Below is a daily chart we’ve been following which shows the six point flat bottom expanding triangle consolidation pattern. The top rail may look a little sloppy but there is a reason for that. First, note the big breakout gap that was accompanied by a very large increase in volume and then the first backtest several days later. It’s always important to adjust your trendlines when you get new information in case there is another backtest or pull back later down the road. So the top rail reflects the backtest point which then defined the top rail. As you can see GLD started to rally which looked like the impulse move was beginning but it had one more backtest it needed to do to put doubt and fear into investors. As you can see the second backtest was just a tad sloppy but held nicely.

Everyone is talking about how overbought the PM complex is right now and it has to rest before it can go higher. What this six point bullish expanding flat bottom triangle is telling us that the correction has been taking place for six months already and the consolidation pattern is finished building out and the next impulse move higher is just beginning. More confirmation will be when GLD takes out the previous high made on the initial breakout. Take a second and look at this chart and try and understand what it really means for the PM sector. Remember we’re in a new bull market and each consolidation phase will have a bullish outcome. Doing nothing can be the hardest part of trading sometimes.

I forgot to add this monthly candlestick chart for the HUI to the post below which shows the 2013 S&R line and the string of white candlesticks that have formed since the bull market began in January of this year. The only candlestick that is black formed during the backtest to the 2013 S&R line. The neckline extension rail is where we may see some overhead resistance come into play. Note the big black candlestick that formed in 2013 when the HUI broke below the neckline of its massive H&S top. Reverse symmetry suggests the HUI may move up over that same area in a strong move to the neckline at 380 or so.

Its been several weeks since we last looked at this combo chart which has the HUI on top and GLD on the bottom. I call this chart the 2013 S&R chart because all the price action below that very important S&R line started to build out after the big gap down in 2013 which many at the time called manipulation but from a Chartology perspective it was a perfect breakout. I’ve been showing the price action below the 2013 S&R line as a bullish falling wedge which is true but when you boil it all down the 2013 S&R line is the most important trendline on this chart, above bullish and below bearish.

The HUI and GLD both broke out above their respective 2013 S&R line at different times with GLD breaking out just ahead of the HUI. They both broke out above their 2013 S&R line with a breakout gap and both had a nice backtest also.

Since the PM complex is in a new bull market it was only a matter of time before each would breakout from their first consolidation pattern to the upside, which was the blue bullish rising wedge on the HUI and the blue expanding triangle on GLD. Again you can see a breakout gap above their respective top rails of their blue consolidations patterns. Once you know the big trend, bull or bear market, the consolidation patterns will breakout in the direction of the prevailing trend. That is an important concept to grasp. Many times a consolidation pattern can morph into a bigger consolidation pattern which will have the same out come as the smaller consolidation pattern. Eventually though the consolidation pattern will finish building out and the next impulse move will begin in the same direction as the previous move.

One last thing to recognize on this combo chart below. Note how much stronger the HUI is vs GLD if you go back to the 2013 gap area. The HUI is currently testing the bottom of the gap while GLD is still significantly below its 2013 gap area. This ties into the thesis I’ve been showing you on the ratio combo charts that are showing this time the PM stocks are finally going to have their day in the sun after 20 years of under performing gold.

Below is a long term weekly chart which puts everything in perspective. First, you can see the big breakout below the bottom rail of the six point blue rectangle consolidation back in 2013 which many called manipulation at the time but it was a clear breakout from a very well defined six point rectangle consolidation pattern.

Then there is the three year seven point bullish falling wedge reversal pattern. It’s a reversal pattern because it has an odd number of reversal points.

Lastly you can see the little red expanding triangle that has been forming on the top rail of the bullish falling wedge which we know from past experience is usually a bullish setup. More confirmation will be given when gold makes a new higher high made just several weeks ago.

The markets have a way to push you just beyond your limits to get you to do the wrong thing at the wrong time and then reverse on a dime. The bearish sentiment from just a casual observation over the last few weeks has felt like there was no way the bulls could rally the PM sector higher before there was a decent correction. In a new bull market the surprises come to the upside and not the downside.

The rally we’re currently experiencing in the PM complex right now and especially the Junior Miners is a potential once in a lifetime event for most investors. Sometimes we get lucky and experience several of these kind of bull markets over a lifetime, but generally your first experience is a learning experience if you can survive long enough to have learned something. I was lucky enough during the tech bubble in the 1990’s to have had just enough experience to play the last five years well enough to be able to retire at 50 years of age. Had I not had any experience before the tech bubble burst I would have most likely not gotten out at the top and rode the whole thing back down.

I didn’t become aware of the bull market in the PM sector until the spring of 2002. My whole focus up till then was the stock market. I still remember very clearly the first time I really looked at a chart for gold and seen a beautiful inverse H&S bottom. I didn’t even know what a junior gold stock was back then as the PM sector was so far off my radar screen. I began to study everything I could on this, way off the radar sector, knowing that the Chartology would be just as clear as the many different tech stocks I traded in the 1990’s.

It didn’t take me long to find some of the junior PM stocks with some really nice Chartology to start trading this new area for me. I felt like I had died an gone to heaven again as I thought nothing could ever beat the tech stocks.The chart patterns the PM stocks were making were just as beautiful as the many different tech stocks I traded.

So I got lucky twice in my investing career by finding two great bull markets in which to invest. Now we have entered the third great bull market of my lifetime which is the bull market that started in the precious complex in January of 2016. To be able to get in on the ground floor of a brand new bull market is only a dream for most investors but to get in at the bottom of the small cap junior PM stocks can change your life forever if you can trade accordingly, which is easier said than done as I know some of you are finding out.

It’s very easy to trade in hindsight when you look at a chart and see a top or bottom already in place but living day by day as a pattern builds out can be very challenging at times. It can take patience beyond what most have , to sit tight and let the pattern mature out , as sometimes they can morph just to throw you a curve ball. Knowing what the big trend you’re trading in, either a bull market or bear market, is the most important aspect of investing. Rule #1 is don’t short a bull market and rule #2 is rule #1. Let the bull market work for you. If you buy too early in a bull market you’ll be saved as the bull market progresses.

The first six months of our new bull market is now over and there is no way to get it back. Many have missed the bottom and have been waiting patiently for a pull back to get in . This strategy is not working. Many have tried to trade in and out of this new bull market and are left standing at the train station waving goodbye to the conductor as the train leaves. Personally I sold my positions a few months back and quickly realized this was a mistake and scrambled to buy them back at somewhat higher levels . This is how a new bull market works taking as few along for the ride as it can. At some point there is going to be a correction which will end up forming some type of consolidation pattern which will be needed to get the overbought condition back to normal. However predicting when and how this will occur will prove to be very challenging.

I have a ton of charts I could post tonight but I’m going to leave this Wednesday Report just the way it is. This is the first time since we opened up our doors at Rambus Chartology in which I didn’t post a chart , which is weird for me. What is most important to understand is this new bull market that is already six months old and isn’t waiting around for you to make up your mind if you want to participate or not. Only you can determine for yourself how you want to play this new bull market in the precious metals stocks. For some it will be a life changing event and for others it will be a should of or could of kind of bull market. Take what you’ve learned during the first 10 years of the PM bull market and the recently completed 5 years of PM bear market and use that experience to guide you through this next leg of the secular bull market. As always I will be right here analysing the Chartology of this most interesting and frustrating and exiting little market that we have all come to have a love / hate relationship with  , The Precious Metals Junior Miners .

All the best…Rambus

Whenever you begin to feel uncomfortable about the short term price action always look at the weekly or even the longer term monthly charts to gain perspective about your feelings.

Below is a four year weekly combo chart which we’ve been following for years as the bear market unfolded before us. Always keep in the back of your mind the magnitude of those three year bullish falling wedges and what they mean for the new bull market that started in January of this year. During the bear market years there were all lower lows and lower highs made. Since the breakouts above their respective top rails you can see a series of higher highs and higher lows. This is a simple concept to understand but hard for many see.

It looks like SLV is forming a small H&S top similar to the one it formed back in May of this year. The minimum price objective for this H&S would be a measured move down to 17.48.

The long term daily chart for SLV shows the big double H&S bottom. Note the small H&S top that formed at the May high which led to the backtest to neckline #1. A backtest to neckline #2 would come in around the 17.05 area. This is where one needs to decide if they want to play the swings or hold on for the intermediate to longer term ride with a portion of your trading capital. SLV has a well defined breakout point and price objective if one chooses to try a short position. Just don’t get greedy.

This week the Japanese Yen backtested neckline #2 of a possible triple H&S bottom at the 94 area. Below is a weekly line chart which shows the price action closed right on the neckline. To say this weeks backtest was critical is an understatement. How the yen goes so does gold for the most part.

Below is the exact same chart as the one above except it’s a bar chart that shows the subtle differences. The reason this backtest is so important, is because if neckline #2 holds support then the low for the third right shoulder will have formed. Reverse symmetry suggests we could see a ping pong move between neckline #2 and neckline #3 as shown by the black arrows, before we see a resolution to this 2 1/2 year pattern. The yen has made a series of higher highs and higher lows since the head was put in place a year ago.

This next long term weekly chart shows a pretty symmetrical H&S bottom as shown by the neckline symmetry line which shows the low for the left and right shoulders. The backtest this week was a little sloppy but so far the neckline is holding support.

This next chart I overlaid gold on top of the daily line chart for the yen which shows why this currency is so important for gold. Sometimes one can be a bit stronger or weaker than the other but they tend to move together so you can see why the 94 area on the charts above is so important. If the backtest to the neckline holds support then there is a good chance that gold will also be finding support. It looks like next week is shaping up to be another very important week in the precious metals complex. Have a great weekend. All the best…Rambus

Tuesday of this week ANF.V broke out of H&S consolidation pattern where I took an initial position and bought 3000 shares. The daily chart shows the breakout and backtest holding.

The monthly chart really puts everything in perspective for this stock. The H&S consolidation pattern on the daily chart above is just part of a much bigger inverse H&S bottom on the monthly chart below. You can see the beautiful H&S top which ended the bull market. Big patterns lead to big moves. The H&S bottom is 2 1/2 years in the making with the price action testing the neckline presently. That big H&S bottom is actually bigger than the H&S top and has a price objective up to the old high around the 6.40 area. I’m going to put an order in to buy another 3000 shares at 1.83 which is just above the neckline, on the breakout.

Below is the reverse symmetry chart with the support and resistance lines we’ve been following since the new bull market began. So far the price action has interacted perfectly with each S&R line. The last rally phase took the price action above the highest S&R zone and now is backtesting it from above between 245 and 260. The 50 day moving average has been rising strongly and now comes in at the 234.06 area.

The weekly line chart shows the reverse symmetry and S&R zones. As you can see the HUI made it all the way up to the top of the S&R zone at 275 where we should see it act as initial resistance which it has. The bottom of the brown shaded S&R zone comes in around the 245 area. The bottom of the S&R zone is taken from the highs made back in 2013 and 2014. Once this counter move down is complete and the next move higher begins, the area above the top of the brown shaded S&R zone is called the thin zone in which the price action can move easily threw until it reaches overhead resistance at the old neckline around the 380 area.