We have been here several times before over the last year. The market has bottomed, provided us with a strong rally, but has failed to confirm the major break out for which we have been looking.
As I noted over the weekend, the 144-minute silver chart has been quite prescient in identifying turns in this market. And, it has still not yet failed us. But, the question is what type of turn are we seeing right now?
For this, I am going to focus most on the GDX and GLD charts, as they provide the most clarity in this complex. Moreover, I am also going to review the ABX chart, since a confirmed bottom in the ABX will likely tell us the complex has bottomed, as the laggards will no longer be holding us back.
Let’s start with the GDX. We have now what CAN be the heart of a 3rd wave off the lows. But, we have the 23.20 region standing in our way. If we are unable to break out through that region, and then drop back below 22.50, that opens the door to the lower low in the GDX. However, if we can complete this 5 waves up towards the 25 region, we will have another (1)(2) presented on the daily chart, and we will be awaiting another i-ii set up for the wave (3) break out before we can confirm the big break-out in the heart of the larger wave (3) is taking hold.
As you can see from the GLD, we have a similar presentation, but with this being a b-wave rally in a bigger wave (ii) in the GLD. Support for this chart is presented on the 8-minute GDX chart, and resides between 127-127.50. But, PLEASE make sure you focus on the daily chart. Once we take out that 131 region target strongly, we will not likely stop until we see 138, and as long as we continue through that level, it points us to the 143-150 region next. And, once we break out, that all can happen rather fast.
Now, as far the representative of the laggards is concerned, ABX is presenting similarly to GDX right now. As you can see from the 60 minute chart, we still need to break out strongly through that 14 region without breaking back below the 13.50 region. Should we be unable to hold support from this point, it still points to the dreaded one more lower low before this longer term pattern may be completed in the ABX. However, just as with the daily GLD chart, I would urge you to focus on the daily chart in ABX, as the divergences being displayed present us with strong bottoming indications, as we have mentioned many times.
So, we still have some work to be seen by the bulls to get us back into a bullish trend. Moreover, the laggards, as represented by the ABX is right at it’s a=c resistance, which can still turn us down one more time. Therefore, please be a little more patient, as it will likely only take the next day or two before the market tells us if it wants to bottom and begin another break out set up, or if it still is destined for the dreaded lower low before a bottom is struck.