Significant Action In GDXJ

While I have been worried for some time that the recent 5-wave rally in GDXJ may be a (c) wave in a 4th wave, leading to another drop towards 33, today's action has likely invalidated that structure.

With the rally over the recent high, we can no longer have a i-ii downside structure for the yellow count. However, that does not necessarily mean we are ready to break out just yet.  This rally is a rather clear 3-wave structure.  Therefore, I am now going to primarily view it as a b-wave within an expanded wave [ii] flat.  Therefore, I am still expecting one more decline before we may be ready to break out.

Also, the yellow count is now going to be my alternative count at the high we create in this move higher, but I see that as a much lower probability as it stands right now.  The only way to count that now is as a non-overlapping diagonal for the [c] wave of 4, and that is not normally a high probability perspective.  I would need more evidence to be able to adopt that perspective.

Does that now mean that I am ready to go aggressively long?  NO!   I still need to see an appropriate wave [ii] structure, followed by a break out over the high of wave [i] before I am willing to consider an aggressive long position.  There are just too many issues throughout all the chart that we still track to take an aggressive posture before that happens, at least in my humble opinon.

Avi Gilburt is founder of