March 27, 2014 Yesterday I got a few emails asking what I thought about the meltdown in Miners. I cant say it wasnt expected, but I can say it was faster and steeper than I expected. On March 20th , we saw a “THRUST” in the price of Miners, but it quickly failed and broke below our consolidation triangle. That means further downside….However I thought we would get a “TEST” of the Triangle and then continue down as seen in this chart of GDX from March 20
The “TEST” was QUICK (Intraday) and the drop has been fast and on High volume, as seen in Todays chart.
How far will it drop? Are we at support? Is selling done? And IS that an Inverse H&S forming?
Honestly , the selling has been faster than I expected, and with heavier volume, so its hard to say.
1. Break down through & Closed below the Bollingerbands (not shown on chart)
2. There is support in this area shown above , so I am expecting a “BOUNCE” at least.
3. Notice on the next chart that we are a hair away from the 61.8% retrace of the entire move up and Puke out type volume.
SO- IF we GAP DOWN in the morning, I may consider a trade (NUGT) . I dont usually tweet risky trades yet, leveraged ones .
Lets look and see if GOLD really looked ugly today, or was this selling as expected?
On March 20th, Gold also had a ‘Thrust ” to new highs and a “Fail” below the consolidation also. Notice the MACD HIST & VOLUME , so I imagined bouncing down to -$1300 possible. Maybe an Inverse H&S too.
However , It did the same quick Intraday “Test” as GDX and also Dropped rather quickly.
Here is my dilemma – The Miners erased a LOT of their gains (61.8% of the entire move) while GOLD hasnt even lost 50% , so it looks like it could bounce , yet still have more downside? Will Miners sell off again, or base out while Gold finishes its move? Time will tell, and its best to take it a step at a time.
A quick review of the $USD may help.
In my March 19th chart below of the $USD, I pointed out the “YELLEN THRUST CANDLE” on the FED DAY in the dollar, but I thought that it would go sideways and not just blast off (And upside in the Dollar could hinder GOLD/MINERS)
So far, It is playing out that way, WHICH MEANS…If the Dollar does break upward, pressure may bring that second wave of selling in GOLD/MINERS (assuming that we get the bounce first) .
So we have a lot to consider and a lot to look for moving forward. The selling has been STEEPER and FASTER than I expected in GDX & GDXJ for sure, so that tells me to keep an open mind and try to let these markets continue to tell me what they want to do over time.
Thanks for reading!!