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Will the Miners Call Janet Yellen’s Bluff Again?


The big move this week has been the decline in the precious metals and miners.

A daily GDXJ chart depicts the sell-off. It broke the 50 day line with authority for the first time the early February low.

One of our primary tools, the 3 Day Chart, did a great job of telegraphing that this pullback was different.

The 3 Day Chart in GDXJ turned down on Tuesday with 3 consecutive lower daily lows.

The next day, the index gapped below its 50 day moving average and closed on session lows.

Yesterday after a down open, GDXJ reversed and rallied to backtest its 50 day.

Notably this week's turn down in the 3 Day Chart followed Train Tracks from all time highs on August 11.

It is also worth noting that the sell-off following the July 13 high did not turn the 3 Day Chart down.

The last big buy pivot in GDXJ was the breakout on June 3.

Consequently, the presumption is that GDXJ and the miners should pullback into at least early September, which is 90 degrees/days from that early June low.

Note that the buy signal in GDXJ occurred in early February and a top occurred in early May 90 degrees/days later and then again 180 degrees/days later in August.

Let's take a look at silver miner AG which ran from 2.40 to 19.50 this year:

AG hadn't turned its 3 Day Chart down since early May.

It did so on 8/16 and the subsequent behavior was bearish.

If the 3 Day Chart turns down and the near-term trend is still up, the turn down should define a low soon in terms of time and price. If not, the indication is lower prices.

That's what happened with AG in August — it accelerated lower.

Notably, the high day was a large-range outside down day in the spirit of a Key Reversal Day as AG narrowly missed closing below its prior day's low.

Be that as it may, the high day did register a Gilligan Sell signal.

This is because, it gapped up to a new 60 day high with a close at/near session lows.

It is impossible to know what Yellen will say in her widely awaited speech today.

It looks like the metals are assuming a hawkish tone.

That said, one never knows the market's reaction even if one should have the speech ahead of time.

In recent comments from the Fed that suggested rate hikes were on the table, miners dropped briefly and then soared as the market seemed to call the Fed's bluff.

Today's action in the precious metals should be volatile.

That said, a rally looks made for selling.

Jeff Cooper has been crushing the market this year. Read all about it here.