Tag Archives: Sentiment

Sentiment Speaks: GLD May Not Yet Be Ready To Break Out
February 18, 2018 6:02 pm|Comments (0)

For those that follow me regularly, you will know that I have been tracking a set up for the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX), which I analyze as a proxy for the metals mining market. I believe that the GDX can outperform the general equity market once we confirm a long term break out has begun, and I still think we can see it in occur in 2018. This week, I will provide an update to the GDX, but want to also discuss the GLD, which is an ETF which attempts to mirror the movements of gold. While I have gone on record as to why I do not think the GLD is a wise long-term investment hold, I will still use it to track the market movements.

While the GDX did move through the resistance region I noted last weekend, it did not do so in what I wanted to see as an “impulsive” move. That is a term of art which means a standard 5-wave structure which adheres to our Fibonacci Pinball methodology. Rather, when the market broke out over 22.30, it set up to run strongly towards the 23.20 region, which is the analysis I presented to those that follow my work daily. In fact, just before the market opened on Valentines Day, I sent out an Alert to my members noting how I viewed the smaller degree structure:

“Over 22.30, and we have an initial indication of a bottom in place. 23.20 then becomes the next higher resistance.”

As we saw, the market broke over 22.30, and then moved quite strongly higher, and topped out this week at 23.16. But, as I noted once we reached the 23.20 resistance region, this can still be a 4th wave rally and point us down towards the low 20 region unless we are able to take out the 23.20 resistance strongly. As we now see, the market may be pointing us directly down towards that low 20 region in the GDX, as we have been unable to break over 23.20, and have turned down.

As far as the GLD is concerned, this is still presenting as a very bullish pattern. While I would have loved to have seen this break out already, the current micro structure is not strongly suggestive of an immediate break out. In fact, should we see an impulsive drop below 127 in the coming week, it opens the door to a drop down to at least the 124 region, but more preferably down to the 121.50-122 region, before we can set up again for a break out.

But, as I have noted many times before, for those who are looking for a long-term investment hold for gold, I would not suggest using the GLD as I have presented in this webinar I did some time ago. Rather, I tend to use the GLD as a trading vehicle rather than an investment vehicle.

Lastly, a break out over last week’s high in either GLD or GDX can alter the analysis presented above, as it is contingent on last week’s highs holding as resistance. Remember, we cannot know what will happen in the future with certainty. Rather, we can plan for what may happen based upon probabilities. But, we also have to know rather quickly when and where those probabilities are no longer in our favor. Remaining in a wrong position while “hoping” is what destroys more accounts than anything else.

Housekeeping Matters

It seems that Seeking Alpha has changed the way they tag articles. So, while my articles used to be sent out as an email to those that follow the metals complex, they are now only being sent out to those that have chosen to “follow” me. So, if you would like notification as to when my articles are published, please hit the button at the top to “follow” me. Thank you.

Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I hedged my portfolio on Friday with stops at 23.20 GDX.

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Sentiment Speaks: Mining Stocks Have Been The Most Frustrating Trade For The Last Year
February 11, 2018 6:01 pm|Comments (0)

For those that follow me regularly, you will know that I have been tracking a set up for the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX), which I analyze as a proxy for the metals mining market. I believe that the GDX can outperform the general equity market once we confirm a long term break out has begun, and I still think we can see it in occur in 2018. But, after last week’s break down below the December 2017 low, the set up will have to be resurrected first in the coming months.

I am not sure what more there is to say. We have had several break-out set ups break down in the GDX over the last year. Yet, all the market has done is consolidate sideways for an entire year. Clearly, this is not something I would have or could have expected. Moreover, we still have a 5-wave structure off the 2015 lows, which still keeps us in a longer term bullish perspective.

Since the GDX is a composition of a whole host of mining stocks, I think I have to resolve myself to understanding that the weaker stocks have certainly been a strong drag on the overall fund. So, until the weaker stocks prove they have a bottom in place, it seems quite clear that the GDX will continue to frustrate us.

With that being said, the miners we are holding in our EWT Miners Portfolio are presenting as exceptionally strong, especially relative to the GDX as a whole. Many of them seem as ready to break out similarly to the manner in which GLD seems poised to break out. Yet, when I go back to look at stocks like ABX, it seems quite clear why the GDX has been underperforming.

As you can see from the attached ABX chart, it has followed through down to lower lows in this current pullback. When I highlighted this chart a few months ago to our members of my The Market Pinball Service, I noted this lower low potential, and the ABX is now fulfilling that potential. But, as I also noted in those updates, the long-term potential being presented by this chart is quite strong. As you can see, the positive divergences evident on this chart as the market has dropped down to just below its .618 retracement of its 2016 rally is quite stark. This is often a precursor to a strong reversal which will likely kick off the larger degree 3rd wave which has failed to take hold over the last year.

Within the micro count of ABX, it would seem we are completing the wave v of (C) of y of ii. But, within wave v, we may still see another 4-5 structure before this completes its downside. That means that the 14 region is going to be the resistance over which it will have to rally in impulsive fashion to begin to signal that this wave ii has finally completed. Should that occur, we may see the ABX catch up quite quickly to the rest of the complex behind which it has been lagging.

So, in order to align the GDX chart with the ABX chart, I have to consider any bounce below the 22-22.66 region as being a 4th wave bounce, similar to the potential we see in the ABX. It will take an impulsive rally through the 22.66 region to suggest that the lows have been struck in the GDX, assuming the ABX is also impulsively rallying through its 14 region. Again, we will have to start seeing the laggards in this complex catch up and potentially even outperform to signal that a true low has been struck.

But, in conclusion, even though the GDX technically broke its recent (1)(2) structure, the metals charts still give me reason to remain bullish in the larger degree. As I noted to my subscribers, the short-term indications in my 144-minute silver chart suggest it is trying to bottom out, while the longer-term structure in ABX suggests it should also catch up to the rest of the market, which would allow the GDX to finally break out when the ABX is finally able to complete its longer-term pullback. Until such time, it seems the market is trying to teach us a lesson in patience, such as that exhibited by the biblical figure Job.

Housekeeping Matters

Lastly, it seems that Seeking Alpha has changed the way they tag articles. So, while my articles used to be sent out as an email to those that follow the metals complex, they are now only being sent out to those that have chosen to “follow” me. So, if you would like notification as to when my articles are published, please hit the button at the top to “follow” me. Thank you.

Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I significantly reduced my hedges, and only hold an appropriate amount for portfolio insurance at this time.

Tech

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