So, there is “some” good news, and some so-so news in this update.
Let’s start with GDX. Over the weekend, I outlined a triangle in the GDX, but also warned that if we broke out over the triangle, we still would likely have a bearish structure in play.
Well, it seems that the triangle we were tracking morphed into a [b] wave triangle, which then broke out for a [c] wave in a larger [a][b][c] corrective rally off the recent lows. As long as the resistance box noted on my 8-minute GDX chart is respected as resistance then I am still looking for that dreaded lower low in wave 5.
Clearly, the alternative count I have presented is beyond ugly and it is very hard to consider this structure as a bottoming structure. But, if the market does break out through this resistance, then I have to consider the potential much more strongly. We have had several rallies in the past begun in this manner, so I cannot say it is unusual based upon what we have seen in this complex in the past. I have even discussed the reasoning for such ugly bottoming structures as being due to the push/pull of those miners that have bottomed and those that have not. But, for now, I view this as a significantly lower probability until proven otherwise.
As far as the GLD, there is some potential that it too has bottomed. In fact, I can count 5 waves up off the last low. But, as you know, we will need to see a corrective retrace followed by a larger degree 5-wave structure, of which the initial 5 waves is only the first wave of that larger 5-wave structure. It that larger degree 5-wave structure which will be our strong signal that GLD has bottomed and that we have begun the rally to our targets overhead on the daily chart.
Lastly, silver has held support, but the rally off support is quite ugly and overlapping. It does not leave me with any strong indications that the low has indeed been struck. But, since silver is not something I would short, I am going to give it an opportunity to develop a bit more before I can feel better about the bottom being in place.
So, in summary, there is potential being displayed that a bottom in the complex may be in place. Some miners have bottomed, while others still have not done so clearly. So, as long as we hold resistance on GDX, I am looking for the dreaded lower low. In the meantime, I intend to track silver and GLD, and give them the opportunity to prove that they have struck their respective lows. I would say I am cautiously optimistic, but do need further evidence in the coming week or two.