GDX has been struggling for the last two weeks to reverse a steep slide begun on September 22 from 28.56. We should take encouragement from the fact that the struggle is taking place well above the 22.08 target we’ve used as a minimum downside projection. Moreover, buyers generated a promising bullish impulse leg Friday via a rally that exceeded several prior peaks, two of them ‘external’, on the hourly chart (see inset). It should be noted that gold’s corrections have shown a propensity to test the very limits of our patience and endurance, and this may be the case here. However, the ferocity of October’s selloff should temper our enthusiasm for bottom-fishing in this vehicle, and impel us toward caution in doing the same with individual mining stocks, no matter how promising their operations. From a trading perspective, if last week’s rally is going to prove to be more than a tease, we should look for a pop through p=23.67. That number would change if the point ‘c’ low at 22.91 is taken out, but as you can see, there is not much more room to the downside for the abc uptrend to remain viable. _______ UPDATE (Oct 18, 6:48 p.m. ET): This morning’s leap on the opening bar put a 24.43 target in play. If that Hidden Pivot offers little resistance, bulls should take encouragement. However, even then we’ll need to see a further push exceeding 26.00 before we could infer that the rally might be getting legs. ________ UPDATE (Oct 23): Price action has been mildly encouraging. GDX not only reached the 24.43 rally target, it now seems to be consolidating above it. In theory, the next leg up has the potential to tack on as much as 1.45 points, or about 5%, based on wherever the point ‘c’ low occurs.
