By: Jeff Cooper
Hit and Run Bonus Report: May 26, 2023
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Metals: The Heart Of A Wave 3 Advance
When GDXJ struck its recent high of 44 on April 13th, we knew it was a square-out but I did not believe GDXJ would drop below 38, which is 90 degrees down from 44.
However, we should not be surprised that given the momentous momentum of the advance from the March 8th low that it would take time and price to walk off the overbought condition of that Wave 1 rally.
But now we are at a Time/Price Square out at the bottom of a weekly trend channel for a combo long setup looking for a strong Wave 3 rally.
The Time/Price square-out is that May 25th points to/vectors 35.50.
GDXJ hit 35.79 yesterday.
Could we get a full test of the 35 strike on today’s Opex? You bettcha.
But we’re in the Wheelhouse.
The first sign of a bottom being in will be a strong 5 wave structure to the topside of an appropriate low.
The second sign that a trend reversal is on deck will be a turn up of GDXJ’s 3 Day Chart.
The thing is that could be at considerably higher prices.
So we will look to the hourlies and a turn up of the 3 Hour Chart.
As well clearing the Breakaway Gap from May 25th at 36.75 will be a strong indication of a change in trend to the topside.
We are seeing equal and opposite sentiment to that as when GDXJ was at 44 in April.
At the highs few wanted to trim convinced the main event, the breakout to new all-time highs in gold/GLD was around the corner.
Now the bulls have been disabused of their golden visions of St. Augustine and the Johnny Come Lately not only are disgusted, but will likely not want to look at gold until its at 2300 or higher.
Well, I am sticking to my guns. I intend on adding to positions on signs that a bottom has been struck and I am planning to press those positions on a breakout that will signal we are in the heart of a 3rd wave in coming weeks.
The last major high in GDXJ was in April 2022. It topped on the one year cycle in April 2023.
Prior to that GDXJ struck a significant high in LATE MAY 2021---two years ago.
The two year cycle is not setting a high here…as we’ve been going down for 6 weeeks.
So there is a strong likelihood we have a high to high to low cycle on the table looking at the 1 and 2 year cycles.
Next week is the 7th week from the early April 2023 high. The normal expectation is to look for a turn.
If that turn perpetuates a rally through the prior 44 peak, it will trigger a MONTHLY Angular Rule of 4 Breakout and we will be in the heart of a dramatic 3rd wave advance.
