We have noted the key pullback support level equivalent to HUI 140 (GDX equiv. is 16.90) and so far this has not even been tested (the lowest GDX got was 17.20). However, as noted HUI did test 140 last week and maybe that is the driver here.
The 50 period (60 min.) EMA supported an earlier decline to 16.15 and after mashing around with it again (17.20 low) it is thus far holding. MACD is triggering up and RSI is climbing positive. The bottom line is that GDX has not broken down and that keeps the prospect of another ‘higher high’ in play.
As noted recently, these things are signs of strength and of character change in the sector, where harsh reactions happen (like on Tuesday) but they are quickly reversed back to bullish. I tried to keep this in mind on Tuesday as I basically sat on my hands and did nothing but incur paper losses. Sure enough, Wednesday and Thursday fixed that.
GDX fills a gap and hits the middle fork tine just below 19. One more high might be a 5th wave, at least according to EW chartists. Maybe a significant reaction will wait until then, which makes sense if our PDAC cycle chart knows anything about anything. 17.20-17.50 is now a key parameter to the short-term view of a potential higher high.
The important thing to remember is that the macro has made some significant improvements, and so far the little burst of relief in the broad markets has not changed that view. A combination of fundamentals and technicals will continue to be our primary driver, and that combination is still intact at this time.