Is It Time To Get Bullish Or Bearish On Metals And Miners?

In our everyday lives, we are so focused on finding the best prices for anything we want to purchase.  We expend a significant amount of effort into finding the “deal” on televisions, cars, jewelry, furniture, or anything else that carries a high price tag. 

Yet, that same perspective does not seem to carry over into the financial markets.  Rather, the higher the price moves in the financial markets, the more we want to buy it.  Hence, the higher gold seems to rally, the more bullish the market gets.  But, as I have been saying, it may still be premature to believe that the next phase of the long term bull market has begun.

When the GLD broke out over 112 this past week, it should have acted as a warning to those immediately bearish.

With the move in gold/GLD, it has opened the door for the metals and miners to head higher still in what I am counting as a corrective rally.  Yet, I have to note that silver is clearly the weakest of the three attached charts, and it may be providing us the best topping signal of all.  Silver seems to be within an ending diagonal for this final move higher.  And within that ending diagonal, it looks like it needs at least one and, maybe even two, moves higher within the confines of its diagonal pattern.  A break down below the 15.60-15.80 support level is our first confirmation of the breakdown of this structure.  But, again, the upside pattern looks incomplete at this time.

Running a close second is the GDX, which also seems to be completing an ending diagonal.  I have attached an 8 minute chart to show that this is likely in the wave (iv) of the ending diagonal, which means we have one more spike higher into the 17.50-18 region to complete this diagonal.  Once the target region is struck, we should see a strong reaction to the downside which would be the initial signal that the market has reversed and is setting up for lower lows. And, as I have said repeatedly, an impulsive break down below the blue box on the daily chart is the signal that we are heading to lower lows.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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