Postponed versus Cancelled

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With baseball season underway, fans know that there is a huge difference between a game being postponed on a rainy day, versus being outright cancelled or rescheduled for the very end of the season. Similarly, traders should try to objectively analyze whether a given breakout has simply been postponed by an intraday reversal, or whether the breakout has been cancelled altogether, and the bulls have been effectively trapped.

Taking a look at many of the precious metals miners today, traders are declaring significant reversals in gold and silver plays. You know by now that I am more constructive on gold than silver miners here. Taking a look at the daily charts of many gold miners, we can clearly see long shadows synonymous with intraday reversals. At issue is how significant those reversals are. Judging from their daily charts, no real technical damage has been inflicted. If we see some strong downside follow-through tomorrow or Friday, then that would be a reason to reconsider. As you can see on the weekly GDXJ (ETF for junior gold miners) above, the symmetrical triangle breakout is still intact, and price is simply consolidating the initial break. Below, you will find two examples of the many intraday reversals in the miners today. Yet, the true technical damage thus far is minimal at best.

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