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Category Archives: GDXJ

GDXJ, Gold Stock Bull Trap?

The start of the bull market in early 2016, soared with small subdivisions This bullish phase ended in mid 2016 at about the $50 price level before GDXJ started to turn down again. For just about 2 years, GDXJ has been grinding sideways for far too long in a bullish correction. A horizontal wedge has also formed which compounds and confuses the next potential move. If we look at it from a bearish point of view, then it’s an easy guess, otherwise it can soar out of this wedge just as easily.

Even now the Gold/GDXJ ratio is hitting a break wall with todays reading at 39.8:1 which makes GDXJ a bit more expensive. This ratio should spread, as any decline intensifies. I have 62:1 as my cheap ratio, but we may never hit that again for a very long time.

Most of the gold stock related ETFs also have this sideways wedge,  so it’s not just some isolated pattern.  The well heeled gold stock contrarians who have very deep pockets will just be buying more, but for a new player this decline would hit them hard.

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GDXJ And SIL ETF Reviews

GDXJ is a gold stock related ETF. The great thing about ETFs is that we don’t have to worry about any single company fundamentals. All we need is a very good understanding, where gold stocks are in their bullish or bearish phases. Recently the story was that investors were dumping gold related assets, to jump onto the Bitcoin Mania bandwagon. Of course the Bitcoin bandwagon has now crashed and is burning in a huge electronic fire. No sooner that this bearish news about gold came out, GDXJ stopped falling and has now started to soar again. GDXJ reacting the opposite way of bearish news, is a very bullish sign in itself.

You won’t find those indicators in your trading tool box, but smart contrarians look for those signs all the time. I see this action during many “ABC” corrections.

During last weeks Bitcoins carnage, and a $9000 price crash, gold stocks kept right on trucking along.  I have dropped my degree levels down to Minor degree again, which means a bullish phase is still coming. Any “C” wave bull market, could send this gold stock related ETF to new record highs.

Any bullish phase ends when many bulls are present, like they were back in mid 2016. I called for a correction at that time, which ended up being about 18 months long. Long drawn corrections are necessary to wash out all those emotional investors, that have no clue about longer term cyclical investing. They panic anytime the market goes against them, forcing them out just before the biggest bullish phase starts to move. I can’t  give any specific “buy” or “Sell” instructions, but I can only relay my bullish or bearish mood at any given time.

The Gold/GDXJ ratio is still relatively cheap as it’s at 37.85:1 at the time of this posting.  This has compressed a bit from a recent base of 40:1. My extreme expensive Gold/GDXJ ratio is 10:1, so we have a long way to go, before this gold market becomes expensive again.

 

SIL has a different bearish phase, that other ETFs didn’t have. SIL just finished a bigger and longer correction, but has now synchronized in time with other turnings. From the 2016 bottom SIL produced a stunning move, which can only happen in a very short time span. The SIL bandwagon also had to crash, producing a bearish phase. Bearish moves in a bull market are necessary to get rid of all those freeloaders, that think they can just jump on at anytime they want. Emotional investors will always get burnt when they chase a bull market, or when they try to take their entire positions all at once.

Contrarians do not do any panic buying or selling, as they were buying during the entire 2015 decline, with GTC orders. Everybody hated gold stocks at that time, but look what happened shortly after. The majority always gets in at a top, and in the case of SIL they left a 360% gain on the table. I believe SIL can break to a new record high again, as this second bullish phase starts to kick in.  At a minimum, SIL would have to completely retrace that mid 2016 peak of $54. This is so close to a Fibonacci 55 number, where a 61% (1.618)  move above $55 will get us close to the $89 price range. SIL would end up just below a major double top.

The thing with anything silver related, is that during its entire life, it contained wild and crazy zigzag moves. These zigzags fit best as diagonal waves. A single zigzag bull market fits very well into any diagonal related run.

The recent Gold/Sil ratio is sitting at about 39.66:1 which is still very decent from my perspective. When the Gold/Sil ratio starts getting closer to 20:1, then we may have to look at the bigger bullish phase again.

Due to the fact that commodities are all leveraged, Elliott Waves don’t always act the same. Fear is the main fundamental that drive commodity prices up or down, not supply and demand numbers. Fear of missing out, fear of gluts and fears of shortages, is the real driver of prices. Hope and greed don’t have very much time to set up between mini panic attacks, while in the stock markets, it could take years for hope and greed to set in.

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Gold Stocks GDXJ Bull Market Update

Gold stocks with this mid sized gold mining companies have finally started to act in a bullish manner, even though they are lagging gold at this time.

Any lagging on the part of gold stocks is not a concern at this time because the Gold/Gdxj ratio is still on the cheap side at a bit under 40:1. Real cheap was 62:1 one which occurred way back in early 2016. There is lots of room for GDXJ to move to the upside so I don’t think gold stocks are ready to die. We have a higher low as well, which is the conventional description for a bullish phase.  I will not be a happy wave analyst until all gold stocks retrace the entire August 2016 top.  A new record high  would confirm this entire bearish phase.

When and if GDXJ gets closer to a 10:1 ratio then it will be time to look for a major top of this gold stock cycle. This may take until late 2018 to play out, but we have to be aware if this gold bull market will end sooner.  In time I may have to adjust my degree levels up by one degree, but that can always be adjusted at a later date.   It is virtually impossible to tell the difference between a “D” wave bull market and an impulse as both have the same bullish mood associated with them.  The only way we can know the difference is the choppy nature of the bullish run.

Some may be tempted to jump on the gold bandwagon now, but those emotional moves can backfire if gold stocks are ready for a correction. From the 2016 bottom to the mid 2016 top, gold stocks have gained close to 300%,  yet gold investors left that all on the table for the contrarians.  I doubt there is another 300%  gain from todays price, but, stranger things have known to happen.  The bullish move from the early 2016 base was not a vertical move, but “C” waves are  famous for going vertical when the party is ending.

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GDXJ Gold Stock Bullish Review

 

Gold stocks have been on what looks like a bearish trip, but we do have a potential, “ABC” corrective bottom,. This would, eventually, take the gold stocks into new record bull market territory.  Since I have a a potential early 2016 Primary degree “A” wave bottom,  we could be in a bigger triangle, by heading up to a “B” wave in Primary degree. All full 5 Minor degree waves would also have to play out. 

Any other potential “B” wave other than a triangle, could push gold stocks to new record highs, past the 2011 peak.  This doesn’t normally happen with a zigzag, as we would be short one extra move. I would also have to drop our present Intermediate degree top down one degree, which would eventually turn the entire move into a flat. 

We have time to think about this until we see another very bullish top. By that time the Gold/Gdxj ratio could show some extreme readings, but we are still far away from that happening. This morning the Gold/Gdxj ratio touched 39.56:1 which it has done only three times, since the start of 2017. 

This is far removed from the potential extreme expensive ratio of 10:1. 

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GDXJ Gold Stock Crash Review

 

 

Gold stocks with the GDXJ ETF has broken the wave 2 key support and has now pushed well past old wave 2 bottom.  Several other related gold stocks, ETFs,  and indices are getting very close to breaking new lows, as well.  At this time I can still get the rally and down cycle, into a corrective pattern, but another game changer would be if the blue “B” wave  in Minor degree does not hold.  

I have mentioned it before that, the entire gold stock bullish phase is a bearish rally, but still a long way to go.  Replace the A wave top with a 4th wave in Intermediate degree and we could have the makings of a zigzag crash that still needs to break below the $18 price level.    This is the least desired outcome as that would send my ratios into disarray in the short term.   Either way,  the ratios will be expanding all the way.   At that December 2016 low, the Gold/Gdxj ratio hit a bit over 39:1. Today that ratio is 39.53:1, which already makes it cheaper when compared to gold, than the December 2016 bottom. 

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GDXJ Junior Miners Gold Stock Review: 2010-2017

 

 

I believe that the big top back in late 2010 was the Cycle degree wave three, and the bear market that followed was only one part of the Cycle degree wave 4 correction.  The 2013 bottom has a special meaning, as there were many obvious reports of gold stock insider buying. Apparently they have a history of  buying just a few times in a bear market, and don’t buy as frequently as the seasoned contrarians do.

This bear market works well as one big zigzag, with the last 5 waves being a very ugly diagonal set of waves.  These types of waves are very common and are a real challenge to count out in real time.   When GDXJ hit bottom in early 2016, the Gold/Gdxj ratio hit 62:1. This was an insane number and represents and extremely gold stock oversold situation. Virtually all gold stock indices or ETFs gave us the same insane ratio indicators and we have to remember that when we look forward, up and down any set of wave positions. There is much more to the EWP than just mindless wave counting, which the majority practice.  The real contrarians have a far better understanding when buying low than any wave counter does because they have accumulated more wealth than any wave analysts I have ever read about.  

Anyways, I can go on and on about how inefficient wave trading really is as it will never change anything. They will continue to miss every major bull market that will come down the pike.

Before the 2016 spike in gold stocks you have to accumulate positions long before the bottom, which the EWP does not teach you. In reality the EWP has to confirm what the contrarians are doing and are going to do in the future. 

Even if Gold stocks are in a big fake bull market contrarians will never be left behind. (Primary Degree “B” wave bull market)  They know that markets travel from extreme oversold conditions back to extreme overbought conditions. It is the Gold ratios that give us an objective reading on the markets, and on Friday this ratio was about 31:1. This is the most expensive since the gold stock bullish phase began, but still far away from any extreme expensive reading of 10:1.

Just because gold stocks made a decline, I would be crazy to show you an extremely bearish wave count at this time, when I know my contrarian friend has been buying.  

This bull market will not end until we read about consistent gold stock insider selling, matched by an extremely expensive Gold/Gdxj ratio.  Many mainstream analysts, wouldn’t touch gold stocks at this time, but I bet they will turn bullish once a new gold stock extreme gets reached. 

GDXJ should eventually hit anywhere on the top of my trend line, and this will depend on the speed that GDXJ will travel at. This will be true with all the gold stock indices and ETFs. 

Short term anything can still happen, but longer term this bull market is far from being finished. 

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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. 

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Gold Stocks, GDXJ Bull Market Review

 

gdxj-oct-1-2016

 

Once I reworked the crude oil and the GSCI, it seems to me there is more upside to come, with this gold stock bull market. The question I always try to answer as soon as possible is, “What type of a bull market are we going to get”?  If the 4th wave bottom is true, then we have to determine if we are going to get a 5 wave impulse sequence, or a diagonal sequence? For decades, gold/silver stocks have been in a big diagonal bull market, in which silver is a shining example, then it is fruitless to use impulse wave labeling now.

Deep diagonal plunges are called bear markets by the majority, but in reality those bear markets are deep diagonal corrections. The choppy bull market in gold stocks from about 2000 are not impulse waves, I call them diagonal wave structures. We can keep an impulse wave count going, but the 2016 starting patterns are not suggesting an impulse at this time. We would still have some distance to travel just to get to the net 50% price level, but we know that “C” waves can and do go vertical, when they reach their conclusion.  

The arrow above points to where ewe can be, now and what we may get is the zigzag above. It would be one move, consisting of 3 smaller moves, (ABC) in Minor degree. 

I can get many, of the gold stock related ETFs, into this wave count, so that is a good thing. The investors that are just starting to jump onto GDXJ, have left 200-300% gains on the table already, as they buy an asset class that is pointing up.

We could still be in a correction so this may still take some time to get going. 

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GDXJ, Bull Market Review

 

GDXJ-July-11-2016

 

What a great run for gold stocks so far.  It seems that a major bottom has occurred with GDXJ in January of 2016. Yes, all the analysts can see the same bull market, and even more investors would be jumping on this bandwagon, because they don’t want to be left behind. Many others jump on just because it’s going up. Meanwhile, the contrarian may start to feel rich today.  As a joke I say that if you are an investor and you feel rich, then “sell everything”.  Well, that works best on the tops of an extreme bullish cycle, unless you think that this bullish party is coming to an end.

The start of a diagonal bull market can be easily confused with the start of a bearish rally followed by a new record low.  This would be all a non issue if we have a better understanding of those wild diagonal wave structures, and where they happen most frequently.   If the 2016 low is a major bottom and we think we are in a 4th wave position, then I draw or visualize the entire next move, based on an idealized chart.  I look for two major patterns, an obvious single zigzag bull market, or 5 waves of the diagonal type. I have to start calling them with a distinct name, so we can always tell the difference. In this case I call it the “Diagoanl5” or the “Impulse5”. They always alternate, between the two sets of 5 waves in a zigzag.  There is also a major difference between the two, and I want readers to understand that. Many wave analysts just roll the two into one type, which I think is not the way it should be done. 

I am sure this diagonal 4th wave bottom dipped well into the previous bull market wave 2, which is the maximum I would allow. In short, we can have an ending type diagonal, but it still would be part of the original bull market. This is not a new bull market heading to the moon, but the continuation of the old gold stock bull market. 

I am looking for a correction big enough to shake out all the late comers and scare the majority who bought “high” recently. Gold stock investors love to buy high,  as they are oblivious to any sizeable correction that may happen.  It would be extremely rare if gold stocks kept on going in a vertical move, as it will be harder to see the bullish zigzags. If GDXJ crashed back down to the $34 price level, this would not surprise me, as that would be the setup for the next zigzag leg up.

I don’t want to get too crazy and say gold stocks are going to the “moon” but breaking a new record high would be next on my target list. This still may be some time away, but at the speed that this first move went, you never know.  If we drifted into a triangle correction, then this would be a bad sign, as then only a single zigzag may form.  Either way I am sure we will see some heavy insider selling reports come out, (contrarians) before this bull market dies again.  In mid June 2013 insiders did some of their heaviest buying that I read about, and I would think we will hear about major insider selling when the bull market ends. 

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GDXJ Gold Stock Review

 

GDXJ-June-4-2016

 

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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