Metals Still Not Pulling Back
By
Avi Gilburt
I am not sure how many more times I can say this. But, if the metals have really struck their long term bottoms, they will not likely provide much in the way of pullbacks, and when we really break out in the heart of the 3rd wave of wave (1) higher, the chasing will likely be breathtaking.
Many seem to have positioned themselves short or still looking for a bigger pullback. However, the metals are the one complex which do not always offer an easy entry.
As I noted over the weekend, the heart of the 3rd wave in wave (1) off the lows is set up to take hold. And, there is nothing that I have seen this week which suggests otherwise. But, as Garrett and Zac have been pointing out, we still may be in wave (i) with this higher move, and that potential is represented on my 144 minute silver chart. But, I must warn you not to assume a wave (ii) will provide much more of a pullback than we have already seen. Again, this is the toughest part of trading the metals, as I have personally experienced “retracements” which sometimes can even be less than 10%, rather than the 38-62% retracements we normally see in other markets.
I want to note the silver chart. As you can see from the 144 minute chart, the market was providing us a very high consolidation, yet the MACD was pulling back towards the trend line from which it recently broke out and has just turned up again. This has a lot of room to run if it can begin upside acceleration in price. My expectation for GLD would be the same.
As far as the GDX, which has been the cleanest chart for us, remember that it will take that strong break out over 27, with VERY strong follow through – and potentially even a gap up over - 28 which will place us on the path to 40+. In fact, if this set up now triggers the 3rd wave higher, I may be considering that this wave 3 of iii alone takes us to 35-37.
So while we are still on the edge of a potential heart of a 3rd wave take hold, I am cautiously optimistic. But, I will tell you that you will not be asking me if the heart of the 3rd wave is in progress once it happens, as it will likely be VERY clear to all market participants at the time.
