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Why GDX Can Hit $40

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GDX, the index with the major miners, undercut a Bottoms Line from the important October low on Thursday; however, Friday it gapped up.

The surge faltered as GDX tested the a Bowtie of its 20/50 day moving averages.

As well it succumbed to a test of the prior Friday’s reversal.

Does someone not want to see miners close strongly on the weekly basis?

That said, if GDX is able to convert this morning’s weakness and reclaim Friday’s high, it opens the door to a test of the 20/50 ma Bowtie at 30.50.

Breakage above 30.50 opens the door to new swing highs above 32.

Momentum above 32 opens the door to a run to the top rail of the trend channel in the 40 region.

Turning to GLD we see a breakout over a short term Tops Line, albeit GLD tailed off.

Friday’s breakout is in the context of a 3rd higher low.

Sharp, fast rallies often follow 3rd higher lows.

Short-term cycles indicate a low for early January as it is 90 days/degrees from the important early October low.

Failure to gain traction suggests it has more work to do.

That said, any weakness is an opportunity as the next impulse will see gold/GLD explode.

Few will want to chase.

This is the psychological handiwork that Mr. Gold has wrought.

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