History doesn’t always repeat, but if we are indeed witnessing a 4-year low in mining stocks then we can look at the last bottom and see if it will rhyme. Whether you use cycles or Elliott Wave, the general structure of moves remains similar:
The important things to note are that the next daily cycle low (Wave 2 down) is likely to move below this point today, and that the next daily cycle (Wave 3 up) tends to be the most powerful. GDX almost doubled in that impulse move alone in 2008.
With the backdrop of the largest short position in precious metals of the entire bull market and historic pessimism, I wouldn’t put it past the worst performing asset class in the market to pull something unexpected out of their…shoe.
Good trading all.
Steve Chapman, TRI