5 UP? - Market Analysis for Mar 15th, 2023

I remember when I was a kid, I used to love drinking 7-UP.  Now, as an adult, I am much more so into the game of 5-UP.

When it comes to my adult game of 5-UP, I am quite a stickler for a solid structure.   And, when I get a solid structure, it will usually allow me to seek an aggressive posture on a corrective pullback.   So, do we have a solid 5-UP in metals?

Well, this is where it gets a bit squishy.  And, I discussed this early this morning on the live video.

Let’s start with silver.  Can I count 5 waves up in silver?  Yes.   Is it an ideal structure wherein silver has struck the levels we normally see in silver during an impulsive move?  Not really.   

You see, in a standard 5-wave structure, the 3rd wave targets the 1.618 extension and the 5th wave targets the 2.00 extension of waves 1-2.   When metals run, they often target much larger extensions than standard.  So, when silver topped on its potential wave [iii] slightly north of the 1.618 extension, it really makes me wonder if this is a true 5-wave structure.

The other issue is that a 1st wave within a 3rd wave often targets the .382-.618 extension of waves 1-2.  Silver has stopped thus far just below the .382 extension.  This is not what I would normally expect if silver is about to start a larger 3rd wave.  But, since silver is known for catch-up moves, I can overlook this issue a bit.

So, for now, I am going to treat silver as though it has completed 5 waves up, and I am going to be seeking a very clear corrective pullback to be more confident of this set up.

Normally, I would say that GC has given me a bit more of what I want to see.   The only issue is the initial move off the late February low can still be counted as the start of an a-b-c rally, which is why the [b] wave alternative remains on the chart.  While it also only reached its .382 extension of waves [1][2] as well, this is not as much of an issue to me because we are already challenging the prior highs of wave [1].  

So, I am going to be watching this VERY carefully to make sure we see a corrective pullback to make it likely we are in a wave ii.    However, should the market begin to drop in impulsive fashion, I will try to prepare you for the potential of the blue [c] wave decline.

The biggest problem I have is with GDX. The double bottom really causes problems, similar to GC.  And, it really has clouded the appropriate count for the rally structure. Moreover, we have not even reached the .382 extension of waves 1-2 yet.  So, I am going to give this a bit more time to clear up.

In truth, I would prefer to see GDX extend higher even within this wave [1].   And, of course, I would assume both gold and silver would do the same, which would be fine, especially for silver.   

So, for now, I am going to give the market a bit of room to either extend a bit more in this current rally, or prove to us a corrective pullback in a 2nd wave.  

Avi Gilburt is founder of ElliottWaveTrader.net.