Precious Metal Stocks, Finally In a Position To Rally

Gold struck an all-time high in early August but reversed quickly below its record 2011 high with a massive Bull Trap.

Consequently, precious metal mining stocks have been locked in a down trend channel depicted by GDXJ below.

However, as flagged last week, early March, 7 months from the early August peak may have put the low in.

Yesterday that low was hammered, but GDXJ reversed, leaving a possible Bear Trap.

Allow me to explain.

When an item makes a new 20 day low but immediately knifes back through the prior low, it leaves what I call a Soup Nazi buy setup.

In other words, no soup for those positioned for more new lows.

Upside follow through of course is needed to validate the setup, but there is reason to think that’s exactly what we’ll see.

Why?

GDXJ set a high in early January. Early April is 90 days/degrees later.

Markets play out in 90/180/360 degrees of time and price.

As well, from the 57ish January high, Wednesday’s 43 low represents 180 degrees down in price.

So we have a possible Gann Time/Price square-out:

180 degrees down in price in 90 days.

Red is 57
Blue is 43

Silver and silver miners have held up much better than most gold miners.

A daily AG below shows a potentially powerful bullish setup.

AG gapped down to a new 60 day low on Tuesday, meeting Phil D. Gap from January’s up gap.

In so doing, it broke a 3 point trendline.

However, yesterday AG reclaimed the broken TL and is now in a position to attack a big picture declining trendline. Breakage above 16 triggers for an Angular Rule of 4 Breakout, giving a projection to the 18 region.

If it occurs today, we could get an Options Expiration Extravaganza squeezage.

The following Gold vs SPX weekly shows what may be a major inflection point on a backtest of gold’s big breakout.

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