From yesterday, on the GDX:
"Key Resistance levels in the GDX now are (1) the bottom of The Channel, which comes in today, September 20, at 64.395, and (2) 64.76 - 64.75, the September 13 and 19 highs, respectively. An upside takeout of both likely would give The Bears another chew at their knuckles ;)"
Wow...The Bears might have chewed off a knuckle when the GDX Double Bottomed at 63.22 and 63.21, then took out BOTH resistance levels, breaking out of this bullish Inverse H&S Bottom!
Monday's 64.76 Bull Trap high only was a short-term trap. It established the second data point for the neckline of the Inverse H&S Bottom and, yesterday, it was The Bears who were trapped if they remained short that neckline breakout above 64.75 - 64.76.
It's unusual for an Inverse H&S pattern to show up at this juncture in the chart, after The Channel breakdown that we've looked at in the daily, but The Bulls scored an upset victory in yesterday's session by taking out that resistance, and a target of 68.15 is IN PLAY as long as the GDX trades above that 64.75 - 65.76 neckline. The Bears are caught out of position unless/until they can crack it.
Math for the Inverse H&S breakout:
64.75 - the more conservative of the 64.75 and 64.76 neckline data points
61.35 - the low of the Head
64.75 - 61.35 = 3.40 points of upside added to the neckline
64.75 + 3.40 = Target: 68.15 IN PLAY
I tried to get long the GDX after the breakout, on a pullback to the neckline, but the pullback was very shallow, then it was gone on the upside. In retrospect, I should have "paid up" for the GDX in the high 64.00's since The Bears so obviously were squeezed on that neckline breakout, but I didn't move quickly enough and "he who hesitates is lost" in those powerful breakout/breakdown situations.
Instead, I bought 5,000 FCX (at 40.35), which also had had a bullish Inverse H&S breakout, had pulled back below the Right Shoulder of that pattern in the early going (which I didn't like), but was trading near its highs of the session while the GDX and stocks like GG were exploding to the upside. FCX has been bearish, but it "looked like" it would make a move higher toward its recent unfilled gap, even if that meant that it would get dragged higher in sympathy with the metals rally.
Being long FCX in that metals rally yesterday was like riding a donkey in the Kentucky Derby. Metals stocks were flashing new highs by the millisecond, but FCX was doing nothing. UGH.
When a stock can't doesn't participate in a bullish situation like we had yesterday, I view that as a BIG warning flag. I gave it a few minutes to get moving, but not long, and threw in it at 40.41.
Gain: $300
As is often the case when we sell, FCX finally began to move higher the minute that I sold. LOL. I didn't regret my decision though. I've seen plenty of stocks tank in situations like that.
The weakness in FCX manifested later in the session. It not only didn't rally to the unfilled gap (horizontal red line), The Bears morphed the bullish Inverse H&S breakout into a H&S Top!
Had I still been watching FCX, the high of the Right Shoulder at the bearishly inverted EMAs (top yellow arrow) and failed retest of the neckline of the broken H&S Top (second yellow arrow) both were excellent entries short the stock. FCX tanked after the failed retest of the neckline of the H&S Top breakdown, which had been my concern when I threw it in at 40.41.
I was watching trading in the GDX, looking for an opportunity for quick "stab and slab" on its nice rally, which came when it broke out of this Falling Wedge, then came back to test the breakout (white arrow). In a strong rally, patterns that form, generally, are bullish continuation patterns, as this one was.
I bought 5,000 shares of the GDX at 65.71 and sold them at 65.95 on the rally back toward the session high for a quick $1,200 gain.
Gain on the session: $1,500
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