Larry Edelson: In a previous column, I showed you that my cycle work was showing a possible major low forming in the mining sector last Tuesday, August 6.
Well, I was wrong. It formed the next day, August 7.
You can see it here on this chart of the Market Vectors Gold Miners ETF (NYSEARCA:GDX). Notice the spike low on August 7 and how it penetrated and closed below the uptrend line.
Then the next day the GDX surged back above that uptrend line, exploding 9.08 percent higher.
That kind of move — plunging below an uptrend line and immediately and strongly reversing higher back above it — is typically only found at major lows.
So yes, I’d say the cycles were on the money and we have the potential for a major low. To confirm that low, I’d like to see GDX close above the downtrend line shown on the chart.
You can see the same type of action in this chart of the ARCA Gold Bugs ETF (HUI). Note the fake out low and the 9.02 percent surge that followed.
A close above the downtrend line on this chart would confirm a major low for senior miners, which this ETF tracks.