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Thursday, January 5, 2012

January 5th Update

GDX

The gold miners ETF might be a good short opportunity here starting with tomorrow's open.

GDX came up in my daily scan for shorting opportunities since it was at the upper boundary of a falling linear regression channel.


When I started my Elliott Wave analysis I noticed that all downward price action going back to September was occurring in three-wave corrective mode, rather than five wave impulse mode. That tells me this whole move going back to September is a diagonal, rather than disparate impulse waves forming a larger structure.  

In summary, we will most likely travel back to the lower end of the channel one last time, but then we will probably get another big rally as a higher degree retracement occurs such as a wave ((2)) up.  This shorting opportunity is very short term in nature, but I'll probably give it a try if the setup is good in the morning.  I'm thinking about a BEARISH FEB12 55/51 VERTICAL PUT spread.  The risk is defined, but at 4 points wide it should capture most of the small downside move.
Posted by Waverunner (FractalTrader) at 7:45 PM

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Notation


Wave DegreeMotiveCorrective
Grand Supercycle((I)) ((II)) ((III)) ((IV)) ((V))((a)) ((b)) ((c))
Supercycle(I) (II) (III) (IV) (V)(a) (b) (c)
CycleI II III IV Va b c
Primary((1)) ((2)) ((3)) ((4)) ((5))((A)) ((B)) ((C))
Intermediate(1) (2) (3) (4) (5)(A) (B) (C)
Minor1 2 3 4 5A B C
Minute((i)) ((ii)) ((iii)) ((iv)) ((v))((a)) ((b)) ((c))
Minuette(i) (ii) (iii) (iv) (v)(a) (b) (c)
Subminuettei ii iii iv va b c
Micro((1)) ((2)) ((3)) ((4)) ((5))((A)) ((B)) ((C))