Gold topped struck a record high in early August in keeping with the 9 year anniversary of the August/September bull market top in gold.
Mirroring the behavior in gold, GDXJ also topped on August 6.
However, GDXJ was 179 in 2011. Last August's high was 66.
The following GDXJ shows a false breakout on November 5, which led to fresh lows for the correction.
Into the November 24 low we were pounding the table to buy mining stocks such as PAAS, MTA and AG.
While it looked like GDXJ was in free fall on a gap down smash through its 200 day moving average on November 24, a funny thing happened on the way to a metals smorgasbord for the precious metals bears.
On November 24, GDXJ satisfied a time/price square-out.
GDXJ struck a low of 47.68 on November 24.
Red is 47.50
Blue is Nov 24
We are about to find out whether GDXJ has another fresh low, which will install bullish divergences if it occurs.
Today, January 11 vibrates off/squares out with 51.50.
Purple is 51.50
Green is January 11
Friday’s knife down was literally out of the blue, in the middle of the night when markets are thin. Gold tumbled $50.
An institution just didn’t wake up in the middle of the night and decide to dump gold.
It was ambushed. Gold was knee-capped intentionally to keep a lid on it, in my opinion.
Take a look at the above GDXJ daily again.
Clearly it looked like this second breakout over a declining trendline from the August high was the real deal.
It broke out on a gap and sustained above the trend channel breakout point for 4 days.
It looked like the second mouse was getting the cheese.
The first mouse, the first breakout, got the squeeze in November, but clearly the second mouse got the cheese on the second breakout.
I think this generated fear amongst those to whom gold is a threat.
Essentially gold calls B.S. on the central banks.
It also calls puts the Whole Enchilada Stimulus of the incoming administration in the cross hairs.
So the hammer came down in the middle of the night to install an ugly weekly bar.
Interestingly, GDXJ still shows higher lows, but it is going to flush the rising trendline from November this morning.
That said, there is a possible timing point where the declining trendline and rising trendline intersect around January 21.
In sum, the metals are being pushed to the limit in the near term, but if they are able to prove to prove their bullish intent with a rally over this past week’s high over the next few weeks, then the promise of a multi year Cup & Handle bottoming formation in GDXJ will be on the table.