Admittedly, I was a little hard on our good friend, GDX, a couple of commentaries ago. Still, one has to question why it's really not lived up to our grandiose expectations over the past three years.
Haven't we been told gold's going to the stratosphere?
So, what's up, or in the case of GDX, down?
Why is it so tied into the performance of the markets, when gold is making new highs? Will it ever again leave the S&P 500 in the dust like it did back in the earlier part of the decade, and if so, when?
The fact is, the performance of the GDX, aside from a few twists and turns here and there, has been far more closely tied to the market's performance than most gold bulls would care to admit.
Things can and do change, however. Until then, though, there are charts and we're looking for a bottom.
One such possibility exists in the following chart:
Left click on chart(s) to expand
Of concern here is simply the number of times the 200 DMA has continued to rescue the GDX. One would have to think the 200 DMA will finally give way and threaten much lower prices. Nevertheless, there is an ABC pattern that could bottom (in the chart above) and lift the GDX upwards into areas we've been expecting long before now.
If the GDX manages to hold the D target on the 30 minute chart and rebounds, the daily chart shows an ABC pattern that could take the GDX to as much as $70.87
If however, the GDX surpasses the "C" in the chart below, you can probably kiss it goodbye.
The weekly is even more optimistic. Below is a chart I have featured on more than one occasion, but I'll show it again, one more time.
The question is whether or not GDX can withstand another stock market bear storm.
Technically, I doubt it.
Fundamentally, I will leave that decision to you.
