Metals Are Moving In The Shadows
By
Avi Gilburt
It has been interesting watching the metals move of late, as almost all the action has taken place during after-hours. As an example, when gold struck its recent local bottom to what I am counting as wave 3, it happened in the overnight session. Then, yesterday, it took the market the entire day to set up a 1-2, i-ii pattern, and as soon as the market closed, silver and gold broke out in their 3rd waves.
I even noted it in a post I made at 1PM:
“The way this continually hesitates at the highs seems to suggest it may attempt a break out overnight. We will see. As long as we hold over the overnight low, this is pointing higher.”
Today, the market is just moving sideways, likely setting up the next rally overnight. And, there is event potential it could strike its 5th wave target and then turn back down even before the market opens. Of course, this is speculation. But, the way it has been running of late, it would not surprise me.
That alludes to my view that I think we are missing a 5th wave higher in the c-wave of the a-b-c corrective rally within my primary count. And, I will reiterate again that gold is providing us with the clearest of the patterns.
The initial rally off the Sunday night low really counts best as a 3-wave structure. Therefore, I have my primary labeling for that rally as an a-wave in wave 4. We then saw a corrective pullback in the b-wave, and the overnight action last night saw wave iii of the c-wave seemingly complete. Today, I am assuming we are in wave iv, and I maintain that view as long as we hold over 4485 in gold. That means I am still looking for one more rally to complete wave v of the c-wave of wave 4.
What that means is that as long as we respect the resistance box, I am expecting us to drop to lower lows to complete this larger degree a-b-c corrective structure off the late January all-time market high.
Silver and GDX generally seem to be presenting the same way. However, in GDX, I have an open question as to whether the next lower low will be just completing wave v of 3 in its c-wave or all of the c-wave. In either case, I think it is a good point in time to continue to layer into individual mining stocks that are presenting a strong pattern for striking a corrective low.
Now, let’s discuss the alternative in purple. Clearly, we will need to see the market break out through the various resistance boxes to assume that the purple count is going to play out in a very evil pattern. Moreover, we will need to break down below the various b-wave lows to invalidate any potential that this could be setting up a 1-2, i-ii structure in the purple (c) wave count. Therefore, we have strong parameters to follow regarding our alternative perspective.
There is one more point I want to make for GDX. Based upon a number of individual mining stock charts, there is a strong view that the purple count is what will play out. Therefore, I cannot completely rule it out, even if we get a lower low. There are also a number of stocks that suggest we could see another rally to complete their 3rd waves, followed by another 4-5. This also bolsters the potential for the purple count, as those stocks could complete their respective 3rd waves to higher highs while the other stocks remain mired in a corrective b-wave rally. So, please keep this in the back of your minds when you are reviewing those stocks you may want to own for the next bigger rally.
For now, I still think the stronger interpretation is for this to be a corrective 4th wave bounce, which can end with one more push higher, followed by lower lows in all three charts. The ideal target for GDX is in the 70 region, for silver is the 53.50 region, and for gold in the 4000 region, but clearly, we can see spikes below those ideal targets.
