The model is shown below. I got lazy on this one because it was not my original thinking but this model says that the dip to the bottom of the red line at left is 3, the move to the top is 4, and now we are finishing out 5 in a way that will stay above the Andrew's Pitchfork center line (longest green line on the chart). This model says that the 5th and final wave down is playing out as an expanding triangle. It says that the centerline of that triangle was broken down and is now back testing from below.
The suspicion is that the centerline will hold and it will force GDX down to the bottom rail sometime during the month of December. If this is how it plays out, metals are at risk of another move down as well. But mark my words: the lower they let GDX fall, the fatter will be the profits for whoever is dollar cost averaging into the bottom. The pain of any quick and final dips could be fierce given that 22.28 down to 18 is about 20%.
But the gold miners will not stay down forever. They are a spring that is coiling. They have made all their cost savings cuts and they are all in survival mode right now, working on minimal new programs and only actively working the best yielding mines. They have cut corporate staff and cut costs to the bone. If GDX goes down to $18 The individual stocks that compose it will probably be paying some very safe, very respectable dividends in percentage terms (as in 4-5%).
We will know the truth on this very quickly, probably within the first few trading days of next week. If GDX cannot break back up top of that center line and hold it then expect a move down to perhaps 18 before the real bottom is found. Unfortunately for short term thinkers, I cannot see much wrong with BraVo's model here.
1 comment:
GDX for 18 or possibly lower? I'd have to throw a few bucks in for that price!
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