During the final hour of today's trading session notable hedge fund manager Jeffrey Gundlach tweeted that the GDX was breaking out from a "textbook six month pennant formation" - adding that an up day tomorrow would confirm it:
He did preface his comment with "You need a magnifying glass," and I would go further to say that even with a magnifying glass this is not a breakout, yet.
A strong up day tomorrow could absolutely confirm a breakout from what Gundlach calls a "pennant formation," or which could more simply be called a breakout from a six month downtrend (a series of lower highs). In fact, a descending triangle is probably the most appropriate technical chart pattern to assign any eventual breakout:
A weekly close above the 6-month downtrend (~$23.25 or higher) would trigger a measured move target of $27+ from the descending triangle pattern. Moreover, the fact that the breakout trigger would take place on a Friday would add even more weight to the power of the pattern and increase the probability of the measured move (17%+) coming true.
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