Yes, I know the GLD has invalidated a potential bottom from yesterday, and dropped a bit lower into support, but no support has been broken in GDX, GLD or silver yet.
But, I cannot say that I only have good news today. You see, the drop in GLD and GDX “CAN” count as 5 waves down off the highs. With that being said, the manner in which the GDX has dropped provided positive divergence all the way down in that “potential” 5 wave downside structure, which means that the technicals do not support that count as being 5 waves down, but more so a corrective drop.
However, the GLD technicals can support it as a 5 wave drop, which is a warning sign to longs, and one I have to consider strongly. That means that if we see a rally over 126.80 which is corrective in nature, then we may have a set up that can take us down to the 123-123.75 region next, in a larger degree (i)(ii), as presented on the daily GLD chart. Moreover, a strong break of the 125.20 region can open a direct drop to the 123 region as well in a c-wave down in that wave (ii) on the daily chart.
Moreover, GDX may also see a drop down to the 23.50 region in a bigger a-b-c pullback if we cannot move through the 24.85 region in an impulsive fashion. But, the technicals in GDX make it more likely that the drop in the GDX was corrective rather than impulsive.
And, as long as silver holds its 17.30-17.40 support, we have a very bullish pattern set up which can even take it beyond the blue box overhead on the 144 minute chart.
So, I am still remaining bullish the complex, but I am going to keep my eye on some “warning” signs I am seeing. The manner in which we rally off the recent low region will likely be more telling, and may have a better answer by the weekend.
Ultimately, the market has provided a really nice 5 wave structure off the 2015 lows which we classify as wave 1 off the bear market lows. Our issue for the last 9 months has been trying to resolve where the wave 2 ends and the wave 3 begins. We have strong potential for that wave 3 to begin from this point. But, I am going to keep an open mind that wave 2 MAY not be over, until we are able to break out through the pivot box on the daily GDX chart, as we have discussed over the last few weeks.