While we still do not have a long term confirmed bottom in the metals complex just yet, the price action is quite indicative of a very bullish market. You see, when the metals are truly in a bullish trend, they do not see deep retracements, which forces market participants to chase price, as most corrections are simply high level price consolidations. This is starting to look like what we are seeing in the GLD and GDX.
Last week, we were looking for a further rally in the metals complex. But, our expectation was that the rally would likely be part of a corrective pattern.
Specifically, as I noted about the GDX:
Ultimately, as long as we remain over this past week’s low of 19.32, I see a set up developing for a (c) wave into our target, which may even result in an expanded b-wave high, which can be higher than the top struck for wave i. I think this may confuse many people, and have them view this as a break out in the GDX. But, as long as we remain below 22.30, any higher high is likely part of an expanded b-wave structure, which is what I would prefer to see, as it supports a strongly bullish bias in the GDX. But, keep in mind that as long as we remain below 22.30, it is only setting us up for a drop in a c-wave for wave ii, which will likely be another buying opportunity.
Even with the rally we have seen this past week, it does not yet look like the upside has completed. One of the indications I am watching closely is presented on the silver chart. As I have said for the last two weeks, as long as silver remains below 16.18, I believe we have a strong set up to even see lower lows in the complex – down to the 12-12.75 region. However, the pattern is still suggestive of a move up to the 15.60-15.80 region before further downside is seen. Alternatively, should silver be able to prove its more bullish intent with a move through 16.18, then we can have more confidence in a potential long term bottom having been struck already. Until such time, this is the chart that has the most bearish potential, but after a little more of a rally is seen.
As far as GLD and GDX, my primary count has them both in a b-wave rally, which still may need one more 4-5 to complete the (c) wave of their b-wave. And, as we expected for the last few weeks, the b-wave in the GDX has now struck a higher high, which will likely make many believe that the rally to 40 has begun. But, I am not as convinced, as I only see this as an expanded corrective move, or, alternatively, as a 5th wave in wave i off the lows. As long as we remain below the 25 region, I do not believe we are on our way just yet to 40+, which is my next major target higher.
Ultimately, I maintain the expectation provided in last weekend’s update:
What is interesting is that all three charts seem to be setting up for a rally in the upcoming week, with silver seeing a potential wave 2 rally, whereas GLD and GDX needing a (c) wave in a b-wave rally. These should be followed by a strong decline in all 3 charts in the coming weeks, with silver seeming as though it is the only chart set up for a lower low, that is, as long as remains below 16.18 on the coming rally.
See charts illustrating the wave counts on the GDX, GLD and YI:
(First published Sat Apr 9 for members)
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education. 
