GDX has taken on the posture of a freak bullish Inverted H&S
The good news: Sometimes these bullish patterns actually work.
The bad news: Just as often (to my eye) they prove fruitless.
The worse news: The pattern has not even formed yet, let alone activated.
We (NFTRH) have been managing a more detailed chart of GDX for most of this year in weekly reports and in-week written/video updates, using it to guide us into rallies and corrections all year. The latest signal was the double top in May, the correction from which persists to this day.
If the miners rally here it looks like it will be as part of the seasonal party scenario, not to mention an ‘anti USD’ scenario. In other words, the 2024 macro would probably have to wait for… 2024! In hindsight I should not have titled last week’s article on gold stocks in such hyperbolic fashion. When I wrote the time is “now” I meant ‘now’, as in the process of a phase change that I believe is already engaging. It’s bigger picture than literal “now”.
Anyway, back to the chart of GDX, when a TA tells you about a “complex Head and Shoulders” what she really means is “it’s a freak pattern with too many humps or divots but I still want to present a bullish thesis to you so ‘complex’ it is because you will not take me seriously if I call it a freak, will you?”
So that fun making and disclaiming aside, let’s see if GDX does indeed follow the symmetry of the left side, put in a second lower shoulder and then rise, which would follow said left side symmetry. That’s another word TAs use a lot, “symmetry”, because they take pleasure in things that are neat and orderly. I am not even joking about that. I am that way too.
For months upon months now we’ve been managing the correction, and the imagined pattern on this chart would need to take out its neckline to activate. I have not drawn it in because the daily SMA 200 is dutifully easing into that zone at 30, which has been our get out of jail parameter all along. The correction is ongoing until it no longer is.
As yet, GDX is depending on a TA novelty/freak to get it out of jail. If it rallies anti-USD along with a partying macro, the sector will not be unique. But that will come when the greater bubble blows out, probably after the seasonal play expires. Meanwhile, let’s see if the “complex” H&S is worth anything in the short-term.
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