In order to print the largest daily candlestick i've ever seen in GDX all we had to do was drop ~50% over the span of a few weeks, and reach the most extreme oversold conditions ever:

GDX (Daily)

GDX traded up nearly 20% during yesterday's trading session (2nd largest single day gain ever for GDX) and yesterday's trading range in GDX ($16.18-$22.95) is also one for the history books - it might be a very long time before we see a wider daily trading range (on a percentage basis).

Turning to gold, yesterday's low at $1450 tested important support/resistance dating back to last year:

Gold (Daily)

A ~$250 correction in gold over the span of a week and now back to major support. Seems pretty healthy in the grand scheme of things, but now this $1450 level needs to hold as support. It might get retested, however, a breach of this level (especially on a weekly closing basis) and we'd have to begin talking about the 'possibility' of a bear market in gold.

For now, I have to stick with the bull camp especially since sentiment is extremely weak on precious metals (gold is at a 37 DSI, and silver is at an 8!), and support held where it was supposed to.

The most bullish scenario would be a weekly close back above $1525 (and preferably above $1550), along with a decline in the insane levels of volatility we have experienced recently. It would also be healthy to see gold diverge from the S&P 500, and return to being a non-correlated asset as opposed to one that is bought and sold based upon perceptions of market liquidity (or lack thereof). 


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