[isatrader]

So looking at a gold stock I hold. Should I be looking for something like this. A bounce which helps to produce a neckline (green line).

It's one possibility, as it is a regular pattern of early Stage 3, but as I said before, it can go either way in Stage 3, and sometimes is merely a shakeout by larger players, and others drops off a cliff, whereas other times it consolidates for a year or more. Basically all it means is that the probability of the recent momentum phase being over is more likely than not, but that's not had any secondary confirmation yet, and likely won't for a while. So it's a time to be more cautious if you have open positions, and take a good look each to detemine their health.

So it might be a good idea to take an indepth look at all other individual gold stocks and determine their Stages, as that will give you better idea of which way the weight of evidence is learning towards. i.e. calculate the amount of stocks in each Stage and then work out the percentage in each, and then keep track of that.

Or for a rough guide use the Gold Miners Bullish Percent to help, as that indicates the percentage of Gold Miner stocks on a Point and Figure (P&F) Buy Signal using traditional scaling. So as you can see on the attached chart, that'd dropped from 100% on a P&F buy signal in July to only 25% on a P&F buy signal now.