[ABX] update [GLD]

I've been following ABX as a proxy for metals and miners because its chart has been slightly different than the others and I hope that it will provide clues that will help me interpret other charts for the industry.

In the backlink I provided the model below.  This model contained a clear resistance line that was not expected to be broken.


Since then, gold rallied harder that the Avi model thought it would and the resulting chart for ABX is below.  I still do not count the expected 5 down here so I'm not ready to call this bear market done.  Keep in mind that while Avi was surprised at the strength here, EWI predicted a bull run for gold to $1300-$1400 that would be the B wave of an eventual crash down to $700.  So EWI is beginning to feel confident at this point.

The data in favor of EWI is that the downsloping resistance line was busted out of with a gap up.  The herd knew that invisible line was there and stepped over it like children step over cracks in the sidewalk.  Afterward, the chart back tested this line from above and, as of Friday, it is holding.  That is some evidence but certainly not overwhelming at this point.

On the Avi side of the coin, if I count 5 small waves down from the peak I get blue 1.  Then blue 2 is obvious.  If I assume everything from blue 2 to the recent bottom was blue 3 and then I use the fib calculator we see that after the chart broke out, it was stopped cold by a DDT at the 38.2 fib.  This is not bullish on its face but cannot be called bearish either because that whole move might have just been wave 1.  Wave 1 could have had the power to break the resistance line but not the powerful 38.2 fib.  Then wave 2 could be forming now only to break out into wave 3 up.  If this happens then I think Avi's model will have to plummet in the odds ratings and something else will have to be looked at more carefully, including EWI's model.  This is all going to be clarified next week IMO making that one of the more important trading weeks for M+M since the 2011 peak.

For now my primary model is as shown below.  I think that the 38.2 fib holds as resistance and that ABX might slide down that slope of hope into the $5 range at which point, if it happens, will indicate a generational buy for M+M.  Truly once in a lifetime.  It would indicate Avi's model is far and away the correct one in terms of odds.

 

Another feature of the above chart that makes me think that an a-b-c is in progress is circled in blue. While it could be 4 of 1 it could just as easily be b of 4.  In other words, it could be the dividing line between blue 3 and blue 4.

Zooming into the 30 minute chart, another possibility would be a head fake 38.2 fib break out to fill the gap and then a reversal back downward as shown below.



Another reason that my current view is for another downturn in gold is the GLD chart below which is now up against resistance.  The 3 wave movements we are seeing on the gold chart suggests that a falling wedge of some kind is in progress.  Here are the likely next moves:

• First I will cover the case I think is least likely to happen which is that the chart does not respect the resistance line.  Instead it breaks through the top resistance line.  EWI's model gains huge points in this case and if that happens then I am going to lose a few bucks to the JDST purchase that I made into the close on Friday.  Stops will save me from too big a screwing but I did load up a bit more than usual due to this resistance being kissed so perfectly.  Gotta play the odds.
• Next least likely is the red model which would be a pull back to center channel and then a break out.
• Next least likely would be the blue model where we get a clear and obvious 3 wave 5th with throw under.  That would just be too easy, too many would see it coming IMO.
• My highest odds play at this point is the green model where the chart moves down and then makes another failed run at resistance thus leaving the chart with a DDT.

 I am not in love with any of these models meaning I will quickly abandon them if the data tells me to do so.  This is the power of TA in general and of EW in specific.  With a clear idea of what you expect or do not expect to happen next it is not difficult to see if model expectations are being met or not.  In this way clear and actionable triggers can be created.  In other words, stop loss trades can be set to occur which remove the emotion of the moment.  Without the ability to use your emotions against you, all of Wall Street's advantage over you collapses and you begin to win consistently over time.   In this way their Magick is wasted on you.