GDX, Gold Stock Bear Market Review



Not that much has changed with gold stocks as they are still much higher, from where gold presently sits.  Investors have been unloading shares at a horrendous rate. This is producing a very bearish mood which I look for when the opposite can happen.  Gold may still have a bit to fall as it may crack a new bear market low one more time.  At the 2016 bottom the Gold/Gdx Ratio hit an extreme  of about 85:1. This is the most extreme calculation I have run across, from which GDX exploded and roared until the August 2016 peak. I was expecting a correction at that time, and we sure got it. It is still heading south, but at anytime it can also start on a reversal.  Today the Gold/Gdx ratio sits a bit above 59:1, which I consider still very cheap when compared to gold.

 The exact retracement price level is impossible to calculate, but I use several based on the net move from the 2016 bottom to the July 2016 top.  We have several gaps open above present price levels as gaps do work like magnets drawing prices to close the gaps. There is always a 90% chance of any gap getting filled, but when they do fill it can take a long time.  

One thing that must not happen and that is that GDX crashes to a new record low, as that means we have been suckered yet again. Of course, all the other gold stock related assets must also do the same thing. Either the bearish phase was completed in early 2016 or it’s not as a sector does not move independently except for single stocks.  Even with strong stock market rallies, GDX has been indifferent to this most of the time, as GDX has been making small incremental moves.  

Longer term I’m very bullish, but it would be nice to see our low price for 2016.  

I also show a potential H&S pattern that has not fully formed, just yet. It makes no sense to show a H&S pattern after the fact, as then it is too late to do anything.  It is the bull market correction bottoms that offer the best places for reversal.  

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GDX, Gold Stock Crash Review




This time I included a bunch of pretty trend lines. Most of the time I just visualize the trend lines as I hate drawing them out.  Trend lines are so abused that I would rather not use them, but I find parallel lines far more useful than drawing out every little wedge.  I can count down 7 waves which can be part of a diagonal wave structure, or a correction.  We just had a gap open up, and my bet is that this gap above, will get filled sooner than later. There may be two more open gaps far above present prices, and gaps can act as a magnet for prices. 

The general public still sees no fear in the markets, as they are about as complacent as we can get. With all the potential turmoil around the world you would figure gold stocks should be soaring.  That will only happen when the USD takes a big rest, and starts to head south again. 

A fast drop like we witnessed usally happens closer to the ends of runs, so the contrarians are buying while the majority display, their emotional dumping of gold stocks.  Gold dropped much further than gold stocks, which is very normal. Don’t bet that gold stocks will catch up with gold itself,  as that was the Wall Street BS they tried to pass off on us, at the 2011 peaks. 

The majority will figure that the “Trump Bump” has destroyed gold stocks, but I believe the opposite will start to happen, surprising all those that are selling in a panic now.  The logic to dump gold stocks when they are just a bit off world record lows, makes no sense to any contrarian as I’m sure that the GTC Ladder Of Orders are kicking in buying gold stock related ETFs. 

If I show you a bearish wave count while the majority are also bearish then without a doubt I will be wrong and we would be forced to chase a trend again. 

The Gold/Gdx ratio has become cheaper again, which is a very good sign. At 59:1, from a bottom of 84:1 I consider gold stocks being rather cheap. 

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Gold Stocks, GDX Review




My patience has started to run a bit thin, as gold and gold stocks seemed to keep declining.  This is also the same time that gold stocks can reverse and roar.  I would be happy if this all turned the corner soon, but I can wish it until pigs start to fly,  if gold stocks are still not ready to start the next leg up.  The Gold/Gdx ration is still very reasonable at 55:1  which has been about the average since the beginning of November.  When GDX gets closer to a 30:1 ratio then we are looking at very expensive gold stocks. Many other ratios would also have to calculate out closer to the extremes, as I don’t base anything on strictly one ETF. 

From my perspective, there should be more upside left to come. So many people are bearish on gold stocks, so when this starts to turn, then all the bears will turn into gold stock bulls. This can put more power behind a move, and is what I look for most of the time. 

I’m trying the wave count containing an expanded pattern, which would produce a more even looking zigzag once the “C” wave starts to complete.  Some readers have asked which wave counts are the best ones to trade? In the last few years I have covered many, if not all of the wave positions which can produce extremely wild moves and a “C” wave bull market is one of them.  Even a Minor degree move can surprise us, but the chance of staying in that type of trade is next to zero. Sooner or later we get scared out of a move, stops get hit, or we take profits far too early. 

The same type of moves up, also happens on the way down. This is when the traders that know how to speculate short, benefit. 

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GDX, Gold Stock Bear Trap Review




Last week gold stocks made another short blip to the downside what I hope will hold for the people that are priced addicts. Many of the disenchanted have been unloading their GDX holdings, but the smart money sees this as a screaming buy.  

Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals  I have read Zeal’s work many times over the years and he makes some great charts. I also consider him a successful contrarian, and the last thing I ever what to do is show my readers an extremely bearish wave count, not confirming a contrarian point of view.  It is not just Zeal, that is bullish on gold stocks, but Steven Jon Kaplan is and has been bullish for some time. “Trump is about to make inflation great again.” –Luke Kawa and Sid Verma tells us that a big bull market in gold stocks should materialize.  When we produce a wave count that does not confirm the rich seasoned contrarians, then any bearish wave counts need to be thrown out instantly.

There are no stinking rich wave counters out today, but only the contrarians that never look at wave counts are millionaires or getting close to it.  Any wave count that is in sympathy with the crowd will fail, leaving those waves counting bears,  in the bull dust!  We need early warning which allows the contrarians enough time to build or accumulate large positions. Buying low also reduces downside risks, as this process brings down the cost average very quickly. 

Jumping on the gold bandwagon after it gets going again, will get the gold bull riders kicked off on the first correction, and we end up losing a bunch of money in a bull market.   

The Gold/Gdx ratio has been working down slowly but is still around the 57.5:1 ratio.  When it reaches 30:1 then gold stocks will be extremely expensive again, and chances are good it will be time to sell. 


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Gold And GDX, Catching A Falling Knife!




It was a wild ride last week as this gold market dropped like a rock on Friday.  This violent move south of the GDX, sure looks like a nice spike to me. Of course, many people do not even see the spike, and when they do they think it is going to go much further.   It may sound crazy, but catching a falling knife is what we have to get very good at, to trade this market. The fear comes from not knowing how low it is still going to fall to.  You are not alone on that, as the majority think exactly like that.  GDX did fall to the bottom trend line and the 100 shares is just part  of a paper trade, to help test this  wave count.

If we look at this decline as a correction in a bigger bullish phase, then the decision may be easier. They key is to never take your entire position at once, as that is a basic buying rule that not too many people know how to do. 

The chances are good that the US dollar will resume with its bigger bearish run, and therefore GDX and gold will rise. We also have the classic setup, where the USD, and stocks are pointing up, as gold and gold stocks are pointing down.

 We just had another stock and USD bull attack, and the gold price suffered. This could all reverse and when it does, it will not just last a few days or so. It may last for the rest of the year or longer. 

In early 2016 GDX bottomed, and I show an ((A)) wave in Primary degree. This means we are in a ((B)) wave bull market in Primary degree, and still have a long way to go. 

GDX also hit the $21 price level, last week, which is what I like to see, as 21 is a Fibonacci number.

The Gold/Gdx ratio of 58:1, expanded the most of its entire bullish phase last week as well. 



Looking at gold we can see how it went wild last week, but two obvious spikes have now developed. So far gold has come to a halt at $1220 and I’m hoping it will hold.  Again, that huge spike is another clear example of what they call a “Falling Knife”. These spikes on the daily charts, is what I target with any wave counts. At this point gold slumped about $155, which worked out to about a 48% correction.  Gold crashed below the middle of a previous bull market, so that helps with a potential price support as well. In a panic, it could still dip lower, but that is a risk that is always present.  

If all gold does is breakout to a new high, then you are looking at a minimum $155 price move.  On the real bright side, maybe gold can hit $1600, but we have to wait until the mass media headlines become bullish again.

Any “B” wave rally in a Primary degree is technically a big bear market rally, but it is so big that it will end up being just another bull market to the majority. By then they will all have forgotten about the 2016 bearish bottom, as they think the worst is over.  With any Elliott Wave we should never forget that bottom as it is the base to do all other net calculations from. The majority is hooked on their little slider retracement tool they use, but does a 48% retracement set off any alarm bells to buy? 

I’m looking for a “C” wave bull market in Minor degree, and don’t let the idea of a “Minor” degree move fool us, as a “C” wave move can surprise even the best of us. 

Silver has not completely retraced its decline, but it may turn into a double bottom. That also can give gold a little more room to move lower as well.

In bull markets all corrections point downward, usally finishing on some type of “C” wave, but when the bullish run does come to an end, all these “C” waves will start to invert on the smaller scale.

The US dollar is the key to all this and I will still post a daily USD chart today.  



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Gold Stocks GDX Review: Trapping the Gold Bears!




This gold stock related ETF follows the HUI fairly well.  We have a bearish decline that is still ongoing, but it should find a bottom eventually.  Sure, we can make good guesses as to how far it may go, but if GDX still has to finish a 5th wave then it could fall below $22. 

For the month of November the Gold/Gdx ratio has been about the 54:1 range which is still rather normal.  When this ratio becomes insane like a 30:1 ratio then we know the gold stock bull market gig is finished. 

The 2016 low was a major low by any stretch of the imagination and I believe we are in a Primary degree “B” wave bull market. As I mentioned before, those that are wondering what a Donald  Trump presidency may bring, should watch the gold market.  All the contrarians have been in gold stocks for some time already, and it was not in anticipation of a Trump, win. It was the shear fact that gold stocks were oversold by an extreme amount, why contrarians bought gold related assets. There is the odd chance that a diagonal first wave is in but that needs to be confirmed. It may take until the end of November for this bearish decline to fully play out. 

The fear of losing money, trying to catch a falling knife, is not what the majority of traders will ever do, as it is a very small percentage that really understand contrarian thinking.  

It is impossible to learn and practice any type of true contrarian thinking overnight, and if you really pour the coals to it, it may take you 4 years or more to do. The EWP will take you a minimum of 4 years to gasp, and that is only if you apply University Degree studying habits.  

 I just visited my friend yesterday and he worked very hard for the last 6 years, to go from running with the gold crowd to buying from the bearish gold crowd, and I’m sure he will never turn back as he is having a very successful year 


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GDX, Gold Stock Potential Correction Review




Last month gold stocks started a run that has just started to correct a bit. Or is it going to move more than just a correction? Next week will be the big kicker for gold stocks, if this present rally is just another diagonal 4th wave rally.  Diagonal 4th wave counter rallies can come back up well into the price territory of wave two, but must “never” exceed it.  The 4th wave has just dipped into wave two last week, so it no longer works as an idealized impulse decline.

Some wave analysts may have switched over and started this bull market as a pure impulse wave, but I’m sure that in the long run, any impulse wave count will not work.  I recently posted an idealized or blueprint of a Primary degree “B” wave bull market, and it applies to all gold stock ETFs as well.

The Gold/Gdx ratio is just a bit over 52:1 which is up from the 84:1 extreme I measured at the bottom. It still is not on the extreme expensive side, but when the ratio expands, then this is a sign that gold stocks are getting cheaper when we use cash gold as money.

It would be fitting if GDX corrected back down to the $21 price level as that would make it a great Fibonacci price level. The GDX peak came in just below a Fibonacci $34, so a $21 price level would just about make it very close to a .618 (61%) correction. Since the EWP is a 60/40 type relationship, it makes no sense to use a bunch of other retracement levels that I have never found to work. 

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Testing A Wave Count With GDX




I created this chart on Monday and have now posted it for the first time. I’m going to gear my commentary to someone who is more of a trader than an investor. Also, someone with EWP knowledge would be very helpful as you have a basic understanding what many of the “ABCs” stand for.   

I have made many of these types of tests, but I have not done one on paper for years. This is all based on any good understanding on how well we can visualize up or down the different idealized wave form.  Many will view this gold market as a very bullish sign, but what they don’t tell us is how much you can lose trading even in a bull market.

Basically, I will be breaking many conventional and even contrarian rules as we test this potential trade setup.  We will start off with a $5000 cash account. On this Monday, I purchased just a bit above market price, 100 shares, spending $2500 of the cash on an uncertain wave position. This single order instantly forces you to put up 50% of your virtual money, which breaks many guidelines, but the main one would be that we are betting too much of the net cash.  Of course, if GDX crashed another move lower, then instantly you will have doubts that you did the right thing. 

If that happened your account could be in the “red” by 30 or even 40%, and this is when most will bail out, as they can’t stand the pain of seeing “red” in their accounts.  

That’s when you look at the 2016 bottom, and think that this could be a very major bottom and this bullish phase has still lots of room to move north.  

In the long run you want to constantly shrink the net cash ratio as that is the key source of all our trading fears.   

If I tried to play this out with a minimum amount of trades, then this would take about 4 trades, with two buy orders and two sell orders. Let’s say that we really don’t have a firm price for the next major top, but that $41 may be a good price target. This is when the majority finally sees that the gold bull market is real, as they jump in and keep buying higher and higher, chasing the bull market. At that time I would do the unconventional thing and try and sell into a high, preferably, with a spike. Of course, when we sell we are breaking another rule and that is not letting your profits run. 

Letting them run to what? At $41 GDX would be showing you about a 160% profit and your account would be lit up in green. How far will we let that profit fall because we want to hang on for more? This is when we get greedy as the wealth effect controls our thinking.  

At this time somebody is going to be the “Greater Fool” and buy right at the peak. We have to ask who is still left to come in, that is going to load up on gold stocks at a peak? Contrarians don’t buy at peaks, so we can forget them, to save a gold stock bull market. 



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Gold Stocks, GDX Bull Market Review




Gold stocks have started a turn, but we may never be sure if it hadn’t landed with a “thud” or stopped on a clear spike.

In this case I will look at this move that contains an expanded pattern which gives the correction more time and a potential recent October bottom. I would also call this a potential running expanded flat so that would dictate a strong “C” wave. I would love to see that happen, but otherwise we could still be stuck in a correction.  

I cannot give direct investment advice as I’m not a certified financial consultant, but how would a person that is going to jump on this bandwagon going to do it?  The people that do it can place all their cash on this bull market, but that is exactly what we are not supposed to do. The trick is to bet very, very small to your net cash trading account, because we would be too late already.  It was the grinding bear market that allowed contrarians (insiders) to accumulate large positions, but they “never” do it with large chunks of their net cash.   

Jumping in at this point basically tells me that investors left about 100% gains on the table already. Other ETFs are even more skewed.  If a person bought 100 shares of GDX next week he would put up about $2500 in risk money, but if this person only had $2600 cash in his trading account, then he can’t do anything for the rest of the bullish cycle, and he would freak out every time, their trade turns into the red.  Taking a profit just because any trade goes into the green is also not the way, as you may take a 20% profit, but there could be another 100%, in this market left. The thing is, it will never go in a straight line so you have to know when we are only in a correction and not the end of a bull market.  

The gold/gdx ratio is sitting at a bit under 51.5:1 which makes gold stocks about the average from a very expensive ratio of 29:1. Gold stocks have lots of room to shrink this ratio, before they hit another potential extreme. 

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Gold, 2008-2016 Elliott Wave Count Review




The reason that gold has such a choppy wave pattern is because its bull market is a diagonal 5th wave in Intermediate degree which started back in April 2001, depending where we count from.  From the 2008 crash bottom, which is my Minor degree “B” wave, gold roared up in a wild ride to its 2011 peak of about $1920. This 2008 pattern can also fit into a triangle, which predicted another strong degree change as well. 

It wasn’t rocket science that gold was going to crash, but what was going to follow sure kept us guessing the majority of the time. Of course, this turned into a major gold bear market, as all rallies were completely retraced. I can turn the gold bear market into a triangle as well, just by increasing the degree level of the 2016 bull market, by one degree.  

I have repeated it many times that gold and gold stocks could be in a fake move as this gold and silver bullish phase started out very choppy.  Now that we have a peak that is 2 months old, we can draw the top trend line to help us to determine if the peak is real.  Of course, if gold is in a much bigger bull market, then that top line will get sliced, like a hot knife going through butter.

In the last 2 months any bullish support has not held, which is sending us a signal that gold and gold stocks, were in a bull trap at that June 2016 top.   If the top is in, along with gold stocks, then a complete retracement is the only option at this time. This may take much less time to confirm as all support price levels will not hold, no matter how much we wish for it to do so. 

I mentioned that George Soros had sold his shares of ABX, and now in hindsight, he may have been right on the money.  All very bullish wave forecasts were getting harder and harder to see, so when those options dwindle, then there should be a few more bearish options. 

The next few months will either make or break the bearish wave count.  I have no real news of any massive insider selling, as they all may be in a bull trap as well, besides, they are much richer than us and can handle any major decline.  

I’m tracking about six gold/gold stock related ratios, and I mentioned that gold stocks were getting a bit to the expensive side. The gold/gdx ratio, compressed to a bit under 43:1, with the max being around 29:1. Today we are sitting at about 48.44:1 as this ratio should keep on expanding for the rest of the year.

Next week I will keep exploring the bearish wave count, which should contain a zigzag. The zigzag will alternate and we should find out if gold goes below that $1303 price level.  Our next two price support levels would be around $1250, and then another about the $1205 price level.  After those two price levels we have nothing but open space, until we get down to that $1050 price level. 

Gold has no problem crashing $150-$200 when it wants to, so the next month or so gold should tell us on which side of the fence it was sitting on.

I could be wrong, but until we hit another bearish gold stock bottom, we have very little to rally from at this time. Fridays spike can also be a fake, and that should not take too long to confirm.   

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GDX, Gold Stock And Gold/Gdx Ratio Review.




Since mid August gold stocks have been crashing. At that time we hit a Gold/Gdx ratio of about 44:1 which was getting a bit on the expensive side when we use gold as money. This ratio has now changed to where gold stocks are becoming cheaper again when we compare it to gold. Today that ratio was a bit more than 50:1. At what ratio the gold investors start buying again is never a clear cut number, but 85:1 was a screaming buy in January 2016.   

We could still see fake rallies as this correction seems pretty simple at this time. That usally set off alarms as corrections that look too easy, are usally found by the lazy wave counters first.  We have many open gaps below present prices and one gap has been closed off already. At the $22 price level another 2 gaps will be closed off. GDX may never get that far, but the $22 price level offers a great bull market did to bounce from. We already have 2 smaller open gaps above our present prices so, I’m sure they will get closed off as well.   

The worst that can happen is if we run into a long drawn out triangle as that would indicate a degree change must happen. 

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GDX, Bull Market Review




Finally, gold stocks have started to correct, but how far down they can go cannot be accurately measured at this time. The bottom trend line may not hold, and if that ends up being the case, then my wave counts need to be adjusted.  There still is a good chance that this bull market could be a big “B” or even a “D” wave, but either way this bullish phase is far from finished. Yes, we hit a high gold/gdx ratio of about 44:1, but now that has improved with a gold/gdx ratio at about 47.73:1.

This is a good thing, as we were still far away from any extreme of 30:1.  I keep track of about 5 gold/stock ratios and when they all turn closer to the extreme side, then I would be inclined to look for the end of this bull market. Until such a time arrives, this bull market should continue, after good corrections have taken place. 

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GDX, Gold Stock Review




This gold stock bull market has run up dramatically with any big corrections. We have had some smaller ones which is good, but for the first 3 months there were virtually no corrections to even count out. These initial fast waves up, can be  “A” waves  or the “A” waves in a diagonal move.  For this bull market to keep going, GDX would have to touch the top trend line one more time.  This GDX gold stock bull market, is also riddled with gaps, which does not indicate any secular bull market lasting decades.

I also show a “Head” which would be the Head to a much bigger H&S pattern. So there are many things to watch, to give us an early warning if this gold stock bull market is getting ready to die. 

The most important indicator I have is the Gold/gdx ratio. I’m calculating this 2-3 times during the week, and today it is about 42.83:1 or just shy of 43:1 once we round it up. This is creeping up to the expensive side, for this gold stock ETF, but it may still have to go vertical, before this bull market will die. The gold/gdxj ratio is at about 26:1, which makes it on the expensive side as well. 

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GDX, Gold/GDX Ratio Bull Market Review




GDX has been chugging along with a few more good corrections thrown in. Corrections happen when too many  non committed bandwagon riders jump on the bandwagon and then get thrown off as they hit a speed bump.   Emotional investors jump on (buy high) when they think that the bull market is safe in its trend.  Those who are just thinking of getting in have already left well over 240% gains on the table. 

We can be as bullish as a bull in a China Shop with this gold stock bull market, and I’m sure the contrarians just love it.  They may start to feel rich or richer with all the recent gains they have enjoyed.

I think we still have a month or so to go, but this bull market could top out as a “D” wave. “D” waves are phoney or false first waves as they can act and even look exactly like any 1 wave would of the same degree.  The general public does not know the difference as most of them are oblivious to pattern recognition. As long as something goes up, it’s a bull market in their eyes.  Again, there is still lots of upside room and GDX and gold may still have to go vertical before I can call that this bull market is dead.  

I’m starting to work the gold/gdx ratio again and today this ratio was sitting at 44:1. The most expensive ratio hit a bit over 29:1 and the  2016 gold/gdx ratio came in at about 84:1  The more GDX units you can buy with an ounce of gold the cheaper gold stocks are. At our present ratio of 44:1, it  would have to keep creeping down if gold stocks start to become more expensive when using gold as money. 

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A Look At GDX, 2008-2016 Review




I would rather do long term wave counts on an index than an ETF, but I think the gold bear market needs another look, with a set of diagonal wave hunting glasses.  From the 2011 peak, gold stocks started an ugly decline which was extremely difficult to fit into an impulse. With the word impulse, I mean the perfect impulse waves, where we get at least 80% of it looking real good, otherwise it would be a diagonal 5 waves.  

We have to grade the 5 wave sequences into great or poor. The GDX decline is a “poor” excuse for an impulse wave and therefore I have to look for all the diagonal waves.  Diagonal waves are counted out using the ABC1, ABC2, ABC3, ABC4 and ABC5 labeling method.  

There is still no way to be sure, but I have not heard about massive insider selling, so even with an impending correction we should eventually see higher gold stock prices. I follow Steven Jon Kaplan on Twitter and I know he tracks insider selling and maybe he will be a nice guy and Tweets when he has his gold stock ETF’s, sold. He may also release his information on his free blog, when the time comes. 

It was in June 2013, when insiders were doing their most intense gold stock buying, which has not been countered  with intense insider selling.  Even though GDX has many gaps below they may stay open for years to come. 

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GDXJ Gold Stock Review




The violent move up on Friday created one massive gap in many, if not all gold stock related asset classes. This means that gold stocks are not going to the moon just yet as the gap may get backfilled, before gold stocks can advance on another big leg up.  As much as GDXJ looks like GDX,  there are huge differences between the two. This GDXJ created a potential expanded top pattern as the HUI and GDX did not.   Still, if investors know how to feather into a position and got lucky and averaged in at $19 or so, then they would have had a 100% gain already. Of course that gain would only show on paper as you would have to sell to lock in any gains.  

Who in their right mind would sell out as this is a bull market going to the moon? Sure, this can be true but not too many bull markets start out this violently and then maintain its accent. We have to see if gold stocks add on a bigger impulse or just sputters out with another double top like pattern.  Any double top would suggest a potential diagonal 5th wave and that would mean another violent move to the downside could happen.

If a an “E” waves crash occurred, then yes, I could see another impulsive leg up. As it stands, I’m not very confident in the staying power of this bullish run.  Below this price level we have a minimum of 4 gaps that need to get closed off, sometime in the future. Sure, gaps can stay open for a long time, but eventually they have a 90% chance of getting filled. 

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