out, it did so with gusto.  Red is my primary, blue is secondary.  Some kind of double bottom would be normal here so the actual could be a combo between red and blue.  This business of calling peaks and bottoms to the exact day is of course, more related to odds than anything else.

If you are a lion tamer and you crack that whip, the lion might move from one circus stand to the other as the tamer would expect.  But the lion might also come off that stand and claw you in half.  Odds, good people, are not to be confused with certainties.  We are gambling here, nothing more.



One of the problems with UGAZ and other natural gas charts that are easy to come by is that they are based on derivatives. Below is a chart of the continuous futures chart since 2006 which shows the longer term count I am looking at.  The recent bottom could have been the bottom but the conservative view is that it was just the bottom of 3 of 5.  If this interpretation is correct then we should see a size-able move (30-40%) in nat gas upward into 2016, worst case.  We will know that this worst case is playing out because it will likely come in 3 waves.  UGAZ should absolutely skyrocket if Nat Gas gets that kind of pop.  UGAZ is down 80-90% in just the past 5 months.  The next 5 months could see it become a 6 bagger from current price.

Best case is that the recent bottom was an even more major bottom with next nat gas target to $6.  Depending on how long that took to achieve, UGAZ could put in an incredible performance in this case.

But don't make the mistake of over thinking this too far into the future.  Play the current wave which I think has likely just bottomed.  Buy the 3 wave dip.  Do not chase!!