GDX update

After yesterday's big decline GDX has regained about 50% of the loss at today's high, but it appears to lack any real push to the upside. It is normal after a big one day drop to see some consolidation before the market decides which way it will go. It would also be normal to see yesterday's bottom tested with a flag. Declining volume this afternoon is consistent with flag formation, but it will need to go down some more to do it right.
If it forms a small symmetrical triangle, or pennant, this afternoon and breaks up, I would still expect a test of the bottom tomorrow or soon thereafter.




 

Elliott wave theory says that markets move five waves in the direction of the trend, and then three waves opposite the trend for a correction.
Yesterday morning's high was slightly higher than it went four days before and qualifies as the top of a fifth wave in the latest up move. A five wave move suggests that there will be another move to the upside after a three wave decline. Whether or not there has already been an A-B-C, or three wave decline is subject to interpretation.




 

The chart above shows how a three wave down move could have already completed.
There was a quick five wave decline to form the A wave. This was followed by a triangle to form the B wave. A quick move below the low of the triangle could have formed the C wave.
If  this is the case, I would expect a flag to form soon without a new low. If my interpretation is wrong, and that is quite possible, then a new low, below yesterday's low, would complete the three wave down requirement. After that new low there should be a flag forming to start the next move up.
Happy trading.