Miners broke through key resistance in climactic fashion, indicating that a significant bottom may have formed. Gold and silver rallied modestly; it’s not uncommon for miners to lead out of a low. Nevertheless, metals should strengthen going forward if they are going to confirm the breakout.

I like to see 3-closes above a resistance level (neckline) to consider it thoroughly defeated. I don’t think that will be a problem for miners. Nevertheless, consecutive closes back below the neckline would breathe life back into the 8-year cycle scenario raising the possibility of a false breakout.

I will be watching to see how precious metals and miners react to the job report. I’m not anticipating a sharp reversal in gold, but we may get one if the report comes in much higher than expected (220,000+).

I elected to keep the color gauges in the “HOLD” position until we knew the fate of the 8-year cycle low. I will restore them to normal operation if metals and miners close higher again tomorrow.

-US DOLLAR- Prices dropped sharply after forming a bearish engulfing pattern yesterday. The 100 level is critical support and a sustained breakdown below 99.00 would indicate that a more significant top may have formed.

-XJY- The Yen made a second higher close above the 10-day EMA, and a bottom has formed. It’s unclear if this is an intermediate low or just an oversold rally.

-TLT- Bonds are finally bouncing, and prices could target the 129 gap on the initial rebound.

-GOLD- Prices are approaching the 50-day EMA near the $1,190 level. Prices will come into resistance between $1,200-$1,210. I will look to take positions when prices drop into the first common cycle low later in January.

-SILVER- Silver is underperforming gold and miners currently. Prices need to rally and close above $17.30 to confirm an intermediate low.

-HUI:GOLD RATIO- The HUI:GOLD ratio was our first clue regarding a potential bottom. The ratio is attacking the 200-day MA and nearing the .1747 high set in November. In Elliott Wave terms, it looks like wave (2) bottomed and the wave (3) higher is starting.

-HUI- The HUI exploded through resistance indicating that a significant breakout just occurred. It would take a strong reversal and consecutive close back below the 195 level to keep the 8-year cycle prospects alive.

-GDX- Prices exploded through the neckline and may target the 200-day MA and $26.00 region next, provided there isn’t a significant reversal tomorrow.

-GDXJ- Junior miners rallied right to the 200-day MA, and the next level of resistance is at $41.00.

-SPY- I’m still expecting a “C” wave lower to around 221 to finish this correction. Consecutive closes above 227 will invalidate my analysis.

-WTIC- I think the rebound after Tuesday’s crash is nearing completion. Once complete, prices should break decisively below the green trendline. I will look for support around the 200-day MA.

I will update if the employment numbers deviate significantly from consensus. Numbers below 150,000 or above 220,000 could move markets.