This week’s sharp rally has turned a dicey short-term picture bullish, generating an ABC pattern that promises to be precisely tradable. Here’s how: GDX was a ‘counterintuitive’ buy on last Friday’s pop through the green line, but we can play catch-up with a ‘mechanical’ bid at 26.92, stop 25.16. Do not attempt this if the stock pulls back to the green line on Thursday or Friday, since that would imply bulls are having digestion pains. However, if GDX pushes above p=28.67 straightaway, we can still raise our ‘mechanical’ bid to that price, predicated on a pullback to it that takes at least three days._______ UPDATE (Sep 11, 12:12 p.m. EDT): Friday’s gap-down plunge hit 26.25, but we passed up an entry at 26.92 because price action did not conform to our timeline. However, my gut feeling is that the trade will work anyway, and that is our rationale for seeking out a ‘camouflage’ entry opportunity. Zooming down to the three-minute chart (see inset, a fresh picture), that would imply, to begin with, an a-b impulse leg exceeding the labeled peak at 26.65 peak. This is hypothetical, and a different entry set-up could conceivably take shape. But I am proffering this example nonetheless to give you an idea of how a camouflage’ entry signal might evolve.
