Unless today is an epic bull trap, which I don’t think is the case, then the move above the neckline and SMA 200 has conviction and implies higher levels to come. Recall that in this morning’s update we noted that the pattern roughly measures to test the May high.
The conviction here is quite positive. This move could still have some upward real estate to it as traders jump aboard the sector and try to MOMO it. Breakout traders often get punished in the short-term, and thus where ever the move stops in the short-term, there could then be some grind and/or volatility. But as it stands now, such volatility would be an opportunity to buy, as close to the neckline and SMA 200 as possible.
I am tending a group of stocks currently held, including 3 new beat downs added this morning per the trade log, as it looks like some of these tax loss downtrend specs want to get a move on sooner, not later.
But the bottom line is that we’ve had the SMA 200 on radar for months as a target that needs to be exceeded and then later the pattern formed and added a neckline to that same level of 30 (+/-). The fact is that as of this moment GDX is busting that level and this is the trigger needed for higher – possibly significantly higher – prices. Volatility will enter the picture, but I am looking at individual items and adding them or avoiding them as their charts speak to me.
The GDX chart, however, advises that pending a few more days of holding the neckline the view of a confirmed end to the post-May correction is at hand and we are looking for the May highs, and later very possibly the 40 area.
As a side note, it feels good to be positioned and ready to add rather than FOMO’ing (fearing missing out) the move and trying to make decisions in real time. As another note, gold is rising vs. stock markets and that should start to improve our ratio chart of gold relative to US and global stocks.
Bottom line: Things are on track (duh).
