My Perspective
In the past, I have noted that when the metals complex is in a larger bullish posture, I will always look towards the more bullish of the patterns as my primary, because experience has taught me this market often leaves people behind with shallow retracements:
“. . . based upon the larger degree perspective, with seeing 5 waves up from the 2015 lows, and then another 5 waves up from the December 2016 lows, I am on the hunt for the heart of a 3rd wave in this complex.When we are looking for a heart of a 3rd wave to take hold, they OFTEN do not provide much in the way of pullbacks.For that reason, I have always defaulted to a more immediate break-out scenario potential, since, otherwise, you can be left in the “dust” (pun intended), wondering where your pullback went.
Along those lines, the market has been consolidating near the highs for quite some time now.And, as I noted last week, when the market has made a number of attempts to break out, and is unable, it often falls back into more of a correction, in order to take another running start at the heart of the 3rd wave.So, with the inability to break out when it had a break out set up last week, I noted towards the end of the week that I would be hedging my account in consideration of that potential, and while we were still right at the highs.
While some of you may want me to tell you EXACTLY what the market is going to do at any point in time, I am sorry to disappoint you by telling you that I, or any other human being for that matter, am unable to do so.Rather, I can show you where we have set ups to break out or break down, but I cannot provide you any certainty.For that reason, I will inevitably be wrong at times.”
This is one of those times where the market has chosen to provide more of a pullback rather than a direct break out.And, the break of 23.30 in GDX should have clearly alerted you to the potential to drop to the 21.50-22 region, as I noted to expect last weekend. In fact, the low for this past week was 21.53, which was struck pre-market.
Overall Warning
One thing I have noticed about this complex is that too many investors believe it will be the road to riches, and it will be easy to get there.Nothing can be further from the truth.Yet, many are still using leveraged ETF’s, or using aggressive options strategies, or are too heavily weighted in the complex despite my warnings to the contrary.At the highs of GDX a few weeks back, I warned strongly several times in our trading room at Elliottwavetrader.net about taking too aggressive a position in this market, and I even provided that warning in bold each time:
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