As we came into this week, the charts were pointing down. Whereas the GDX was clearly pointing down, along with NEM, it seems to have dragged silver down in a more extended 3rd wave, with the ABX also pushing for a more extended 5th wave down.
As we can see from the GDX charts, we were looking for the completion of waves 3,4 and 5 on the 8-minute micro chart. Today, we seem to be completing that micro 3rd wave, with a 4th wave bounce to be coming soon. And, as long as we remain below that micro resistance on the 8-minute chart, I expect a 5th wave lower low to complete this downside structure from the top we caught last week.
But, as you can see from the daily chart, once this 5 wave structure completes, it is quite possible that this could conclude this drop in the GDX in a WXY pattern. We will not be able to make that determination until we see how the next rally takes shape. If it is clearly impulsive, then we can declare the bottom has been struck in the GDX. If it is clearly corrective, then we will be looking for a lower low in the yellow count.
Whereas the ABX is certainly fully cooked to the downside with this lower low, I really can only count a clear 3 waves off the recent high into that low. That leaves the potential for the yellow count to play out, which would then align it with the GLD.
As far as the NEM, I think we are completing the 3rd wave on this decline, which would suggest we can still see another 4th and 5th wave before this 2nd wave is completed in NEM. So, there are really no changes to that count.
And, with regard to the GLD, I hypothesized that even if GDX and miners get lower lows, the GLD looks like any decline will likely only be a b-wave in its 4th wave. So far, that seems to still be the case.
So, as the metals continue to fill in their downside patterns as generally outlined over the weekend, I still have nothing in place to suggest a bottom has been struck. It likely means we still need a bit more patience and it will likely takes several more weeks before these downside patterns all complete and the entire complex has bottomed.
But, there is no question many of these charts are stretched just as much, if not more, than what we saw back at the end of 2015. So, please remain on your toes, as we are nearing the point at which a number of miners will likely begin to show patterns off lows evidencing they have bottomed, and that will be the initial signal that the complex is very near to a bottoming. One such stock I am watching very closely is the ABX.