• 398 days Will The ECB Continue To Hike Rates?
  • 399 days Forbes: Aramco Remains Largest Company In The Middle East
  • 400 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 800 days Could Crypto Overtake Traditional Investment?
  • 805 days Americans Still Quitting Jobs At Record Pace
  • 807 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 810 days Is The Dollar Too Strong?
  • 810 days Big Tech Disappoints Investors on Earnings Calls
  • 811 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 813 days China Is Quietly Trying To Distance Itself From Russia
  • 813 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 817 days Crypto Investors Won Big In 2021
  • 817 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 818 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 820 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 821 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 824 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 825 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 825 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 827 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Gold Stocks (GDX): If Not Now, When?

That was the question I asked myself after being 100% cash into the last hour yesterday and seeing the bottom fall out on the gold stocks once again. Classic trading methodology teaches that you do not try to catch a falling knife. 'Screw classic trading methodology' thought I, 'I'm taking some positions', which ended up being in the gold and silver bullion fund CEF (now selling at a discount), a few individual items I consider to be of relative quality and the leveraged NUGT in a high risk trading account.

The above was noted in an update to NFTRH subscribers in the last hour and certainly was not a call to action. It was just a note from a market manager who had been updating subscribers all along this frustrating journey since the gold stocks lost critical support in November. With that final plunge yesterday afternoon, something bullish welled up inside me.

But as usual, the chart takes out the human element (e.g. "something bullish welled up inside me"), so let's look at the one for GDX, as it shows an awe inspiring picture of volume.

GDX Market Vectors Gold Miners NYSE + BATS - Daily Chart
Larger Image

I won't recount the whole agonizing history of the breakdown from the September 'QE' euphoria. The busy chart does that for me. What is important now is the series of 'rolling capitulations' that manifested in Bear Flags, which in turn served to reset over sold status just enough to continue a series of plunges.

Yesterday's impulsive mega volume drop blew the Bollinger Bands to their widest separation in maybe forever. RSI came to an opposite condition to its very over bought status from September. While on this subject, my stance in September/October was that gold stocks were over bought and in need of a 'healthy' correction. That is what TA said. I was wrong about the "healthy" part and was proven so when the red dotted neckline broke down. We are going to be wrong, but it is what we do with that knowledge (deny it or face it?) that is important. When that critical support failed, we labeled the correction "abnormal" and in need of constant risk management.

Which brings us to today. I may be right or I may be wrong in having bought the puke-fest close yesterday. I have plenty of dry powder (too much, if a real rally is forthcoming), but these are the times we wait for people. That chart above has finally woken up with capitulation after a 6 month grind.

A long standing target of HUI 250-260 was hammered yesterday into the close. There are targets lower in the low 200s (secular trend line by linear chart) and 100 (measurement off a huge topping pattern). So this is all just a trade until it proves otherwise. But look at that chart again. People are being driven out with extreme cruelty and force. This is a picture of massive pain and tumult. Sometimes you just gotta buy that. As noted to subscribers, this will be undone quickly if proven wrong.

 

Back to homepage

Leave a comment

Leave a comment