To date, every time the market has rallied off a bottom, I have been quite confident that lower lows were going to be seen. And, for many years, I have been correct, even though most of the market disagreed at the time. However, this is truly the first time in many years where I am going to strongly entertain that the bottom has been struck, especially since we have struck the targets we set out years ago.

As I have said many times over the last half year, I have had no desire to be shorting this market aggressively, since we are coming to the end of this 4+ year correction. The time for shorting this market has come and gone, and I have even less desire to short this market at this time. Rather, I am now going to give the bull market the opportunity to re-assert itself, and will continue to ride the long positions purchased in our BUY BUY BUY boxes, Now is the time to sit back, and allow the market to prove if we have transitioned back into the bull market, which will then have us apply different “rules,” as to how we react to market action.

Along those lines, I want to re-post something I sent out as an alert this past week in preparation for the resumption of the long-term bull market:

I see some of you attempting to look at the overbought nature of the technicals on the miners and metals and view it as simply another topping pattern just like all the others we have had for years.

The issue that many overlook is that we apply those technicals differently during bull moves vs. bear moves. You see, if the market has truly bottomed and transitioned into a bull phase, then overbought indicators simply remain overbought as the market continues higher in a 3rd wave. This is when technicals imbed and why so many are caught off guard when a market transitions from bear to bull.

So, do not assume an overbought indication in the techncials will mark a top this time, and maintain an open mind to the potential that the market may have finally transitioned. Due to the potential of a bottoming pattern in place in GDX, we now need more than just an overbought indication on the technicals to confirm a top to a corrective rally. We also need to see a Fibonacci Pinball support level broken by an impulsive structure to the downside.

In conclusion, this post is simply to note that indicators should be used differently during bull phases and bear phases, and one has to be able to understand how to use them appropriately during the different phases of a market move.

http://www.321gold.com/editorials/gilburt/gilburt021016.html