Let’s Give A Warm Welcome To Altcoins, The New Junior Miners

Just as demand for the GDXJ was based on an anti-establishment thrill, crypto altcoins are now even more appealing to many.

The rally might have just burnt itself out. And I don’t mean just the precious metals market, but stocks too.

Having said that, I would like to write a few words on stocks today as well. While it could be the case that we’ll see another short-term move higher (as we did previously after pullbacks), it seems to me that this might have been the final top for months to come.

The Market’s Rhythm

The markets are self-similar (which is another way of saying that they have a fractal nature), which generally means that while the history tends to rhyme, it also tends to rhyme in similar shapes of alike or various sizes.

For example, the rally from 2018–2020 seems very similar to the rally from 2020 to the present.

Both rallies started after a sharp decline, and the first notable correction took the form of back-and-forth trading around the previous high. I marked those situations with big blue rectangles.

Then the rally continued with relatively small week-to-week volatility. I created rising support lines based on the final low of the broad short-term consolidation and the first notable short-term bottom.

This line was broken, and some back-and-forth trading followed, but it was only about half of the previous correction in terms of price and time.

Then, we saw a sharp rally that then leveled off. And that was the top. The thing that confirmed the top was the visible breakdown below the rising support line right after stocks invalidated a tiny breakout to new highs. That’s what happened in February 2020, and that’s what happened this month.

Combining this with the recent underperformance of the Nasdaq (which just moved to new monthly lows) and a specific situation in the recent “leader” – the GameStop stock – suggests that this might have indeed been the top.

GameStop just broke below two major support lines – the rising one based on the January and February lows and the lower border of the triangle pattern. This spells massive trouble for those invested in the stock.

That’s particularly interesting not only because of the technical pattern that we see above. It’s important because of when GameStop was strong – it attracted a lot of attention a few months ago when the stock market was already in the final stages of its rally (based on numerous fundamental valuations). This stock seems to be a nice proxy for the interest of the general public – which has already peaked. If the market got oversaturated with even the part of the market that goes in last, then what we saw in the S&P 500 can truly be the final top.

I will get back to this thought while discussing the GDXJ charts, but for now, let’s take a look at the USD Index – another key market for the precious metals investors to monitor.

The USD Index

What one might not notice at first sight, but what is very important, the USD Index just invalidated a small breakdown below the head-and-shoulders pattern, and it rallied back above its neckline. This is a classic buy sign and a sign that the breakdown below the rising support line will be invalidated shortly. But that’s not even the most bullish thing that we see right now.

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Disclaimer: All essays, research and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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