GDX: time for the gold miners to shine?

Gold and goldminers have been beaten to death ever since the relentless advance of the SPX 1075 low made in fall 2011, thanks en large to CBers free-money-for-all, except you, you, and you! Looking at the charts, we can see perfect 5 waves down, or 3 waves if you prefer to count as such, with a perfect 1.382x fib relationship (hence why I prefer the abc count since 5 waves tend to adhere to an internal 1.618x relationship). Regardless, IMHO, an important bottom has been made. Next stop for GDX is the $20-$22 area: support becomes resistance. It is also where the daily R1 resides ($20.62), while the ascending 50d SMA is now at $20.81 (not shown).

click to enlarge

GDX 11172014

However, I do believe all this will be overcome eventually and that the 3-waves up to form a blue B will target a 50-62% retrace of blue wave A down: $45ish +/- $3. GLD will likely follow the same pattern, as will many beaten-up-behind-the-wood-shack-till-it-ain’t-funny-anymore individual gold miner stocks. IMHO, this will mean one thing: risk on. Money can only be invested at one place at the time, and if money flows into “secure” gold, it will have to flow out of “riskier” stocks. Hence, the current start of an very likely uptrend in gold, on increasing (buying) volume, may suggest the start of a larger market decline.


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