GDX

The Gold Miners ETF seems likely to fall to at least 46.15, the Hidden Pivot target of a clear and compelling pattern that is shown in the chart.  Traders and long-term investors seeking a defensive play should look to get short or covered-write the stock if GDX rallies back to the 52.04 midpoint, which is now resistance.

The gold miners ETF known as GDX should find support just under its 2011 low of 49.22 if it continues to trend down, as the chart suggests it will.  Two robust patterns on GDX's daily chart give us a pair of "D" targets at 47.21 and 46.15, the latter of which is augured by a very strong impulse wave.  GDX could be dragged down either by a decline in the broader stock market or in the gold price.  Both of these are quite plausible at the moment, and should they occur simultaneously, GDX could slice through both of our targets.  But the gold miners are widely seen as undervalued, and we might expect heavy buying in our target area.  Traders looking to catch a bounce from the lower pivot should use a stop at 45.99.  (Posted by Doug "harry" McLagan)

Although yesterday’s Congressional testimony by “Helicopter Ben” Bernanke was fundamentally meaningless, it caused gold and silver prices to take a spectacular dive. They got hit after the ‘Nank, prevaricating as usual, said the central bank wasn’t rushing to crank up a QE3 stimulus.  While this may be true as far as it goes, it belies the fact that the money spigots have been wide open for years and will remain so, probably, until the financial system collapses. More on that below.  Concerning the savaging that precious metals received, they are all but certain to recover, since the forces that have been driving them steeply higher for more than a decade are still very much in place. Even so, it could take at least a few weeks for gold to build a new base for a shot at $2000, and silver for a push into the mid-$40s. In the throes of yesterday’s brutal, deftly engineered shakeout, Comex gold dropped $104, or nearly six percent, in just a few hours. The April contract hit an intraday low of $1688 after trading as high as $1793 the day before. As for Silver futures, they suffered their worst single-day loss since September, falling $3.76, or 10 percent, from intraday high to low. Mining stocks fell in sympathy, lopping three percent from the value of the Gold Bugs Index (HUI) and five percent from GDX, an index that tracks the shares of junior miners. Although Silver futures fell harder than gold in percentages terms, the technical damage was worse in the latter. Notice in the chart above that April Gold’s plunge exceeded two prior lows on the daily chart. This created a bearish “impulse leg” of daily-chart degree, according to our proprietary Hidden Pivot Method of analysis, and it is the worst such damage we’ve

The bad guys appear to be having a devil of a time trying to push this vehicle below a 52.04 midpoint support associated with a downside target at 46.15.  Assuming they will fail miserably at this, we should look for ways to jump aboard on subtly impulsive, bullish breakouts. The 58.06 peak that I've labeled could be ideal for this purpose, but my hunch is that any B-C pullback from just above it would very quickly rebound to the 'X' trigger point.  Under the circumstances, you'll need to be alert with your buy-stop to catch the trade. ______ UPDATE (March 2): We'll put the trade aside for now, since technical signs have turned mixed. A 59.36 rally target should be held in mind nonetheless if GDX takes off.

The trajectory of Silver's bull run is so much steeper than Gold's that something's got to give. My hunch is that the divergence will be corrected more gently than some might expect, via moderate weakness in silver and a corresponding, moderate steepening of gold's bull market. Even so, the divergence could widen over the near-to-intermediate term, and I'm not going to worry about a possible correction until such time as these vehicles hit Hidden Pivot rally targets or significant C-D midpoints.  For GDX, the two such numbers lie, respectively, at 61.37 and 70.28.  Since GDX is currently probing the lower number, we should turn cautious at these levels. I expect it to be exceeded shortly, but we should verify with hourly readings nonetheless.  With respect to SLV, on the weekly chart shown, it's approaching a muddy 'D' at 39.04, but more upside to at least 42.10 is indicated if the lower number is decisively exceeded.

Today's touts include a comparison of long-term charts for SLV and GDX, tied to a prediction that the steep divergence between them cause by Silver's rampage will be corrected more gently than some might expect. There are also some specific pivots noted, along with a cautionary note in SLV, which on Tuesday hovered at an important midpoint resistance.

A Hidden Pivot resistance at 56.01 became support in mere hours, suggesting that the bulls who have been pushing the Gold Miners ETF higher have bigger fish to fry.  There are two peaks they'll need to take on to establish dominance: 58.24 (January 12), and 59.09 (January 4). Rally targets immediately above are somewhat murky, but the nearest where I would look for a reaction lies at 56.91. The highest target that can be coaxed from the hourly chart is 57.71.

Price action yesterday in the Gold Miners ETF (GDX) looked encouraging, since the low fell within a few ticks of a clear Hidden Pivot support.  However, I've allowed for further slippage in today's tout, which identifies a target well below current levels.

Yesterday's low came within four ticks of the 52.50 Hidden Pivot correction target shown in the chart, so we should view the bounce as potential bottoming action.  Also, it is a tentatively bullish sign that the decline stopped just short of taking out the 52.43 low recorded in early September. If yesterday's bottom gives way nonetheless, I suggest fishing at 50.10, a Hidden Pivot target calculated by moving to a lower b-c pairing (shown). ______ UPDATE:  GDX appears to have put in a good bottom. Now let's see how much resistance the nearest rally target, a Hidden Pivot at 56.01 poses. If it falls easily, this rally could have legs.