Matt mentioned 47.50 as the stiff resistance in his last nightly update.

I appreciate your feedback, Steve. I could count only 3 waves down from the top on GDX: one in a falling wedge, then a descending triangle, and the third one a waterfall drop from that triangle. I permit to be perfectly wrong here. If you or Matt are willing to put the wave count on the 60-minute GDX chart and explain why the count goes there, I'd appreciate it. I need to develop my own looking and not be dependent on you, Matt or GET to place wave counts.

I see, silly me. What's your target range for GDX wave 3, Steve? And is there a way to predict it like GET does? There must be some theory behind the GET's algorithm to compute the target ranges. Thanks for any input on this subject!!

Are we in wave 5 down now, according to the chart? It looks different from the previous chart posted here last week.

ditch, could you explain why gold prince at $1060ish and $1030 are not going to hold, according to your projection? Your target strikes me as somewhat extreme. Is there any other evidence for it except your tentative head and shoulders pattern? Thanks for your input.

Matt, is KBE swing trade still good? XLF broke out of the consolidation and could retest its resistance at 15, at worst.

Thanks, Daniel! Mining stocks are indeed in a bull market, so the trade would be a counter-trend. In my understanding, a break of the MA(50) is the key to note a weakness (pullbacks to the MA(50) are bought, as you noted). GDX is below the its MA(50), which tells me where the trend is going. Gerald Clifton had me learn to respect the GDX as the index.

This is the first correction of the $USD since March, so it's a different situation for all other pullbacks. The break of the MA(50) occurred on the high volume, not seen before. You are probably right that I should wait for a bounce and pounce there.

The bullish falling wedge may play out, as you said. I don't see much upside in this chart though, even if the market goes up. AIG is a weak stock, it would be my candidate for shorting during a downtrend. For what it's worth.

If.. and might ... You'd need a lot more certainty than that to conduct that trade. Determine your entrance point, your target(s) and your stop-loss point and assess the risk. AIG has been in a downtrend. It's going to single digits eventually, but not before the whole market breaks down. I hope this helps.

ditch, the $USD resistance is at 78.50. If you see it going much higher, how much and what factors are you observing?

Why do you see gold going below mid $1060s level to test the break out levels? Curious what you see. Gold has been very resistant to downward moves as of late.

I am reading "Reminiscences of a stock operator" now. Jesse Livermore described his mistake of plunging too early on the bear side -- anticipating a crash -- as having a telescope view on reality. I am relieved that he too made that mistake. He makes a very convincing point of not fighting a trend by avoiding the costliest 1/8th in a trend: the first and the last. That's for a trader!The last one is no brainer, but the first one is very hard to resist.

His other point is to take a vacation after a big win: that is, not to trade the market all the time, only when the conditions are right. I am thinking of your 4-mile hike idea for the weekend now. You live up to his wisdom :-))

Ok, then non-pinned are stocks those exempt from manipulation (I initially assumed the opposite). Take two mining stocks then, IAG and GDX. The former was pinned on Friday to 15, yet its January max pain comes at 17.5. There is no difference for GDX, both show 46 or 47 as the max pain prices.

Two inferences from this are:

1. Widely traded stocks are more prone to manipulation (the intuition suggested me the opposite, yet GOOG, SPY are fine examples). IYR and CSIQ then are not.

2. IAG could close at 17.5 on January's OE day, that's a 12% gain from its close on Friday. Easy money, huh?

to tahoe: yes, I meant exactly those fundamentals, as crooked and warped they are. The factors you listed are not all relevant to the standard stock valuations: number of shares issued, company revenue, earnings, % of debt, rate of sales change from one quarter to another. The upcoming stall will come when the gravy train of injections comes to a halt, but it is some 5 to 7 months from now (based on what I read). Any war prospects will kill the markets even sooner.

For those who know how to trade (not perma bulls or bears, please!). NXG had just lost its MA(50)=3.00, its top was at 3.49 and its MA(200)=2.25. It closed at 2.90 on Friday. Its trendline support comes at about 2.50. <a href="http://stockcharts.com/h-sc/ui?s=nxg&p=D&yr=0&mn=9&dy=1&id=p77868502372">NXG daily chart is here</a>

My question is, Is it a good candidate to short at this time? I expect to cover at 2.50 or when GDX is near its MA(200). What would be a good stop placement? I am thinking MA(20)=3.16. Is it too obvious for market professionals who know how to clip stops?

What is a risk/reward ratio for this trade?

I appreciate good solutions or valid input on this trading problem.

An interesting review, thanks! You say that the financial fundamentals are horrible. Yet stock valuations are driven by present fundamentals, which are improving from very bad to worse... That's the factor that bears refuse to take into account. We had a market top in October 2007, well into the subprime crisis for those who knew the truth about the economy. Yet the fundamentals (P/E ratios, earnings, etc.) were terrific back then. I was much more naive back then, yet those were my most successful months on the market of just playing the trend. Yeah, it's stupidly simple.

Perth- As I read you, you are referring to a shorter time frame. That's awefully confusing for those who read what you write, but it's okay.. My target (courtesy of Peridot's GET program) for wave 3 down is near 42.5, and we are nowhere near that point yet. (The *likely* price projection for the entire correction is MA(200), which is near 150 on the $XAU, currently at 167). We only had a slight bounce after a steep 6% decline in one day. Good luck with your trades!

5 of 5?? I could trace only two completed waves down, current wave being wave 3. Gold stocks are in a steep downtrend, as Steve mentioned in his last update.

Punching a few stocks tickers, I found one egregious exception to that maximum pain rule. Ticker: CSIQ, for December 2009 option expiration the max pain is at 20 and it closed at 26.86, at its extreme. I have long noticed that its price is irrational, and this is a proof of its price manipulation.

I am fascinated by this chart, I cannot believe that an algorithm can produce such a detailed and precise description and a close prediction. This chart is the best EW explanation I've seen with respect to the GDX chart!

Matt, would it be not late tomorrow to place a swing short on the bounce? The target would be 150 on the $XAU or the MA(200)?