With less than an hour into the session, Junior Miners (GDXJ), have tapped upper resistance, pushed past by just 0.07-points, and are now eroding to the downside.
If the index continues lower, it has the classic near textbook look of ‘bump and run’.
It’s a price action response to stops placed just above resistance that get executed and then the market continues lower.
If that’s the case, it could get very serious to the downside (not advice, not a recommendation)
Short positions via JDST, have been maintained with a hard stop at today’s JDST, low of 5.974 (not advice, not a recommendation).
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
If it’s frustrating for the bears, it’s got to be frustrating for the bulls as well.
Pulling back and looking at GDXJ action without emotion, it’s clear we’re still in the ‘test’ (as we’ll see below) that’s been the topic of discussion over the past several updates.
The weekly chart of GDXJ, shows that even with today’s (as of 3:04 p.m., EST) retrace and test, we’re still in a negative divergence on the MACD (orange arrow).
Junior Miners GDXJ, Weekly
The horizontal blue line is not only an axis/resistance line, it’s also the Fibonacci 38.2% retrace of the GDXJ down move, April 13th, to May 25th.
We’re about an hour before the close and price action’s starting to erode from the highs.
If the downtrend is to continue, this may be a low-risk area for the shorts via JDST (not advice, not recommendation).
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The ‘Artificial Intelligence’ (AI) clown show’s in full swing with a ‘predicted‘ single quarter target of $11-Billion, from NVDA.
That’s not to be confused with the budget clown show just ended in Washinton D.C.
And where does that leave Tesla? They seem to be left out of the latest round of cult-like insanity.
Back in the day, Dr. Alexander Elder stated, professionals don’t look for the ‘challenge’ in the markets (trying to figure out the NVDA, top), they look for the ‘money’ … there’s a huge difference.
Junior Miners GDXJ, Weekly Candle
As of 12:35 p.m., EST, from a technical perspective, even though we’re up for the day (so far), MACD momentum’s increasing to the downside (magenta arrow).
Nobody seems to be paying attention to gold and silver; all eyes are focused on the next shiny object.
Pulling out a bit farther on the weekly, there’s no question we’re in a channel.
The question is, are we (GDXJ) going to say in that channel or reverse from here?
The last update said we’d likely be testing the wedge break and that’s what’s happening.
A ‘test’ will take however long is needed. It’s either pass or fail. Pass in this case is resumption to the downside.
Technical conditions (MACD, wedge break) favor the downside (not advice, not a recommendation).
In addition, we need to keep in mind there’s a new circus in town; the miners may be well on their way to more downside before anyone steps out of the big-top to notice.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
If this is the ‘big one’ that everyone’s talking about, the miners have a long way to go to the downside (not advice, not a recommendation).
When there’s a viable, bearish (or bullish) divergence, then price action has the potential to go much farther and the move last much longer than anyone would expect.
Junior Miners GDXJ (as well as GDX), have posted a bearish MACD divergence on the weekly time frame … very significant.
That divergence is shown below:
Junior Miners GDXJ, Weekly Candle
Price action goes one way (i.e., up) while MACD goes the other … down.
Other posts have already covered details of the current set-up, now reversal, links here and here.
Not covered yet, is the apparent repeating trendline and potential trading channel.
That is shown on the daily close chart of GDXJ, below:
Junior Miners GDXJ, Daily Close
At the minimum, on the right side of the chart we have a down trendline. An upside break of this line would negate any short positions … (not advice, not a recommendation).
The compressed chart of GDXJ (below), shows the potential.
As of this post (12:57 p.m., EST) GDXJ, continues to move decisively lower. Gold (GLD) and silver (SLV) have reversed to the downside.
Gold’s reversal potential has been discussed previously here, and here.
No one expects a significant reversal in gold …. no one.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
If we’re at the downside pivot for gold and the miners, there’s only one right answer for the next market session.
That answer is:
Lower open, lower high, lower close.
Not advice, not a recommendation.
However, it is an assessment of where we are in the market cycle for gold and the miners.
The focus is on the Juniors GDXJ, as they are the weakest of both gold GLD, and the Seniors GDX.
If GDXJ, does not open lower, there’s something else happening; that would mean the downside reversal potential is in question and/or it could morph into more testing at the Axis Line, previously discussed.
Here’s a close-up of the sector.
Junior Miners GDXJ, Daily
Volume bar No. 1, corresponded with a solid up move for that session; shown as Price Bar No. 1.
Volume Bar No. 2, is where it gets interesting.
Specifically, higher volume, more narrow range (net distance) and a close well off the high.
Wyckoff called this: ‘effort vs. reward’.
Lots of effort (volume) with less reward (distance) than the previous move.
The next session confirmed that assessment by opening gap-down and then spending the entire day attempting to close higher … which did not happen.
That day (last Friday) may have been short covering. If so, we’re about to find out.
Junior Miners, GDXJ, Daily (forecast)
If we’re in a reversal (a big if), then we’ll get some variation of the price bar (black arrow) as shown (not advice, not a recommendation).
For the bearish option to remain intact, GDXJ needs to open lower and close lower for the day.
However, it does not need to post a new daily low, although that would help the case for more downside.
Anything other than what’s just described, would indicate a more complex price action environment.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Nearly everyone expects gold to go higher; much higher.
You want ‘clicks’ on your website? Then talk about how gold’s going to the moon.
It’s an easy grift. Everybody’s doing it.
However, gold’s truth is in the price action, not the grift.
We’re going to look at that truth and more specifically, what gold’s (GLD) volume is telling us.
With full understanding that anything can happen, gold could go higher, there’s a case for a significant downside reversal (not advice, not a recommendation).
Gold GLD, Weekly
In Wyckoff analysis terms, volume is the energy behind the move. It’s the commitment … or lack thereof.
Last week’s volume is far below the prior spike high set during the ‘invasion’.
It’s down over 56% from the ‘invasion’ spike and down 26% from the most recent spike.
Demand, commitment and thrust energy, are backing away from the gold market.
Moving down to the daily, we see the net distance traveled with each significant thrust is shorter than the last.
Gold GLD, Daily Close
Wyckoff wrote about this observation a century ago when discussing how to spot the end (or absorption phase) of a move.
He called it ‘shortening of the thrust’.
So, there it is. The weekly chart shows each major volume spike is less than the last.
The daily close has net distance traveled less than the last.
Add in the mining sector’s GDXJ, posting its most recent peak four weeks ago (week ended April 10th).
Last week’s action in the Junior’s appeared to be an act of desperation by the bulls.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Does the mining sector forecast the actual direction of precious metals; specifically, gold?
When looking over the past year, the short answer is yes.
We’ll look at the daily chart of the Junior Mining Sector GDXJ, below and show that each peak and reversal in gold, was preceded by a reversal in the mining sector (not advice, not a recommendation).
Junior Mining Sector GDXJ, Daily
Each ‘black arrow’ shown on the chart of GDXJ, is a peak or bottom and significant reversal in gold (GLD).
Over the past year, GDXJ reached its peak or bottom several days or several weeks before the actual metal.
The right-most arrow is blue … because we don’t know what’s going to happen next.
Pulling to a longer time frame (still using the daily), we see the GDXJ on a closing basis, is oscillating about an axis line that’s been in effect for three years.
Junior Mining Sector GDXJ, Daily Close
Until proven otherwise, we’re still in a test of the ‘Up-Thrust’.
Price action could somehow power its way higher (with higher gold prices) and move into some kind of bull move.
Or, as the chart implies, we’re at a potential inflection point with probabilities equally weighted but suggesting a slight hint to the downside.
Futures Market
Gold futures, GCM23, as of this post (10:25 p.m., EST), are drifting higher and curretly trading up about +0.05%.
Funny things tend to happen overnight in the futures markets. We’ll see if the upward bias holds to the next open or if downside pressure becomes apparent.
From a news standpoint, we have the employment report(s) before the open at 8:30 a.m.; the Fed speaks at 1:00 p.m.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Gold’s reversal or potential for reversal, has already been covered here, here and here.
We’re going to focus on the Junior Miners GDXJ but start first, with an updated chart of gold (GLD).
Gold GLD, Weekly Close
This is how it looked back on April 15th.
As of the close yesterday, we have this:
It’s arguable GLD, is now below the resistance line (completing the Spring-to-Up-Thrust) but that’s not the most important part from a trading standpoint.
When looking at the Junior Mining Index GDXJ, there’s an ominous pattern.
Junior Miners GDXJ, Weekly Close
Each extreme peak over the last three-years has been labeled; the Derecho of 2020, the so-called Ukraine ‘invasion’, and now, the banking crisis.
Note: The SVB bank failure was on March 10th. There was a ‘knee-jerk’ reaction by the public into gold and related components … that peak appears to have stalled at the location shown.
What’s going on is obvious; it’s a bear market.
Each major peak, lower than the last.
Now, the interesting part.
The Junior Miners are in Wycoff Up-Thrust condition.
In this case, price action’s solidly below the resistance line.
Looking at the daily (not shown), there may have been a ‘test’ of resistance this past week for a move higher; if so, it failed and GDXJ closed slightly lower.
Summary & Positioning
So, here we are: The market (SPY) has rallied over the past week, giving the illusion that all is well.
However, it too is now in up-thrust (reversal) position.
For my business accounts, it looks like being short the miners at this juncture is lower risk than being short biotech (not advice, not a recommendation).
Typical short vehicles that could be used (not a recommendation) are DUST and JDST.
As always, anything can happen. If the markets ‘implode’, they might be closed for any number of days or weeks.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
With Friday’s downside reversal we’re now between Euphoria and Anxiety for gold.
This past week was inundated with stories of panic at the bullion dealers.
YouTube ‘content creators’ were going berserk with hyper-inflationist rants; other ‘influencers’ telling us the dollar’s about to collapse; they say the Fed’s the only reason the dollar’s not at zero right now.
Then, rumors warning of gold to $5,000/oz. and higher.
The result as you would expect, is a highly emotional, manipulated public.
Different This Time?
At this point, whether or not the dollar will collapse is probably irrelevant.
Long time visitors to this site already know, battle lines (like here and here) are being drawn and it’s not in precious metals (not advice, not a recommendation).
As always, anything can happen and gold could go higher but with Friday’s reversal, probabilities have now shifted to the downside.
With that, we now have an ominous chart of gold below.
It shows the set-up to a repeating market characteristic:
Wyckoff ‘Spring to Up-Thrust’.
Gold (GLD) Weekly Close
Gold’s momentum wanes just as it’s pushing up through resistance.
Obviously, what happens next is the important part.
Strategy
Looking at the economic calendar for the coming week, there’s a Fed speaker every single day. If we’re really at a significant reversal, next week’s likely to put the panic into unsustainable overdrive and mark the top.
For the bulls, we’re looking for the GLD, highs to be maintained. If it can’t hold, there’s reversal trouble ahead.
A Reversal?
If this is the ‘big one’ and gold reverses, a likely (medium-term) target is in the area of $1,300/oz., – $1,350/oz. (not advice, not a recommendation).
If that happens, gold’s still expensive but it’s the mining sector GDX, GDXJ, that would potentially be devastated.
Both the Seniors and Juniors are already printing an MACD bearish divergence (not yet confirmed) when looking at the weekly charts.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point® 