As we followed through down to our target region for wave (v) of 5 of iii this past week, the market seems to have found a bottom where we expected last weekend, and has started back up on Friday. Ideally, we are now only left with a series of whipsaws as the market finds its long term bottom. And, each time we surge off a bottom, you will have many people claiming that the bottom is in, yet again. But, in my humble opinion, we need at least one more strong drop before we can even reasonably consider the long term bottom being in place. So, strap yourself in.
But, while we follow the up/down machinations over the next 2-5 months, we are going to be seeing more and more people throwing in the towel. In fact, Brian Kelley of CNBC posted a chart of gold that looks like a camel throwing up as a representation of the gold market. And, yes, that is now the sentiment of most gold and miner holders out in the world today. Everyone was so certain of the lows being in and the new bull market about to begin, no one was reading the signs that had us looking lower as we came into 2014.
As for the wave count, based upon the Market Vectors Gold Miners (ARCA:GDX), as Larry White – our Stockwaves Miner’s Analyst – sees it, as well as the potential I see in in the Gold, we have at least one more low to be seen potentially into year end, and possibly even two more lower lows. That second lower low can still take us into the end of the 1st Quarter of 2015, with the low teens potentially being seen in GDX and the lower region of our target box on the GLD between 95-100 as the targets.
So, allow me to explain the difference between the two potentials I am seeing in the GLD, so that you can be prepared going into the end of the year. The more immediate bottoming pattern is suggesting that wave (v) of 5 of III has bottomed this past week, and has met our ideal bottoming targets. (Of course, if we see a lower low in the upcoming week, then that immediate lower low would complete wave (v) of 5 of III). Assuming we do not see a lower low early next week, I am expecting that we are now in the larger wave IV, which should target the 114-116 region in the GLD. Also, I would expect that this 4th wave should take us at least a few weeks, due to the wave degree with which we are dealing. This count suggests that the decline seen after the wave IV corrective rally completes is the final decline before the bull market resumes.
The alternative, more bearish count actually has the larger degree wave (4) having completed in March of 2013, and counting the drop from that high as wave 1 down within this final 5th wave in this c-wave down. That means that the rise into the high in July was a wave 2, as it spiked through the .618 retracement of wave 1, and strongly reversed to the downside. Now, the reason I REALLY like this pattern is because it has been playing almost perfect Fibonacci Pinball on the way down. Wave I if yellow 3 bottomed at the .382 extension, and wave iii of yellow 3 bottomed at the 1.382 extension, which is a very appropriate extensions for iii of 3 in the metals.
So, in both counts, the main target I have for this wave iv is the 114.75-116.50 region, with the maximum extension that can be seen at the 118 region, which would the .764 extension in the most bearish count. And, as long as we remain below the 118.50 region, I am still looking down for at least one more lower low. But, ultimately, we are going to have to treat the next lows as THE lows, which really should be seen by the end of this year. However, should the rally off those lows materialize as a corrective move, we can always hedge our long positions, and prepare for the last drop into the end of the 1st quarter of 2015.
And, as I promised this past week, I am going to simplify the count on silver this weekend. While I can easily “force” a standard impulsive count on silver, it seems to count best as a non-overlapping diagonal for the (c) wave of this larger degree correction. That being the case, it means we are also bottoming in the 3rd wave of this c-wave.
What is also most interesting is that the bottom region of the “buy,buy,buy” target on the 144 minute chart represents where this larger degree (a)=(c) calculation resides, as calculated from the market high of 2011. Of course, we have two more long term Fibonacci regions of confluence below, but I think this is the region one wants to begin their buying if they are wanting to be long in metals for the long term. Below, those levels are the 14.00 region, as well as the 12.75 region. I view that 12.75 region as the maximum extension that is likely to me at this time, and crosses the bottom of the long term trend channel at the end of the 1st quarter of 2015.
Therefore, in my humble opinion, I believe you have a long term buying opportunity in silver between the 12.75-16 region. And, my target for wave I off those lows in the next bull market will be the 23-27 region.
So, as many of you have been asking me to scream from the roof-tops as to when we should be buying into the metals world, the “BUY,BUY,BUY” zone I had on the silver chart was hopefully enough shouting for those looking to move into silver for the long term. Clearly, as I have stated above, we can head lower, but if you are buying long term positions in silver below $16, you should do very well over the coming years.