GDX Update - Market Analysis

While I will do a more formal update tomorrow evening on the metals complex, I wanted to put a note out about the GDX.

While we certainly can have started in wave (iii) of (3), I cannot say that confidently.  The main reason that still holds me back a bit is, believe it or not, the fact that the high struck on the 17th of May counted better to me as a 3 wave structure rather than a 5 wave structure.  So, while you may think I am being a bit picky about this perspective, being this picky has kept me out of trouble many times in the past.  While we are in no "trouble" in this region, it still can have an affect. 

I think I have made it quite clear that I am bullish this complex, and have been looking for the heart of wave (3) to take hold in the near term.  The only question on my mind was if we would see a 5th wave to wave (I), or if wave (I) truly ended on the 17th. And, as I noted before, should the market move strongly through 24.65, then I can no longer look for any more pullback until we strike at least the 28 region.

However, it is still quite possible this rally is only a 5th wave in wave (I), which still means we may see another week or two of pullback in wave (ii).  But, as I have noted before, the market is in a bullish posture, and just like the equity market, I do not believe anyone should be shorting this complex.  Rather, as I mentioned today, I have been much more comfortable in this complex since the last quarter of 2015 being fully long in stock, while trading around those positions when pullbacks are possible.

So, for now, if we remain over the 23 level on any pullbacks from this point forth, and then take out 24.65 strongly, then we are in wave (iii) of (3).  However, if we break back below the 23 region, then it suggests that wave (ii) has not yet completed.

If you have also noticed, I have not tried to micro trade this move, nor have I tried to micro count this move.  I think most people should be viewing this region as a bullish consolidation as I have been explaining for weeks.  And, that simply means we may have to have a bit more patient, especially if there is further pullback to come in wave (ii).

Avi Gilburt is founder of