Bounces Have Been Hard To Sustain

In the weekend update, I tried to prepare you for the potential that we can see a double bottom in GDX and GLD, as both had a set up to drop again this week.  While GLD is still holding a bit over its double bottom relative to the bottom struck earlier in October, GDX is already there, and exhibiting much more weakness.

And, as I noted in my updates the last few days, I really want to see the GDX holding the 22.70 region, as there is strong positive divergence in here. But, due to its weakness, I want to present the alternative at this time.

Should GDX see weakness beyond this region, and point down towards the 22.30 region, it would suggest that we have already begun wave 3 down in this decline I am expecting towards the 17 region.  I would then have to consider us already in wave i of wave 3, and I have shown that potential on the daily chart.  Again, this is ONLY if we see continued weakness in the GDX before a bounce takes hold. 

This would also mean that any bounce we see will likely only be wave ii of wave 3 down, again, as shown on the daily chart.

While my preference is still to see this region hold as support and take us up for a more appropriate wave 2 in the 24.50 region, further weakness will cause me to change that perspective, and consider us one wave degree beyond where I had believed we currently stand.

As far as GLD and silver are concerned, they still are holding where they need to hold for their respective (c) wave rallies, and as long as silver remains over 16.50, I have to maintain this expectation.

I want to reiterate that the market will still “likely” see a bounce before we see much bigger weakness overall, and my preference is for that bounce to be a (c) wave.  But, if the GDX continues with its current weakness down to the 22.30 region, then I will have to view it as being one wave degree ahead of the metals themselves which also means that the miners can see much greater weakness than the metals in the coming months.

GDX-8min
GDX-8min
GDXdaily
GDXdaily
GLDdaily
GLDdaily
silver144min
silver144min
Avi Gilburt is founder of ElliottWaveTrader.net.