To See If You Can Hang On
Gold’s upside test has failed.
Now, it gets interesting.
Over the past four trading days, the gold market got slow and boring.
On top of that, we had Thanksgiving; providing more opportunity to be asleep at the wheel.
As Dr. Elder has said, when the market gets slow, traders start ‘squinting’ at their screens and imagine set-ups that aren’t there.
They forget (in this case) we’re in the middle of a potentially significant, long-lasting downside reversal.
All of this provides the conditions we saw at today’s open. A swift upside ‘gut check’ as David Weis used to call it.
It terrifies the weak hands
They either close out shorts, go long, or both; confused as to the real direction of the market.
How do I know? I’ve done it myself
Such a move, is typically what happens just before a market gets underway in earnest.
Gold (GLD) and the Miners (GDX)
We’re looking at the daily GDX, inverse fund DUST.
The chart below zooms-in on the trend contact points.
There’s a caveat to more GLD and GDX downside.
While gold has made a new weekly low, the miners, GDX, have not.
That leaves the possibility for some kind of upside action; although at this point, it’s low probability.
Charts by StockCharts
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