GDX 2015-2019 Review

The majority were waiting for GDX to perform like gold itself, but GDX never even got out of the gate as we are still waiting.

GDX never cleared 2016 high while gold soared into the previous wave 2 which makes it a diagonal pattern.

Silver and much other gold-related ETF performed much less which makes all rallies fit a 4th wave bear market rally.  Obviously, the public doesn’t know what an Elliott Wave bear market rally is, as they just use the standard 20% retracement description.

SLV is a prime example of how much difference is between GDL and SLV.

Even the Gold/Gdx ratio hasn’t changed that much at 53:1 and I want to see that number spread much more with 84:1 being on the cheap side of my ratio data base.

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Gold/GDX: The Bearish Picture, 2015-2019 Review

Hulbert Gold Newsletter Sentiment Index, or HGNSI

Mark Hulbert makes a very strong bearish case with his sentiment readings. I pay attention to that, as wave counts come to an end when sentiment is very bullish or bearish.

When the mainstream analysts start forecasting crazy bullish gold forecasts like $3000 gold or higher, then who is left to come in?

Below is the simple chart version of the commercials being net short, while the speculators have a huge long position. The last 5 speculators bars also has a flat top, which shows they are not that enthusiastic to take on more bullish positions.

The speculators are the emotional players and they will be the first to sell gold when this gold bull market turns out to be a dud!

While gold was still in a rally, the commercials added to their bearish positions, but the speculators added to their already massive long side. Both parties can’t be right as they contradict each other.

Last week spikes were starting to form, which are sell signals from my perspective.  I think gold is fooling us, as no other gold-related asset class like GDX could keep up to the metal.

If the Primary degree “B” wave top is in, then investors will suffer serious losses if the stay. Gold has already crashed $50 last week, which could be the start of a very bearish run.

When we look at GDX, we can see that it’s being left in the dust when comparing it to gold. We have resistance going back to the 2013 peaks, with an open gap just barely getting closed off.

Draw another line from the 2016 peak to our present 2019 peak, we can see a massive H&S. In a very bullish market, the right shoulder will just correct, and then break out again, but no such pattern will happen if a bigger bearish move is already in progress.

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GDX Gold Stock Bullish Phase Update

GDX tracks the HUI fairly well with plenty of volume and liquidity for any trader. I don’t have any positions in GDX but my funds are in 4 Canadian penny stocks that do have exposure to the gold sector.

Trend lines can be very subjective but right now the trend looks like it’s still heading up! I believe we need a 5 wave sequence in Minor degree with wave 3-4-5 still to develop.

Since the 2018 price low, we’ve been in a “C” wave bull market which if we are very lucky, might take us to the $55 price level again.

Last week, with gold making a bit of a jump, the Gold/GDX ratio expanded to 53.46 from 50.98 which means that GDX got a little cheaper last week. This bullish phase could last all year but the trick is to understand the 4th wave when it is unfolding.

 

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GDX Bullish Phase Update

The decline ended on September 2018 and GDX has been in a bullish phase since then. Higher lows on the charts are patterns of a bullish phase,  with this wave 1 containing diagonal waves.  Pretty trend lines will rarely work even if we are expecting a full set of 5 waves in Minor degree.  Also, you can’t trust any angle that much and in this case the angle change dramatically as we started up wave 3 in Minor degree.

Even chart gaps have opened up below present prices but they can stay open for the entire bullish phase. Besides that, the big open gap at the $34 price level is a much more powerful draw.

With the fast move up in GDX it also changes the Gold/Gdx ratio which sits at 50.1 today. GDX is now more expensive than it has in the last 2 years. Any true bullish phase still to come, will push that ratio much further as 30:1 is my most expensive ratio to beat!

Jumping on a bullish bandwagon after it has already gone vertical or near-vertical only works if you have the bigger direction right. We can run into all sorts of wild corrective moves yet, but after each correction gold-stock, ETFs should push higher.

I can’t tell you when this GDX bullish phase will come to an end as extensions can push GDX beyond logic. Anywhere between $45 and $55 can be my price target after the impending 5 waves up have completed.

Once all the analysts turn bullish on gold stocks we know there is nobody left to jump on the bandwagon.

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GDX Bullish Phase Review

I”m sure all the GDX bulls are happy now that GDX is soaring again. This could be the start of a 5 wave sequence, with wave 1 in Minor degree already completed. This time I drew in some trend lines and if this 5 wave sequence is true then GDX should breakout to new highs.

Diagonal wave structures dominate so I have to look for connecting zigzags which isn’t always that easy to spot at times.

This bullish phase started in late 2015 and has now been running close to 3 years and 7 months. The fast bullish phase in 2016 is a typical “A” wave and the angle is the same as our present start of wave 3.

GDX is lagging behind gold as gold has already gone well above 2016 highs and GDX might still take a month before any breakout becomes more obvious.

This is also when any Gold/Gdx ratio starts to matter again as GDX rises the Gold/Gdx ratio starts to compress with our present ratio is sitting at 53.9. The expensive ratio to beat is 30:1 so we still have a long way to go before the ratio starts to set off alarms. Missing a bullish phase with GDX is not what I like to see happen but once this reaches its 5th wave high a new shorting position may present itself.

The $55 price level would present a nice target and by then investors will have to know if the entire rally is just another bear market rally.

From an Elliott Wave perspective, my “A” wave bottom in Primary degree is telling you what our present bullish phase is.

Just because some asset class goes up does not mean a bull market is in effect. There are many other gold-related ETF stocks out and there is no way I can maintain all their wave counts but I will start posting GDX more frequently.  As of this posting, there are 45 different stock holdings inside the GDX basket so your betting market direction and don’t have to be a stock picker.

I may also look at XGD the CAD version as I want to avoid switching into US funds if I can.

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GDX 2015-2019: Is It A Bear Or A Bull Market?

After looking at the platinum chart I  to adapt and adjust it for the GDX. This wave count makes the 2015-2016 bottom my Primary degree “A” wave.  Moving the Primary degree back to 2015 is like time traveling into the future.

It’s a mental shift that has to be done every time we move a single wave position around which may not seem important to most, but the difference between Primary degree and Cycle degree could be 100 years difference.

The center line is where GDX bounced around the $21 price level. GDX at $21 found support and resistance about 12 times in the last 4 years and it still may dip below that in the next week or so.

The Gold/GDX ratio also spread a bit more and is now sitting at 61.33:1. This is not as cheap as I would like to see it, but we could be hitting a “Ratio Brick Wall”.

If this bullish scenario is even close then GDX should break well above the $30 price level and on a good day may even head to $34.

Short term for the rest of this month, anything can still happen, so we have to keep an eye on GDX. What we need is the spike to stretch a little longer, which might motivate me to take a long position in GDX.

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GDX Bearish Update

I do use trend lines but they can be so subjective that it can make them useless to use.  I draw many different trendlines but I do not post most of them.  In the case for GDX, we have a slightly down sloping trend while gold itself had more of an upward trend, since that June 2016 peak.

From the 2018 September bottom, the bullish move can fit well into a triangle, but it can also fit very well as a diagonal 5 wave sequence.  Even W, X, Y, X, Z would work.  In late February we had a peak after which GDX started a decline that can be part of another set of 5 waves in Minute degree.

Another 1-2 wave has to form after which we could see a huge spike to the downside develop. When that happens then a correction could be finishing and we should expect a huge counter-rally.

Gold has gone nowhere but down as the US dollar soared during the night.  With the holidays and a full moon, it could give a small bullish price move, but otherwise, this GDX decline is far from over.

I do have a small GDX short position out which turned green a few days ago.

The Gold/GDX ratio is at 59.13:1 today which is only a bit cheaper than what it’s been most of this year. The more the Gold/GDX ratio spreads the better, as that would make gold stocks seem cheap again.

Stories that China, Russia, and a few other countries are buying gold sure does not confirm the bearish mood gold is in.  They have to buy gold with US dollars as I’m pretty sure they are not going to use other currencies. They are trying to destroy the US dollar which has all been tired before in 2008!

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GDX: September 2018-February 2019 Review

Majority of the time we are confronted with multiple choices in any of the wave counts that we can produce, as all of it depends on where we are counting from.

In the case of GDX, I’m just going to talk about one move from September 2019 to February 2019. I labeled the same move as a Minor degree “A-B” sequence.  A triangle in a “B” wave has a finality to it that forces me to look for and ending at least one degree higher, which would be Intermediate degree.

Just as easily as the wave count can fit a triangle, with just a few changes I can also use it as a diagonal set of 5 waves with an ABC1, ABC2, ABC3, ABC4, and ABC5 wave count. That would make GDX a bullish scenario where a correction would happen. The present “D” wave bottom would be the same as the previous 4th wave of one lesser degree, which would be around the $20 price range.

Of course, there is also the “W, X, Y, X, Z” label I can use which is just a glorified triangle.  The most desperate wave count would be to try and force a pure impulse wave count on GDX. This would give as a potential of at least 4 different wave counts, with 2 of them being very bearish and the other 2 being very bullish.

I would love it if we had another bullish setup as I do trade GDX when I can.  If a correction is due then I would like to see a huge spike to the downside which are a bit softer spikes than what we would get in Gold itself.

Many times GDX runs from month end to month end so maybe by the end of April, we will have a new picture.

The Gold/Gdx ratio is at 58.53:1 which is not all that cheap from an extreme of 84:1.

 

 

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GDX: It’s Now Or Never!

 

 

Gold stocks made a recent high-speed drop that should be enough if the next bullish phase is supposed to be for real. GDX must not fall below the $17.28 price level as 100 % retracement is just another bear market rally. A bull market is supposed to give as higher and higher lows which have not happened in over 2 years. Every attempt to go higher has refused to materialize.  Since the 2011 peak, all rallies were just mini bear market rallies as each rally has been completely retraced, except for the 2016 peak! The 2016 bottom created a bear trap producing that funny looking 5 wave sequence. The vast majority of these moves are just “A” waves, but in the case of GDX, it’s part of a potential “C” wave.

Gold charged up again today getting close to $1242, while GDX was not impressed that much by gold’s move up. All bear market rallies retrace themselves, so it’s just a matter of time before I throw my hands up and surrender to the gold bulls. Platinum has the exact same pattern as GDX and other ETFs, but there was no support for platinum as it established a new bear market low.

The Gold/Gdx ratio is not that extreme by any stretch of the imagination as 64:1 is not the 84:1 ratio when GDX hit rock bottom in late. I sure would like to see the Gold/Gdx ratio spread much further, indicating that it’s getting cheap again when compared to the gold cash price.

Hopefully, we will know more by the end of this month, as many turnings happen at month end, or the beginning of the month.

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Gold Stocks GDX Update!

 

Gold Going To $3000!

GDX has been on a rally which many think was a major bottom as the above analyst thinks gold is going to $3000 soon. What these crazy forecasts are telling us is that the US dollar has to implode in a major way, before gold ever breaks out again. The 2011 peak was already a gold/silver mania peak which I documented very well. At that 2011 peak, the majority of analysts were all extremely bullish yet gold stocks imploded ignoring all the fundamentals.  Most people couldn’t tell you what caused the decline after 2011, and I bet they still can’t tell you what lifted GDX in early 2016!

Sure GDX formed a bottom and it even has a decent “C” wave decline, but that doesn’t mean that GDX is in a real bull market! In a 4-year + decline,  gold stocks had many rallies and they all resumed their larger bearish trends. It may take the rest of this month, but any new bottom will help make my bearish case. The US dollar is in a bull market that very few understand, as the US dollar bull market represents “deflation” not inflation. Any emotional gold buying moves will never last as they are not based on sentiment, but based on fear!  Gold investors will run like chickens if this bottom does not hold.

The Gold/Gdx ratio is not all that bad at 66.54:1, but this ratio should expand much more before gold stocks become very cheap again.

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Quick GDX Update!

 

GDX hit a bottom at $17.28 and is now looking like it is correcting. If this big bullish phase is on, then GDX must head higher, leaving all previous resistance levels in the dust, or should I say, “gold dust”.

There may be a bottom in GDX today, but the rest of the day could still change things.  Above all, we must see bullish sequences with good corrections, as that is the sign of a bullish phase in effect.

The Gold/GDX Ratio is sitting at 64.25:1. This is cheap, but still far away from being extreme of 84:1.

As this GDX bullish phase advances, then this ratio will start to compress. Not until we get to a ridiculous expensive ratio, would GDX be overbought.

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GDX: A Bullish Phase In Progress?

 

 

GDX hasn’t moved that much, but last week many the COT reports I follow had some major shifts which is always a wake-up call that something has changed, That change should be to the bullish side. Even my PUT options watch list saw a major price drop, which would mean there is no longer time for the PUTs to recover and that they will all expire worthless. The addition of a CALL watch list, keeps you feedback in a real time basis, so I see a huge benefit of watching an “Options Pool”. With Options you can always calculate how much will cash will disappear, once the risk to zero is calculated the instant you buy any option.  Last week I reversed my entire account before I got up in the morning as I start late at night putting my orders in. I don’t run to my desk when I get up but coffee comes first!  Adding options to the mix is going to be the norm not the exception.

Many hate options, but there is a crowd that likes them, and I’m one of them. I think professional traders and hedge funds all use options regularly. If you hate options, because they may expire worthless, is more about how we use them. If readers want more options commentary in the mix then please e-mail me and let me know. Locally I look for traders I can meet face to face with. My buddy has taken a full course on options trading, so if I need any questions cleared up then I will will consult to him. After this bullish phase appears and then starts to stall at the $30 price level, we know we have a big H&S to contend with, but think of them now as friendly H&S patterns.

The Gold/GDX ratio has been hitting a price brick wall at over 66:1 which is not extreme, from a 84:1 major low. The same thing that happens on the upside also happens to the downside, when the ratios seem to slow down and then reverse. At least GDX now has the “C” wave second bottom which is very important for a corrective pattern to complete.

 

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GDX Potential Bear Trap Review

 

 

In the last few weeks, many of the COT reports I watch, have shifted very quickly ,in gold,  silver, Britsih Pound, US dollar, Canadian Dollar, and a few others as the hedgers or commercials pile on som long positions. XGD, the Canadian Gold stock index has a completely different pattern than most other related ETFs. I have closed off my GDX short positions this morning and have added a small 100 share long position as a test. There could be more downside to go, and I still have some PUTs and Calls out that can add a bit of extra insurance, in both directions.

It would be nice for GDX to stop before a new low gets hit, as these expanded type moves can do that.

I moved the “A” wave in Primary degree to the 2016 bottom, which is also a time leap of about 3 years. Just by changing “one” letter we “time travel” on paper 3 years into the future. The EWP is not about just flipping numbers and letters around like flipping hamburgers on a grill, but the entire wave counting world does exactly that.

The Gold/Gdx ratio is at a bit over 66:1 with about 84:1 being the extreme cheap side in my records. That 66:1 number should expand if GDX keeps dropping for the rest of Sept.

There could also be another mean spike to the downside, which is what usally happens just before it turns.

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GDX Bear Market 2011-2018 Review

 

The 2011 GDX top was a 30 year mania peak  that is far from over in its correction. It could take well into the fall before we would only be a third of the way through.

The entire zigzag in Primary degree may not finish until 2021 or so as this would be close to a Cycle degree 4th wave bottom. That would work out to a 10 year bear market which is a bit shorter than some that took 13 years to complete. This inflated world is going to crash and gold will follow it down as well, reflecting deflation perfectly. Gold will not protect you from inflation unless gold hits a rock bottom below $500. Extreme prices for everything servers no one, as it stiffles all activity over time. Inflation is no longer the threat as deflation will be the core reason why gold and gold stocks are still going to crash.

If your waiting for the US dollar to collapse then you could still be waiting when your 6 feet under. The USD could be on a Supercycle degree bull market that will last longer than our present lifetime or 2041 and beyond. The cause is the great worldwide fertility crash that will intensive after every stock market crash. This happened in 2010 as reports of a fertility crash surfaced.

The Gold/GDX ratio is sitting at 57.3:1 this morning, which is better, but still a far cry from being cheap at 84:1. I also keep an in-house “gold ratio pool” of about 15 items that only my clients get to see and ask questions on. The same thing goes for my “Wave Pool of 50 asset classes” which is all in-house maintained as well. Also a Death Cross Pool would keep track of any Death or Gold Crosses that might be forming. My buddy and I meet about once a month, and I assure you we are in full planning stages, to squeeze the most efficiency out of every major move, for the entire Cycle degree move. We can only squeeze in a few hours but it is the best way to help each other to be very clear in what we have to do, later this year and in late spring of 2019. My wave positions will be continuosly tested with real money from 2018 forward, and the next three years.

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GDX Crash Bottom Plan [A] Review.

Even when we are still far from the bottom my planning process for the bottom is in full swing  and has been for months already. If you think this is too early then think again, because you are “late” as the control entry sequence should be worked out already, you can not be late to this gold bear riding party or the performance will suffer.

Lets say we are just a few dollars above the $8 market I will close of all my GDX short positions and then put in my control sequence right away. The reason for this is many times ,the last move can be deadly as the bottom falls out with gold stocks. GDX can crash right through the $8 price level right down to $7 in one move that nobody can catch. All your orders must be set before this and then you just wait for the markets to do their thing and all your orders would be picked up instantly when this happens.

As soon as this happens you will be deep in the red and panic will ensue! Oh my god! What have I done” I see “red” and I’m down 50%.  For the very first time it is scary when we see red but it is only a loss when you take the loss. This sea of red might have 5 orders in it and not a single color of green is showing. Frickin scary right? I will tell you in blunt terms that I always see red before I see any green at all.  Your last buy order will give you first clues that a turning is in progress by flickering green here and there. At that point your 50% draw down moves to 48% or 46% and you will slowly see the red numbers get better, at that point the turning may be in place. At about the same time more green lights will show until one day “ALL” lights are green and we have turned the corner. When you see and experience this as it happens,  you get a rush that is hard to explain to anyone. Green is Good!

Also remember that if you started your control entry sequence under $8 then as “soon” as GDX crosses $8, your entire account will be green, and you are just barely out of the $8 gate!  From $8 you should already be in the green on all shares, and it should stay green for the entire run back up to $55 or so.

This is not some tall tail I’m telling you, but it comes from experience as it is my preferred way of entering a major crash bottom. The same thing already is happening with my short bets on GDX  and another drop will send my 500 shares into the green.  I think I may have the chance to look for a 1200 share position as that duplicates my 2008 crash bottom order as well.  I screwed  that up a bit but still came out smelling like a rose with one of my best GDX trades of my life.

We could get the same this time, but we have a much bigger support price than 2008, as in 2008 we had no real bottom.  At $8 this first leg will complete and then we start on another huge counter rally that will “also” be a bear market rally. After the big peak is in, GDX will suffer a bear market that will destroy any smooth talking  gold bull that is in the way, as gold bulls will get shredded again. This time it will be a bigger shredder as the gold bulls will be fat with profits as well. If someone  comes along and tells you that your are breaking the rules when buying low, then tell them, “What fricken rules? There are no rules in a bull and bear fight, in a ring! The only thing that matters is that you find the first golden bull and you ride for a personal best trade. I don’t give investment advise as I’m not an investor but a trader speculating on major turnings.  I only look for the best possible positions in any 5 wave run as that is what creates long or big moves and are a sight to behold.  An investor rarely does this as they never would skew such a trade as it is to risky. I do it all the time to supplement my living as I’m rebuilding my account.

What we all must know before hand, is that if in a panic and you don’t know what to do or are confused, then go to your account at night and put all orders to sell at market and you will jump into cash before you get up in the morning. “GO TO CASH”, if need be as that is the traders safe-haven world! We don’t need fancy footwork in trying to stabilize our portfolios as we have none. In 5 minutes of opening you will be as stable as a rock, and then get ready planning for another turning. Capital preservation is the top priority here, nothing else matters. If ever you were to carry your 100 shares, down, up and then down again. Nobody on this planet has the right to tell you how to trade because if I had a trading house you would be the first to join my club.

This is long and drawn out but I will add some more pages below until we cover the full 3 moves we need to make to ride both ways. By only knowing how to go “long” we are only running at 50% efficiency and that to me is unacceptable to leave 50% of the money on the table.

I will post my control entry sequence later below this page, so we will be prepared as best as we can before this crash hits bottom. (5 orders)

All what I have just explained, I explained to a 28 year male Millennial last night, and he is a young working native kid.  After this I asked him, “does this all make sense to you?

And he said, “Yes”.

When at this low bottom and cries of deflation are rampant, then think about the real fundamentals already in place that will send the gold price soaring again. I will let you figure it out as it is important to only those that are “in”.

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GDX Special

This chart has no wave counts on it just trend lines. Followers know exactly what wave count I’m on. In reality I don’t need to do anymore wave counting until GDX has shown me that a decent recognizable correcttion has taken place.  For the life of me I don’t see it, as any correction always has at least two bottoms not just one bottom.

GDX only has one bottom, so the so called GDX bull market has to see the second low to finish a correction. Eyeballing any chart first is very important.  Technically speaking GDX still needs to have its second bottom make a public appearance which it refuses to do. Even if GDX turned to a new high It would still be a bear market rally so that still makes GDX below $12 a real target.  There is a major conflict between gold bulls and the golden bear because the bearish group needs GDX under $12, the GDX bulls need to go above that $34 price price level. Exact price levels are required when we get to a critical turnings.

What other two technical hints do you see, that will help us and all readers to determine if we are in a true bull market, or if the past has just been a good old fashioned bear market rally. A big Head & Shoulder pattern and a little innocent gap is also there. There is always a 90% chance that any gap will get filled, and in the case of GDX it provided extreme resistance.

I always use two parallel lines to define a trend and its parameters.  I do this first thing  before I put a single wave position on my charts. I also make a  a full 8×10 printout and I can stare at the GDX pattern for weeks if I want.  Notice that our present day GDX has some resistance issues at the $25 price level where it tried 4 times to breakout and never made it. Now think of the 2017 GDX sideways market as a triangle in a “B”wave matching golds triangle “B”. In this case pattern identification is thrown out the window just to promote that GDX is in a bull market.

Continue reading “GDX Special”

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GDX, Gold Stocks: Bull Trap Or Bear Trap?

 

The question is simple and direct. How do you know when some asset class is just in a bear market rally (Bull Trap) or bull market, in which case your in a bear trap. If you have any doubts then you should not be playing this game as commodities have a vicious streak to them that majority of investors ignore or even forget. A bear market rally “ALWAYS”  retraces its entire move from its point of origin, with no exceptions.  I caught the “Falling Knife” in the 2008 crash and it was one of my best trades ever. This can happen again, and the only regret is that I got out to early. At that time I made 4 buys as GDX crashed and I ended up with a $19.10 average with 1200 shares and $22,900 at risk.

I would love to have a big US dollar trading account, as I would definitely do the same thing again, when GDX implodes. Retail investors and the majority of e-wavers don’t have a clue when something is in a bear marekt rally, and therefore they get caught in a crash, when they least expect it.

It’s sad to say but gold bugs are the easiest to fool, and I have no guilt feelings or hang-ups, shorting those that think gold stocks are still going to the moon.  The top bearish trend line should be enough to scare the gold bugs, but it doesn’t fizz on them yet.  A rising wedge is clearly visible, which is one of the most bearish indicators in your chart tool box that you can draw, yet the majority of gold bulls ignore this indicator.

So far the bear market has been mundane, but I for one will expect this market to make very violent swings. If participants are not fully prepared they will miss out on another huge bullish phase that could take GDX back up to my wave 2 bear market rally.

The slope or angle of the entire GDX bear decline broke away from an impulse decline at the top.  An impulse decline would have a far steeper decline angle.  I’m working a diagonal 5 wave decline, and eventually, I will need another 5 to complete a big zigzag in Cycle degree. All, except for a few of my commodities are in Cycle degree zigzag bear markets, and any GDX crash will put us about 1/3 of the way.  As you can see many bottoms occur at the end of a month so October, November would be the best time for this to hit bottom. When this starts to get close to the bottom then you will see prices fall like all leaves falling in an Autumn storm.

We have all sorts of GDX support prices and not one of them will hold in a bearish rally as the big correction is har from over.  Remember, we need a clear “ABC” pattern to finish a bullish correction. If we are lucky we only have an “A” wave, but no “C” wave finish.

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GDX, Gold Stock, ETF Review

 

I will stay with my Intermediate degree wave count at this time. It will take some time to confirm this wave count, and in the longer run GDX should clear all previous peaks.  The $32 price level will be the main price level to retrace, but GDX should also push much higher than the 2016 highs. Between each gold ETF    there are differences, but in general we should have completed a Minor degree wave 2 bottom. 

My last Gold/Gdx ratio calculation on April, 22,  calculated at 54.34:1. Today it calculated at 53.85:1 which is a bit more expensive.  I see that there is still a long way to go,  before any real extreme becomes clear. In the future we could get a rapid completion of this ratio, which would then flash a warning sign. When we reach the 3d of a 3d wave count, then we are at the midpoint of this 5 wave move, after which only waves 3-4-5 in Minor degree need to be completed. 5th waves have a tendency to extend in commodities, but in no way does that mean it is a fundamentally stronger wave. 

All this could still take the rest of the year to play out, as we progress in the “C” wave bull market. 

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GDX, Gold Stock, ETF Review

 

 

GDX, which reflects the HUI pretty well, and  is trucking along,  maintaining higher lows, pretty consistently. In Dec 2016 GDX hit another bottom, after which it soared off in another leg.   There is a high probability that we are in a much bigger gold stock bull market, which may be a “D” wave bull market in Primary degree.  

Some may even try to get the entire structure into a wave 1-2 and not an “AB” like I have. This doesn’t compute as it would be a very tall wave one, which rarely happens. When they look long,  chances are good its an “A” wave  before any wave 1. An Intermediate degree zigzag would need a 5-3-5 type of a move, but we are a long way away from even getting close, as we need wave 3-4-5 still to complete in Minor degree.  Mind you the 5 waves up can be so choppy and erratic that every correction could seem like  the end of the bull market.

A bull market is very hard to kill, until it has played out all moves according to the script of an inverted zigzag.   Tracking the Gold/Gdx ratio helps to give us more of an objective view when these gold stocks are starting to get very expensive. At present we are sitting at about a 53.46:1 ratio, which is a bit more expensive, but nothing I would jump up and down about, or find alarming.  If we ever end up closer to 30:1 again, then we may have a different ball game and all other contrarian indicators would need to be reviewed as well.

We still have a long way to go as the next target is to breakout to all time new bull market highs, past the $32 price level.   

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GDX, Gold Stocks On Fire!

 

It looks like the rate increase sent gold and gold stocks soaring. This is a good sign if the gold stock continues to rally. In a bigger bullish phase GDX must clear, it’s 2016 top of $32, but how it gets there is the million dollar question.  At this time a zigzag wave one may be in the works, ending at the middle trend line at about the $29 price level. Of course, if a better impulse wave is alive and well, then the next top trend line, would  get sliced up with little effort. 

The Gold/Gdx ratio also shifted to the expensive side at 52.91:1. This is still very decent and definitely not in the nosebleed section. When we get closer to the extreme expensive ratio of 30:1 then we may need to be more cautious, but for now this bull market is still alive.  This gold market will always try and shake off all the freeloaders, that think they can ride an easy bull market. 

This afternoon, the US dollar crash sure helped in sending gold stocks up, so this also help my bearish case for the USD. 

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GDX Gold Stock, ETF Review

 

 

So far gold stocks have suffered the same fate as gold, as it seems we are in a mini crash at this point. More downside may still happen, but I sure do not want to see a complete retracement of the February bullish move. If it drops to a 60% retracement that would be just fine, as that would still produce a higher low which is the conventional description for a bull market.

If the wave 1 has already happened then we should get a far bigger move than what I have at present.  Even though both asset classes are crashing the Gold/Gdx ratio, which sits at 56:1 right now shows that gold stocks are getting cheaper when we use gold as money. I always use the futures gold cash price so I get more consistent readings. The gold price from the Kitco site will work just as well.  

A “D” wave bull market, could be real and even would match my old wave count.  Eventually GDX should breakout past all potential resistance wave structures, as that is what “C” wave bull markets are famous for. The majority will not clue in to a bigger bullish phase, until they are all bullish again. By the time that happens the gold stock bull market could be over. “C” wave peaks are also famous for creating blow-off spikes, which are usually produced by extension after extension. Mind you, many contrarian indicators also have to come in, as the Gold/gdx ratio is just one of them.

All the other gold stock related ETFs would also have to show us extreme readings. This is still far away so this mini crash should be just a correction.

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GDX ETF, Gold Stock Mini Crash Review

 

 

Finally gold stocks have made a move to the downside , which was a rather sharp move.  For the next few months or  longer,  I will be looking at gold stocks from a “D” wave bull market perspective, as my original degree level may have been too low.  Even now a wave 1 in Minor degree would be too soon, but this market can produce some serious extensions, so the  Minute degree wave 1, may not last too long. 

The longer this drags out, the higher GDX will go if project a couple of parallel trend lines.  The mood for a “D” wave top will be about the same as any wave larger degree wave 1 would be. It would also show some very expensive Gold/Gdx ratios.  Right now we are sitting at about 54.86:1 which is still rather cheap when compared to gold.  If we get closer to a 30:1 ratio,  then gold stocks would be approaching the expensive side. On most new  record highs I will take ratio calculations if I remember. 🙂  For now I think we still have a long way to go,  before the contrarian indicators I use,  start showing themselves consistently.

Very seldom do I talk about the fundamentals, as from my perspective, they are irrelevant. Many traders used to call fundamentals as”funny-mentals”.    Markets behave in the opposite direction of the herd, when the majority of bull riders think they have a free and easy ride.  

  At the extremes, fundamentals will always tell us the wrong things, as no popular expert was calling for a  potential bull market back in late 2015.  Yet the contrarians have been accumulating gold related assets for over a  year already, well before the real bottom in late 2015. 

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GDX Gold Stock Bull Market Review

 

 

We can replace the HUI with GDX as a gold stock indicator, as GDX tracks the HUI very well. It is also easier to figure out the Gold/Gdx ratio.  Since early 2016 gold stocks have seen an explosive rally, but also got hammered in a summer type of a correction. This correction can contain an expanded pattern which, if it is true, then gold stocks should have no problem in breaking out to new bull market record highs. 

Depending on the speed this progresses, we should get close to the top trend line one more time.  This is still a substantial move. I visited my contrarian friend who manages some large accounts, and we both are in agreement that there is a lot more upside to go.  Not until we get some clear gold stock insider selling reports, and GDX becomes very expensive when we use the Gold/Gdx ratio, this bull market is not going to end anytime soon. 

The next phase is off to a good start, but is still hazy to the degree we are now in. This may not clear up until we see a sudden drop, otherwise gold stocks can just keep grinding along, as they have done already. 

There is no way I can be bearish with such a pattern even though the Gold/Gdx ratio got a bit more expensive recently.

Today this ratio is sitting at just under 50:1 from a maximum cheap ratio of 84:1. We would have to get close to 30:1 or more before gold stocks become very expensive again. This is not going to happen overnight so be prepared for a long ride mixed with some surprises along the way.  

As you can see my next target wave position at the next top is another “A” wave in Intermediate degree, so hopefully we can milk this run as much as possible.  

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GDX, Gold Stock Quick Review

 

 

Gold has made a small violent corrective move, and so has GDX. Not much has changed, but a 5 wave sequence seems to have completed.  We should get a deeper correction if this were the case, but we can still be too early for that to happen. If our late 2016 bottom is real, then this market should eventually take out that mid 2016 peak, just under $32.   The trend line is pointing closer to the $55 price level, and a “C” wave ratio calculation points to a $52 price level.

We have a long way to go, for that to get confirmed. All the markets were making wild swings this morning, so anything can still happen. My long term outlook has not changed any, as short term swings can keep us guessing. 

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Gold Stocks, GDX Review

 

 

Since about mid December GDX has started to wake up and perform. That’s all good, but it cannot continue until we get a small correction. GDX has gone vertical in the last few days, with 2-3 gaps opening up below present prices as well.  

One gap may still get close on this trip, but all the rest may remain open until the next big bear market. 

From here on the trend chasers will take over as they can also see a potential upside breakout coming. GDX would have to break above $32  to make this happen.  I don’t want to restrict GDX with a price forecast as a “C” wave bullish phase can go vertical, with extensions before it ends.  Right now the  invisible top trend line is pointing to the $60 price level, but we have to watch if GDX starts to veer dramatically.  For the next 6 months or so, this should not be a problem. 

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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

 

gdx-dec-5-2016

 

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

 

gdx-nov-20-2016

 

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!

 

gdx-nov-11-2016

 

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. 

gcy00-nov-11-2016

 

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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