Relentless weakness since mid-April finally triggered the 'mechanical' buy at x=35.58 that we've awaited for a month. Such signals are supposed to come at times when they are unappealing, but in this case the opportunity, such as it is, looks so dim that I'll suggest waiting for lower lows before we attempt an entry. With bearish forecasts for both gold and silver futures in force, and the prospect of a further decline in this vehicle to C=32.25, there is no rush to get aboard.
As tedious and labored as the uptrend has been since this vehicle bottomed on September 30 at 25.80, it is healthy enough to suggest that the long, corrective dirge from the $66 high recorded in the summer of 2020 is over. By 'healthy' I mean that rallies are capable of generating impulse legs on the weekly chart. Most recently, for instance, buyers did so by pushing GDXJ above an internal peak and an external one at 42.13 recorded exactly a year ago. The jury is still out on whether the 'mechanical' buy we narrowly missed executing at 35.58 can bounce more than a single level without retreating below the green line. It failed by just three cents to accomplish this last week.
GDXJ missed triggering a 'mechanical' buy last week by just 21 cents, but if it follows through to the downside and hits the green line (x=35.59), the trade would be a 'go'. From that point forward you could get long on a buy-stop following any rally of $1.12. That's how much entry risk you'd be taking per share, but it would be predicated on a potential profit of as much $2.75 per share. You could cut that down to as little as 0.34 per share by triggering yourself into the trade on a rally of at least 35 cents from C or lower, and although taking that approach looks like it has a good chance of producing a profit, it would not necessarily get you to the 45.56 target of the big pattern.
GDXJ looks like it will continue to grope its way lower to reflect softening quotes for bullion futures. If the bloodletting should reach the green line (x=35.58), however, it would trigger a 'mechanical' buy that we should not pass up. Corrections that traverse Hidden Levels from above p2 down to x often yield profitable 'mechanical' entries at the low, even if the anticipated bounce does not always achieve the D target. If bulls were going to find traction somewhere above x, it would have happened with last Thursday's dip to D=37.73 of a corrective pattern begun on April 13 from 43.89. Alas, the support was breached, suggesting there is more downside to endure.
GDXJ triggered a 'mechanical' buy last week that got nowhere near the bids I'd suggested. Actually, the swoon didn't even trip a 'conventional' buy, since the week's low missed touching the red line by six cents (see chart inset). We may have to take what we can get if we're going to be on board for the finishing stroke to the 45.56 Hidden Pivot target shown. I didn't mention it here explicitly last week (although it was shown in the chart), but it has been our lodestone since mid-March and never in doubt.
We can be confident the so-far 11% pullback from the April 13 top at 43.89 is merely corrective rather than the start of a sickening decline, since GDXJ surpassed two important peaks -- one internal, the other external (circled in the chat) -- before taking a breather. This generated a quite powerful impulse leg, one with the potential to push this gold-miner proxy into the low-to-mid-50s. A reverse pattern that starts with January's 41.16 peak suggests GDXJ will become an opportune buy at either 37.40 or, worst/best-case, 35.24.
GDXJ has corrected sharply after falling a substantial 1.68 shy of a 45.57 rally target that remains viable. In fact, a further fall to the red line, a midpoint Hidden Pivot support at p=38.92, would trip a moderately appealing 'mechanical' buy, stop 36.70. It would be less hazardous to wait for the correction to come down to x=35.59, but that would risk missing the next important upturn. In practice, we'll look to buy at the higher price, but with a 'camouflage' trigger that risks relative pocket change. Stay tuned if you care.
GDXJ turned south well shy of the 45.57 rally target we've been using for the last few weeks. If Comex Gold and Silver futures had not made what appear to be intermediate-term tops at the same time, I'd be more confident about GDXJ fulfilling its price objective. Its rally has been even steeper than gold's, but perhaps that means it will lead the way higher once this correction in bullion has run its course. A drop to the red line would signal a 'mechanical' buying opportunity, but a death dive to x=35.39, however scary, would be even more enticing as a place to reload.
Although I've identified bull-market targets as high as 72.23, it's appropriate at this time to rein in our expectations, since the pattern shown, despite its steep pitch and 45.57 target, is problematical. It is the ersatz impulse leg that is most nettlesome, since it failed on the January run-up to 41.16 to surpass a key 'external' peak at 42.19 recorded last June. That diminishes the usefulness and reliability of the pattern and its D target. Additionally, last week's high stalled at p2=42.24, but also at the D target of a minor pattern. A pullback to the red line would not present an ideal 'mechanical' buying opportunity, although a hellacious slide to x=35.39 could set up something more promising._____ UPDATE (Apr 11, 9:58 p.m.): The slight poke above an external peak a 42.19 recorded on June 2 generated a short but strong impulse leg, refreshing the bullish energy of the daily chart. Now, other than 'voodoo' resistance at 43.31, it looks like clear sailing all the way to 44.42, where resistance will be felt in the form of an external peak recorded in May.
A spirited push higher on Friday easily exceeded the 39.52 target we've been using, setting GDXJ up for a crucial test that would be strongly impulsive if it can get past the two peaks shown (inset) without pausing for breath. The higher of them lies at 42.19, and a two-day close above it would all but ensure further progress to at least p=49.02. Because gold is in a bull market, it is appropriate at this time to show what's possible over the long term -- in this case an ambitious target at 72.23 that has never been aired here before. For the time being, though, we'll use p=49.02 as a minimum upside projection, with an eye toward low-risk 'mechanical' entries to augment long positions on the way up. _______ UPDATE (Apr 5, 9:56 p.m. EDT): Today's bull-trap thrust to 42.05 got within 0.3% of the target, so it should be considered fulfilled. If GDXJ surprises with a second-wind lunge above the high within the next 2-3 days, that would be quite bullish.
