While the equity market was moving in a big way, I think we had a rather normal day in the metals today. As we stand, we are still over cited support, and the question now is if the metals have finally begun a c-wave rally?
Starting with the GLD, today’s rally stopped right at the 1.00 extension off the recent lows, which still allows for this rally to be corrective in nature, and take us down one more time. We really need to move through the 113.50 region to gain some traction for a rally back up towards the 116.25 region. And, as long as hold over 111, I am still expecting that c-wave rally.
The larger structure on the daily chart still has the “look” of a 4th wave consolidation, and that “look” still seems to be missing a c-wave higher in the 4th wave. This still means that as long as we hold resistance on any rally we get, it points us lower for a 5th wave down.
The GDX has a nice 5 waves up off the recent lows off support, but we still have not proven that it is anything more than a c-wave rally. We still need to see a strong break out through the 18.70 region after a wave ii consolidation, which may have completed after hours. The micro structure is not clear to that regard.
But, overall the guidance remains the same on the GDX. AS long as we remain over 17.70, I am still looking for a rally back to at least the 20 region. And, ultimately, I still have no clear signal that the lows have been struck. As the GDX is being pulled higher by those miners which may have bottomed as well as pulled lower by those that have not, we have a similar situation as seen at the end of 2015 into early 2016. At that time, the stocks that did not bottom pulled the GDX down to a lower low. For now, I maintain that same perspective unless it is able to impulsively rally through the 20.70 level, with follow through over 21.20.
When I look at NEM, a major component of the GDX, it clearly suggests that lower will be seen, as I have not clear immediate bullish count upon which to rely. Rather, the moves off the low look corrective which suggests lower levels will still be seen. In fact, the other day, someone on Seeking Alpha was arguing with me about how they are certain that NEM has bottomed, but I see no evidence of that in the daily chart.
As far as the ABX is concerned, I am still trying to give it more room to prove that it has bottomed. Therefore, as long as we remain over 10.60, I am still giving it room to run.
The issue I have with the rally having begin already is that silver really does not look ready. It can still sustain one more spike down, but as long as it holds the 14 region, I am also expecting a c-wave rally out of it.
But, on the larger scale, we are still seeing the positive divergent set up on all charts for impending bottoming in the coming months. Nothing has changed our expectation for striking a major bottom across the complex in the coming months. But, there still seems to be one more bout of “pain” for the market as the 5th wave down is often quite emotional for most market participants. So, unless we see a clear break out of resistance, much of the market is still set up for that final decline. Yet, the set up is still in place for another rally before we see that final decline.