Direct May Not Be So Direct

The main point of this update is simply to remind you that pressure will remain down in the more direct path to our lower directs UNLESS we see a VERY CLEAR 5-wave rally take hold at higher than a micro level.  But, even so, I am still expecting a sizeable bounce soon in a 4^th wave of the c-wave lower.

Yet, I want to note that silver still retains some potential for the purple count.  Last night, we struck a 1.00 extension (a=c) low and have bounced.  Since I am counting a direct move lower as an ending diagonal, we really should be targeting at least the 1.236 extension in the 58/59 region in wave iii of the ending diagonal before we see a wave iv bounce.

At best, the rally seen off that support overnight MAY count as a leading diagonal.  But, as I said, they are not terribly reliable so I am still assuming this bounce will remain corrective and we will continue lower to the wave iii target in the coming days.  Should we see a 5-wave structure take hold at one higher degree with this potential leading diagonal being wave i of that 5-wave rally, then I will likely change focus.   Barring that, I am still looking lower to complete wave iii, followed by a bigger wave iv bounce.

To me, GDX is the most clear structure in its c-wave lower.  We have struck its 1.382 extension down, which can satisfy a 3^rd wave completion.  But, as with silver, I would prefer to see one more extension lower before wave 3 is done.   This is the chart I am most excited about, as once we complete waves 3, 4 and 5, I believe that mining stocks will be the higher probability buy for them to reach new highs, as the metals themselves may only see larger degree (b) wave rallies.  If you remember, whether the metals reach higher highs will be based upon the nature of the rally after this correction is completed, whereas many mining stocks likely will be going to higher highs.

Gold clearly has a corrective bounce in the overnight session so I have absolutely no indications of the purple count in that chart, and we likely remain in the immediate downtrend to complete this correction sooner rather than later.  But, as with the other charts, I would still expect what may be a sizeable 4^th wave bounce before we drop to complete this structure.

Overall, my preference remains that we continue lower in a more immediate fashion to complete the respective 3^rd waves in the various charts.  Thereafter, I think we can see a sizeable corrective bounce, especially in gold and silver, since these seem to be taking shape as ending diagonals in their c-waves.  Therefore, it is not unusual to see wave iv overlap or at least approach the lows of wave i.