Deeper Pullback Has Interesting Ramifications For GLD
By
Avi Gilburt
With this deeper pullback in the complex, the GLD has now also reset itself in the same manner as we had been hoping for GDX. In fact, this now looks like a larger degree a-b-c structure for wave [iv] in GLD, rather than the complex ending diagonal scenario I had previously been tracking. What this means is that not only can I now expect a standard impulsive structure for the next rally in silver and GDX, but it seems that GLD will also join its brethren with an expectation of an impulsive rally over the coming year. This will likely allow us aggressive trading opportunities in GLD as well once we complete this larger degree corrective structure.
But, clearly, we still do not have a completed downside structure, despite the depth of the pullback thus far. While I do have enough waves now in place for GDX to be considered completed to the downside, I do not have that yet in GLD or silver. So, as I said over the weekend, we may still have several more weeks ahead before the complex finally bottoms out.
As you can see from the silver chart, I view this further downside extension as simply an extension within the wave [iii] of the 5th wave of the c-wave, and I would assume that GLD is in the same posture, as it has lower to attain until we see an a=c structure for this larger wave [iv].
For those that are aggressive in the complex, I have noted that one can begin to layer into initial long positions as we complete the 3rd wave of the c-wave, with the expectation that you can add another layer of longs as we complete the 5th wave lower low, assuming we get that. If we do not, you can always layer into the 2nd wave pullback after we see an initial 5-wave rally off a low.
But, for now, the only chart that I am on the lookout for an impulsive rally off a low is the GDX. I do not think we are ripe yet to expect one in GLD or silver. Rather, I think it is reasonable to expect another 4th and 5th wave before this c-wave completes.
In the meantime, those that are more conservative in the complex can always choose to wait until we complete the initial 5-wave rally off the lows, and then begin layering in on the 2nd wave pullback. Also, remember that you do not have to move into your full position all at once. You can always choose to buy an initial position on a 2nd wave pullback, then allow the first wave of the 3rd wave to complete, then buy a 2nd position on the 2nd wave pullback within the 3rd wave, and add a third tranche when we break out over the 1st of wave in the 3rd wave.
There is more than one way to move into this complex, and it is all dependent upon you recognizing how aggressive you want to be in the complex. Please do not allow greed to dictate this decision for you, but rather your own risk tolerance.
Overall, I still expect us to see the resumption of the bull market in the metals complex in the 2nd half of this year, and I think it will take us well into 2023.
