Monthly Archives: July 2016

JNUG and the Behavioral Analysis of Markets Model

My friend Cyrille Jubert is a France-based Gold and Silver markets expert featured by the largest financial newsletter publisher in the world.

 

Today, he chose to highlight the BAM Model’s JNUG forecast to his global audience and I wanted to share that forecast here so that new subscribers (that were not with us during the wild JNUG ride) can better understand how I exploit periods when the model says a market is mis-priced.

 

In my last post, I mentioned the idea of turning my pain into your own personal gain.  ((meaning that you can focus on BAM Model Portfolio (BMP) positions that show an open loss as a method for highlighting potentially over-sold names)).  The logic in this idea can be found in the BMP’s proven performance since inception February or 2015–  w/ a record of 83 closed winners, 2 closed losers, and 3 closed break-even trades.

 

And although all of you are well aware that I’m not a financial advisor and that I never provide trading or investment advice/directives here, I do understand that subscribers occasionally use some of the model’s predictions as a way to challenge and clarify their own thoughts.

 

In the case of JNUG, that name saw the largest inversion washout (to the downside) that I have ever recorded in my work.  Thus the reason I was so aggressive in sharing my enthusiasm (as well as what appeared to be outrageous targets) w/ subscribers as well as on Twitter.  @baminvestor

 

During early January 2016, JNUG traded as low as 20.52 into January 20th.

 

At the time, I was holding positions that were well under-water.  But the JNUG Model was predicting that prices would soon rebound not only to my entry levels, but well beyond in a HUGE advance carrying price back to 206 or above.

 

My confidence in a large move was based on the BAM Model’s proprietary upside “retest” levels and I was willing to hold steady and continue to be as patient as necessary while I waited for the forecast to unfold.

 

Then, as JNUG lifted off that January low, it did something that’s not unusual after a washout occurs (but very welcomed) —  it created a “melt-up” fractal, with all of the required components that I’ve discovered during my 30 plus years of studying the human emotion that drives market price action.

 

Fast-forward now to June 3rd when a specific window was identified and predicted to bring the most powerful (blow-off) portion of the actual melt-up.

 

If JNUG were to act normally during this melt-up window, we would expect to see an attack of the retest level at 206 on its way toward a potential attack of the primary speedline (formed by price-action generated way back on Jan 22nd through February 8th).

 

That’s when (June 3rd) we immediately sent an updated chart (seen below) of the model to subscribers alerting them about the model’s incredibly bullish near-term set up into 6/28 through 7/14 (and that’s also the chart Cyrille Jubert shared with his clients today)

 

We then continued to send charts to clients showing that JNUG was tracking nicely and that our ultra-bullish forecast was well intact.

 

Fortunately for us, $JNUG tracked the model perfectly and saw a speedline attack high at 315.04 on July 11 (a 1400% gain off the January low!)

 

Also fortunate for us, $JNUG then tracked the model on the downside as well when a collapse unfolded as soon as JNUG traded through the end of the window on 7/14.

 

As you can see in the final chart below, both the 206 retest as well as the speedline attack unfolded directly into the 6/28–7/14 “melt-up” window and shares accumulated into the 21-22 level during January.

JNUG-60MM-6-3-16 JNUG-60MM-6-7-16 JNUG-60MM-6-28-16 JNUG-60MM-7-15-16 JNUG-60MM-7-26-16

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Attack of 15970 Probable for Dow Jones Industrial Average

The Behavioral Analysis of Markets Model was built after studying the similarities of the pre/ and post 1929 stock market crash price-action as well as the pre and post 1987 stock market crash price-action.   And after multiple years, and multiple dead-ends, I finally noticed the exact same pattern of human emotion had unfolded during both of those periods– as well as a common topping count (waves of price-action) also tied to human emotion.

 

And while many analyst talk in terms of optimism and pessimism driving price action into highs and lows, I found that description to be deceiving for one simple reason.  All bull and bear legs (at any degree I’ve studied) terminate (form TOPS or BOTTOMS) on a combination of factors.  For example, a TOP is formed due to a combination of optimism (actual net new purchases of shares) as well as short-covering of shares.  So in this example, the net new purchases can be attributed to “optimism” but the fund managers and traders that either capitulate or forcibly cover their previously shorted shares are not optimistic at all.  Their short-covering is strictly a function of their own capitulation or the forced margin call (broker or risk desk).

 

But more importantly, I discovered what I later came to describe as “retest” levels.  Behavioral Analysis retest levels are completely different than the “retest” levels described and identified through using Technical Analysis.  Retest levels derived through the study of Technical Analysis are typically created on price breakouts or breakdowns and they’re obvious to anyone willing to look at a price chart.

 

Behavioral Analysis “retest” levels (the ones that I discovered, and the cornerstone of my price target work) are completely hidden to the naked eye when studying price charts and were only revealed to me when I took a reverse engineering approach to dissecting the 1929 and 1987 crashes.   In other words, I looked at the final price destination the crashes reached and then worked my way back in time looking for any odd activity that might have occurred at those same price levels during the past weeks, months, and years of price-action.

 

…Which brings us to the reason behind today’s post….

 

Today’s price-action in the DJIA once again shows a completed BAM TOPPING count, and more importantly, a similar (albeit smaller) version of the price fractals I discovered back in 1929 and 1987.  So assuming the DJIA tracks the historic price-action I’ve used to identify multiple mini-crashes, we should see a violent attack of the 15970 level in the Dow Jones Industrial Average during the 7/22–8/12  window (adjusted on 7/26) with the most likely Flash-Crash or mini crash occurring during the 7/28-8/8 period. (adjusted on 7/26)

 

The Behavioral Analysis of Markets Model long term forecast is predicting a July 2016 TOP in this area followed by a massive bear market decline carrying price back below the 2009 low.   We remain bullish Natural Gas, but not much more at this point…

 

*Disclosure:  I am long SPY PUTS at various strike prices and various expiration dates.

 

 

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Stock Market TOP Predicted Today

The Stock Index Model has been expecting strength into this week’s ZOS (7/11–7/15) and we now think that a major TOP is being formed today.

 

If correct, and if the stock market continues to track the Behavioral Analysis of Markets Model, we’ll see an immediate plunge in price– carrying indexes back to/through the June low as early as 7/22 but no later than 7/28ish.

 

The nature of the predicted decline would be crash-like w/ fast-market attack levels (retests) for the ES Futures are located at:

 

2085, 2036, 1991, 1929, 1889, 1844, and 1833.

 

The current BAM-VI (Break/Acceleration) trigger levels stands at DJIA cash 18387 and that will serve as our “short below/flat above” trigger level for our Position Trader Model next week.

 

Please either subscribe or check back for future predictions as we will have an updated forecast on 7/28 which will determine if any new all-time highs are expected in any of the stock indexes.*

 

*Any future short-term updates will not change the BAM Stock Index Model’s forecast for a stock index BEAR MARKET carrying prices back below the 2009 low as we trade into 2018-2019.

 

Good luck!

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