The Winds Of Change
As posted earlier today, we have seen a significant initial confirmation in the GDX chart:
With the break out over 15.01, the GDX has provided us the first indication of a long term potential bottom in many years. As I noted over the weekend, should we break out over 15.01, it takes off the potential that a (1)(2) downside structure can take this down to the 9 region, and gives us a much stronger potential that a long term bottom has been struck in our “BUY” region we set many years ago.
But, simply invalidating the immediate (1)(2) down is not the same as confirming a new impulse off the lows. So, as I mentioned on the weekend as well, we need to now move through the 17 region, on our way towards the 21/22 region for an initial impulsive 5 wave structure off the bottom to signal that a new bull market has begun. That will set up a wave ii pullback in green, which should take us back down into the region we now find ourselves within and set up a major move higher in the miners later this year.
But, the break out over 15.01 was a very important first step in that process. But, the 17 region is now going to be just as important.
With that being said, the GLD and silver charts have now come right into their target resistance points. Since both these charts need a 5 wave decline from these resistance regions, I am going to be on high alert now for an initial 5 wave decline from resistance to begin to signal that we are heading down for our final bottom.
As I have been saying for quite some time, I still question whether gold will drop below the $1,000 region, since it seems just as many that expected gold to exceed the $2,000 region in 2011 are also expecting gold to break below $1,000 now.
The main question is what it will take for me to believe the bottom could be in for the metals? Well, if the metals can bust through these resistance regions, we can begin to consider it. But, the overall charts really suggest a lower low should be seen, so until we see a break out, I am going to be looking down for one more lower low.
Another question being asked is how the metals will get a lower low and have GDX not follow along? Well, why can we not see a corrective decline in GDX while the metals drop to a marginally lower low? This is what I would expect if the GDX has actually confirmed its bottom.
But, remember, we still need the GDX to move strongly through the 17 level before we can be more confident that the bottom truly is in. Yet, I have no desire to be shorting GDX at this point, as there is no immediate pattern looking down, as we broke the last one today. And, until I see one, I will be looking higher for the market to finally prove the bull market has resumed.