It seems I am going to be forced to track the NEM a bit longer, since I am still seeing it as a strong barometer for the miners complex.
With the take out of resistance yesterday, and the continued strength today, I am seeing two pattern potentials over the coming couple of weeks.
As you can see from the green count, it is quite possible that the NEM may try to catch up to its brethren, as I noted before. That being the case, the next level we will have to blow through is the 1.00 extension off the lows in the 36.80 region. If we can see a strong continued move through there, then I would view us as being in wave [iii] of wave 1, which points us up to the 39-40.50 region.
But, as I noted in the title to this update, I am quite uncomfortable in being long without any protection because it is still very hard for me to trust this move up in the NEM until we get a full 5 waves completed off these lows. You see, having to rely on a very uncertain bottoming structure makes me quite nervous even if I do not have a higher probability pattern pointing to lower lows for what would be a more completed pattern. For this reason, I noted that I am again going to take some shorter-term hedges until the NEM can blow through the 37 region. So, please review the potential pattern I highlighted in yellow which can still take us down, but which I don’t think will make a lower low at this point in time. It simply would provide for a more expanded wave [ii].
The other reason I think it is reasonable to take some hedges is because silver looks to be completing 5 waves up off the low we expected last week. While a-waves can be 5-wave structures, it is less common to see such a structure for an a-wave. For this reason, I am more strongly considering the potential for the market to take us up to the alt (5) in yellow in silver, after we see a pullback. So, buying pull backs at this time would be prudent, with a stop below last week’s low.
As far as GDX is concerned, due to the significant overlap with which we are dealing it is truly hard to discern where it will top out for wave 1. So, I am going to wait for some weakness before I can be a bit more certain. Overall, I still don’t think that wave 1 has completed just yet.
Lastly, as far as GLD is concerned, it too does not suggest it has completed its wave [i] just yet. We will need to see a break down below 123 to suggest that wave [ii] is in progress.
Overall, this week has certainly provide more of an immediate bullish case scenario across the complex, but I still think we will see another bout of weakness for buying opportunities. Moreover, I am now going to approach this market in a buy-the-dip mode more so than before.