Gold Stocks, GDXJ 2011-2016 Cycle Degree Bear Market Review

 

gdxj_oct-11-2016

 

Up  on the left side of this chart I show the Cycle degree wave III position. On previous wave counts I was two degree levels too low, which can make us look for all sorts of patterns, that may end this bear market early. All of them will be wrong, but when we change something, a new Cycle degree world order comes into focus. Or parts of it. I always have 3 simple corrections to choose from, and for now we have to figure out where we are in this pattern. 

Cycle degree corrections are not going to take just 5 years to play out, we could be looking at another 5 years or until 2021. At this time I’m looking at a possible Primary degree correction, which the “B” wave part can contain a triangle. I don’t expect a triangle in the entire 4th wave just yet, and this doesn’t have the start of a flat. So that leaves a zigzag at this time, or a 5-3-5 pattern. It is the Primary degree “B” wave that could be big and tall. So this will be a wild swing to say the least. This “B” wave should not be another zigzag, as zigzags correcting inside another zigzag I frown on.  They are a dead giveaway,  that we can’t be in a zigzag, or it determines we are in a triangle.  Crude oil had this type of a move so I had to eliminate it as a flat. 

The run up from the bottom looks like 5 waves up! If we were in a true blue bull market, then it has to find another button, and then soar, but if those same 5 waves are attached to an expanded bottom pattern, then gold stock investors are going to be in for a shock! This GDXJ can then crash well below new record lows. 

Now that we have a very strong top completed, my parallel lines may have some use. They give us a basic trend line, and a rough target for a new low. I did not mention any price at this time, because in my world, pattern supersedes price, any day of the year!  Besides, nothing in the EWP first chapter, talks about prices.

 At the peak in August 2016 the gold/Gdxj ratio was just a bit above 26:1 and today it was 33.42:1, this is getting a little cheaper, but not cheap enough at this time. 62:1 was very cheap and about 11:1 was very expensive, so I see the risk still being very high in buying any gold stock ETF at this time.