GDX, UCO update May 4

GDX: Counts well as having completed red intermediate iii and now in intermediate iv. the ideal price zone is $23-$21.50; the 23.6-38.2% retrace levels. The lower price is right at the larger S/R zone. Support is also at the white and red trendlines, which falls well with the target zone. Cont’d below.

GDX

 

The daily TI chart shows all TIs are pointing down, wanting to see lower prices; in line with the projected price target zone. The 20d SMA should provide initial support and below that lie the S1 level at $21.50ish and he 50d SMA now at $21ish and rising. Both are logical targets.  For those interested in buying; wait till price has reached the target zone and then watch the TIs turn back up for buy signals to give the all clear. That simple.

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UCO: While everybody has been heralding the oil rally (we call it the garbage rally as it has caused a lot of beaten down energy/commodity stocks to rally) a look at the price chart of UCO tells us that the price advance off the February low is rather corrective than impulsive: more a 5-3-3 rally than anything else. Price broke above resistance 5 days ago but fell below it already yesterday: false breakout. This causes any possible 3rd wave scenario (in this case a red iii) to become much less of a likely scenario.

uco 1

If we look at the daily TI chart we see all TIs are pointing down, wanting to see lower lows. Volume has dried up, but price remains in the ascending trend channel. As such we expect price to move to the $9ish area for a more meaningful bottom. By then the whole possible i,ii,iii (iv and v) count is off the table and we expect UCO and therewith oil to make lower lows below the February low; putting the garbage rally back where it belongs: outside with the other trash.

uco 2