Tag Archives: GDX

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.

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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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Gold Stocks GDX Review: Trapping the Gold Bears!

 

gdx-nov-10-2016

 

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

 

gdx-nov-6-2016

 

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

 

gdx-wave-test

 

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

 

gdx-oct-21-2016

 

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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GDX, Gold Stock And Gold/Gdx Ratio Review.

 

GDX-Aug-30-2016

 

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

 

GDX-Aug-24-2016

 

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

 

GDX-Aug-12-2016

 

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-Aug-1-2016

 

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

 

GDX-June-29-2016

 

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

 

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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GDX, Just A Correction?

 

GDX-May-25-2016

 

Gold stocks have declined and with this GDX ETF, we are at a point where GDX can reverse. We basically have to ignore the bottom trend line as it only highlights the section in review. Again, we are now at a point where the next counter rally has to give us a good impulse of some magnitude, or otherwise die in another leg down. 

Impulse waves can go up or down, and the ones that are traveling against the larger trend, usually contain waves that overlap at many of the critical wave positions.  Hopefully the next few days will tell us more. 

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